Connecticut 2022 2022 Regular Session

Connecticut Senate Bill SB00011 Introduced / Bill

Filed 02/09/2022

                        
 
 
 
 
 
LCO No. 641  	1 of 39 
 
General Assembly  Governor's Bill No. 11  
February Session, 2022 
LCO No. 641 
 
 
Referred to Committee on FINANCE, REVENUE AND 
BONDING  
 
 
Introduced by:  
Request of the Governor Pursuant 
to Joint Rule 9 
  
 
 
 
 
AN ACT CONCERNING REVENUE ITEMS TO IMPLEMENT THE 
GOVERNOR'S BUDGET. 
Be it enacted by the Senate and House of Representatives in General 
Assembly convened: 
 
Section 1. Subsection (b) of section 12-704c of the 2022 supplement to 1 
the general statutes is repealed and the following is substituted in lieu 2 
thereof (Effective from passage): 3 
(b) (1) The credit allowed under this section shall not exceed (A) for 4 
taxable years commencing on or after January 1, 2011, but prior to 5 
January 1, 2016, three hundred dollars; [and] (B) for taxable years 6 
commencing on or after January 1, 2016, but prior to January 1, 2022, 7 
two hundred dollars; and (C) for taxable years commencing on or after 8 
January 1, 2022, three hundred dollars. In the case of any husband and 9 
wife who file a return under the federal income tax for such taxable year 10 
as married individuals filing a joint return, the credit allowed, in the 11 
aggregate, shall not exceed such amount for each such taxable year. 12  Governor's Bill No.  11 
 
 
 
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(2) Notwithstanding the provisions of subsection (a) of this section, 13 
for the taxable years commencing January 1, 2017, to January 1, [2022] 14 
2021, inclusive, the credit under this section shall be allowed only for a 15 
resident of this state (A) who has attained age sixty-five before the close 16 
of the applicable taxable year, or (B) who files a return under the federal 17 
income tax for the applicable taxable year validly claiming one or more 18 
dependents. 19 
Sec. 2. Subparagraph (B) of subdivision (20) of subsection (a) of 20 
section 12-701 of the 2022 supplement to the general statutes is repealed 21 
and the following is substituted in lieu thereof (Effective from passage): 22 
(B) There shall be subtracted therefrom: 23 
(i) To the extent properly includable in gross income for federal 24 
income tax purposes, any income with respect to which taxation by any 25 
state is prohibited by federal law; 26 
(ii) To the extent allowable under section 12-718, exempt dividends 27 
paid by a regulated investment company; 28 
(iii) To the extent properly includable in gross income for federal 29 
income tax purposes, the amount of any refund or credit for 30 
overpayment of income taxes imposed by this state, or any other state 31 
of the United States or a political subdivision thereof, or the District of 32 
Columbia; 33 
(iv) To the extent properly includable in gross income for federal 34 
income tax purposes and not otherwise subtracted from federal 35 
adjusted gross income pursuant to clause (x) of this subparagraph in 36 
computing Connecticut adjusted gross income, any tier 1 railroad 37 
retirement benefits; 38 
(v) To the extent any additional allowance for depreciation under 39 
Section 168(k) of the Internal Revenue Code for property placed in 40 
service after September 27, 2017, was added to federal adjusted gross 41 
income pursuant to subparagraph (A)(ix) of this subdivision in 42  Governor's Bill No.  11 
 
 
 
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computing Connecticut adjusted gross income, twenty-five per cent of 43 
such additional allowance for depreciation in each of the four 44 
succeeding taxable years; 45 
(vi) To the extent properly includable in gross income for federal 46 
income tax purposes, any interest income from obligations issued by or 47 
on behalf of the state of Connecticut, any political subdivision thereof, 48 
or public instrumentality, state or local authority, district or similar 49 
public entity created under the laws of the state of Connecticut; 50 
(vii) To the extent properly includable in determining the net gain or 51 
loss from the sale or other disposition of capital assets for federal income 52 
tax purposes, any gain from the sale or exchange of obligations issued 53 
by or on behalf of the state of Connecticut, any political subdivision 54 
thereof, or public instrumentality, state or local authority, district or 55 
similar public entity created under the laws of the state of Connecticut, 56 
in the income year such gain was recognized; 57 
(viii) Any interest on indebtedness incurred or continued to purchase 58 
or carry obligations or securities the interest on which is subject to tax 59 
under this chapter but exempt from federal income tax, to the extent that 60 
such interest on indebtedness is not deductible in determining federal 61 
adjusted gross income and is attributable to a trade or business carried 62 
on by such individual; 63 
(ix) Ordinary and necessary expenses paid or incurred during the 64 
taxable year for the production or collection of income which is subject 65 
to taxation under this chapter but exempt from federal income tax, or 66 
the management, conservation or maintenance of property held for the 67 
production of such income, and the amortizable bond premium for the 68 
taxable year on any bond the interest on which is subject to tax under 69 
this chapter but exempt from federal income tax, to the extent that such 70 
expenses and premiums are not deductible in determining federal 71 
adjusted gross income and are attributable to a trade or business carried 72 
on by such individual; 73 
(x) (I) For taxable years commencing prior to January 1, 2019, for a 74  Governor's Bill No.  11 
 
 
 
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person who files a return under the federal income tax as an unmarried 75 
individual whose federal adjusted gross income for such taxable year is 76 
less than fifty thousand dollars, or as a married individual filing 77 
separately whose federal adjusted gross income for such taxable year is 78 
less than fifty thousand dollars, or for a husband and wife who file a 79 
return under the federal income tax as married individuals filing jointly 80 
whose federal adjusted gross income for such taxable year is less than 81 
sixty thousand dollars or a person who files a return under the federal 82 
income tax as a head of household whose federal adjusted gross income 83 
for such taxable year is less than sixty thousand dollars, an amount 84 
equal to the Social Security benefits includable for federal income tax 85 
purposes; 86 
(II) For taxable years commencing prior to January 1, 2019, for a 87 
person who files a return under the federal income tax as an unmarried 88 
individual whose federal adjusted gross income for such taxable year is 89 
fifty thousand dollars or more, or as a married individual filing 90 
separately whose federal adjusted gross income for such taxable year is 91 
fifty thousand dollars or more, or for a husband and wife who file a 92 
return under the federal income tax as married individuals filing jointly 93 
whose federal adjusted gross income from such taxable year is sixty 94 
thousand dollars or more or for a person who files a return under the 95 
federal income tax as a head of household whose federal adjusted gross 96 
income for such taxable year is sixty thousand dollars or more, an 97 
amount equal to the difference between the amount of Social Security 98 
benefits includable for federal income tax purposes and the lesser of 99 
twenty-five per cent of the Social Security benefits received during the 100 
taxable year, or twenty-five per cent of the excess described in Section 101 
86(b)(1) of the Internal Revenue Code; 102 
(III) For the taxable year commencing January 1, 2019, and each 103 
taxable year thereafter, for a person who files a return under the federal 104 
income tax as an unmarried individual whose federal adjusted gross 105 
income for such taxable year is less than seventy-five thousand dollars, 106 
or as a married individual filing separately whose federal adjusted gross 107 
income for such taxable year is less than seventy-five thousand dollars, 108  Governor's Bill No.  11 
 
 
 
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or for a husband and wife who file a return under the federal income tax 109 
as married individuals filing jointly whose federal adjusted gross 110 
income for such taxable year is less than one hundred thousand dollars 111 
or a person who files a return under the federal income tax as a head of 112 
household whose federal adjusted gross income for such taxable year is 113 
less than one hundred thousand dollars, an amount equal to the Social 114 
Security benefits includable for federal income tax purposes; and 115 
(IV) For the taxable year commencing January 1, 2019, and each 116 
taxable year thereafter, for a person who files a return under the federal 117 
income tax as an unmarried individual whose federal adjusted gross 118 
income for such taxable year is seventy-five thousand dollars or more, 119 
or as a married individual filing separately whose federal adjusted gross 120 
income for such taxable year is seventy-five thousand dollars or more, 121 
or for a husband and wife who file a return under the federal income tax 122 
as married individuals filing jointly whose federal adjusted gross 123 
income from such taxable year is one hundred thousand dollars or more 124 
or for a person who files a return under the federal income tax as a head 125 
of household whose federal adjusted gross income for such taxable year 126 
is one hundred thousand dollars or more, an amount equal to the 127 
difference between the amount of Social Security benefits includable for 128 
federal income tax purposes and the lesser of twenty-five per cent of the 129 
Social Security benefits received during the taxable year, or twenty-five 130 
per cent of the excess described in Section 86(b)(1) of the Internal 131 
Revenue Code; 132 
(xi) To the extent properly includable in gross income for federal 133 
income tax purposes, any amount rebated to a taxpayer pursuant to 134 
section 12-746; 135 
(xii) To the extent properly includable in the gross income for federal 136 
income tax purposes of a designated beneficiary, any distribution to 137 
such beneficiary from any qualified state tuition program, as defined in 138 
Section 529(b) of the Internal Revenue Code, established and 139 
maintained by this state or any official, agency or instrumentality of the 140 
state; 141  Governor's Bill No.  11 
 
 
 
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(xiii) To the extent allowable under section 12-701a, contributions to 142 
accounts established pursuant to any qualified state tuition program, as 143 
defined in Section 529(b) of the Internal Revenue Code, established and 144 
maintained by this state or any official, agency or instrumentality of the 145 
state; 146 
(xiv) To the extent properly includable in gross income for federal 147 
income tax purposes, the amount of any Holocaust victims' settlement 148 
payment received in the taxable year by a Holocaust victim; 149 
(xv) To the extent properly includable in gross income for federal 150 
income tax purposes of an account holder, as defined in section 31-151 
51ww, interest earned on funds deposited in the ind ividual 152 
development account, as defined in section 31-51ww, of such account 153 
holder; 154 
(xvi) To the extent properly includable in the gross income for federal 155 
income tax purposes of a designated beneficiary, as defined in section 156 
3-123aa, interest, dividends or capital gains earned on contributions to 157 
accounts established for the designated beneficiary pursuant to the 158 
Connecticut Homecare Option Program for the Elderly established by 159 
sections 3-123aa to 3-123ff, inclusive; 160 
(xvii) To the extent properly includable in gross income for federal 161 
income tax purposes, any income received from the United States 162 
government as retirement pay for a retired member of (I) the Armed 163 
Forces of the United States, as defined in Section 101 of Title 10 of the 164 
United States Code, or (II) the National Guard, as defined in Section 101 165 
of Title 10 of the United States Code; 166 
(xviii) To the extent properly includable in gross income for federal 167 
income tax purposes for the taxable year, any income from the discharge 168 
of indebtedness in connection with any reacquisition, after December 169 
31, 2008, and before January 1, 2011, of an applicable debt instrument or 170 
instruments, as those terms are defined in Section 108 of the Internal 171 
Revenue Code, as amended by Section 1231 of the American Recovery 172 
and Reinvestment Act of 2009, to the extent any such income was added 173  Governor's Bill No.  11 
 
 
 
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to federal adjusted gross income pursuant to subparagraph (A)(xi) of 174 
this subdivision in computing Connecticut adjusted gross income for a 175 
preceding taxable year; 176 
(xix) To the extent not deductible in determining federal adjusted 177 
gross income, the amount of any contribution to a manufacturing 178 
reinvestment account established pursuant to section 32-9zz in the 179 
taxable year that such contribution is made; 180 
(xx) To the extent properly includable in gross income for federal 181 
income tax purposes, (I) for the taxable year commencing January 1, 182 
2015, ten per cent of the income received from the state teachers' 183 
retirement system, (II) for the taxable years commencing January 1, 184 
2016, to January 1, 2020, inclusive, twenty-five per cent of the income 185 
received from the state teachers' retirement system, and (III) for the 186 
taxable year commencing January 1, 2021, and each taxable year 187 
thereafter, fifty per cent of the income received from the state teachers' 188 
retirement system or, for a taxpayer whose federal adjusted gross 189 
income does not exceed the applicable threshold under clause (xxi) of 190 
this subparagraph, the percentage pursuant to said clause of the income 191 
received from the state teachers' retirement system, whichever 192 
deduction is greater; 193 
(xxi) To the extent properly includable in gross income for federal 194 
income tax purposes, except for retirement benefits under clause (iv) of 195 
this subparagraph and retirement pay under clause (xvii) of this 196 
subparagraph, for a person who files a return under the federal income 197 
tax as an unmarried individual whose federal adjusted gross income for 198 
such taxable year is less than seventy-five thousand dollars, or as a 199 
married individual filing separately whose federal adjusted gross 200 
income for such taxable year is less than seventy-five thousand dollars, 201 
or as a head of household whose federal adjusted gross income for such 202 
taxable year is less than seventy-five thousand dollars, or for a husband 203 
and wife who file a return under the federal income tax as married 204 
individuals filing jointly whose federal adjusted gross income for such 205 
taxable year is less than one hundred thousand dollars, (I) for the taxable 206  Governor's Bill No.  11 
 
 
 
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year commencing January 1, 2019, fourteen per cent of any pension or 207 
annuity income, (II) for the taxable year commencing January 1, 2020, 208 
twenty-eight per cent of any pension or annuity income, (III) for the 209 
taxable year commencing January 1, 2021, forty-two per cent of any 210 
pension or annuity income, and (IV) for the taxable year commencing 211 
January 1, 2022, [fifty-six per cent of any pension or annuity income, (V) 212 
for the taxable year commencing January 1, 2023, seventy per cent of any 213 
pension or annuity income, (VI) for the taxable year commencing 214 
January 1, 2024, eighty-four per cent of any pension or annuity income, 215 
and (VII) for the taxable year commencing January 1, 2025,] and each 216 
taxable year thereafter, one hundred per cent of any pension or annuity 217 
income; 218 
(xxii) The amount of lost wages and medical, travel and housing 219 
expenses, not to exceed ten thousand dollars in the aggregate, incurred 220 
by a taxpayer during the taxable year in connection with the donation 221 
to another person of an organ for organ transplantation occurring on or 222 
after January 1, 2017; 223 
(xxiii) To the extent properly includable in gross income for federal 224 
income tax purposes, the amount of any financial assistance received 225 
from the Crumbling Foundations Assistance Fund or paid to or on 226 
behalf of the owner of a residential building pursuant to sections 8-442 227 
and 8-443; 228 
(xxiv) To the extent properly includable in gross income for federal 229 
income tax purposes, the amount calculated pursuant to subsection (b) 230 
of section 12-704g for income received by a general partner of a venture 231 
capital fund, as defined in 17 CFR 275.203(l)-1, as amended from time to 232 
time; 233 
(xxv) To the extent any portion of a deduction under Section 179 of 234 
the Internal Revenue Code was added to federal adjusted gross income 235 
pursuant to subparagraph (A)(xiv) of this subdivision in computing 236 
Connecticut adjusted gross income, twenty-five per cent of such 237 
disallowed portion of the deduction in each of the four succeeding 238  Governor's Bill No.  11 
 
 
 
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taxable years; [and] 239 
(xxvi) To the extent properly includable in gross income for federal 240 
income tax purposes, for a person who files a return under the federal 241 
income tax as an unmarried individual whose federal adjusted gross 242 
income for such taxable year is less than seventy-five thousand dollars, 243 
or as a married individual filing separately whose federal adjusted gross 244 
income for such taxable year is less than seventy-five thousand dollars, 245 
or as a head of household whose federal adjusted gross income for such 246 
taxable year is less than seventy-five thousand dollars, or for a husband 247 
and wife who file a return under the federal income tax as married 248 
individuals filing jointly whose federal adjusted gross income for such 249 
taxable year is less than one hundred thousand dollars, (I) for the taxable 250 
year commencing January 1, 2023, twenty-five per cent of any 251 
distribution from an individual retirement account other than a Roth 252 
individual retirement account, (II) for the taxable year commencing 253 
January 1, 2024, fifty per cent of any distribution from an individual 254 
retirement account other than a Roth individual retirement account, (III) 255 
for the taxable year commencing January 1, 2025, seventy-five per cent 256 
of any distribution from an individual retirement account other than a 257 
Roth individual retirement account, and (IV) for the taxable year 258 
commencing January 1, 2026, and each taxable year thereafter, any 259 
distribution from an individual retirement account other than a Roth 260 
individual retirement account; and 261 
(xxvii) To the extent properly includable in gross income for federal 262 
income tax purposes, for the taxable year commencing January 1, 2022, 263 
the amount or amounts paid or otherwise credited to any eligible 264 
resident of this state under (I) the 2020 Earned Income Tax Credit 265 
enhancement program from funding allocated to the state through the 266 
Coronavirus Relief Fund established under the Coronavirus Aid, Relief, 267 
and Economic Security Act, P.L. 116-136, and (II) the 2021 Earned 268 
Income Tax Credit enhancement program from funding allocated to the 269 
state pursuant to Section 9901 of Subtitle M of Title IX of the American 270 
Rescue Plan Act of 2021, P.L. 117-2.  271  Governor's Bill No.  11 
 
 
 
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Sec. 3. Section 12-217qq of the general statutes is repealed and the 272 
following is substituted in lieu thereof (Effective from passage and 273 
applicable to calendar and income years commencing on or after January 1, 274 
2022): 275 
(a) As used in this section: 276 
(1) "Authority" means the Connecticut Higher Education 277 
Supplemental Loan Authority; 278 
(2) "Commissioner" means the Commissioner of Revenue Services; 279 
[(2)] (3) "Eligible education loan" means [a loan issued by the 280 
authority to an individual to refinance one or more student loans] an 281 
authority loan, as defined in section 10a-223, that is in repayment;  282 
[(3)] (4) "Full-time" means required to work at least thirty-five hours 283 
per week; 284 
[(4)] (5) "Qualified employee" means an individual who (A) is a 285 
resident of the state, (B) has earned his or her first bachelor's degree from 286 
an institution of higher education in the immediately preceding five-287 
year period, (C) is employed full-time in the state by a qualified 288 
employer, (D) is not an owner, member or partner of such qualified 289 
employer or a family member of an owner, member or partner of such 290 
qualified employer, and (E) has received an eligible education loan; 291 
[(5)] (6) "Qualified employer" means a corporation licensed to operate 292 
a business in the state that is subject to tax under this chapter or chapter 293 
207; and 294 
[(6) "Student loan" means any loan in repayment that was issued by 295 
(A) the authority, or (B) any other private or governmental lender to 296 
finance attendance at an institution of higher education]  297 
(7) "Qualified small business" means a qualified employer that has 298 
gross receipts of not more than five million dollars for the calendar or 299 
income year, as applicable, for which a credit under this section is 300  Governor's Bill No.  11 
 
 
 
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allowed.  301 
(b) (1) For calendar or income years commencing on and after January 302 
1, 2022, each qualified employer that employs a qualified employee and 303 
makes a payment directly to the authority on behalf of such qualified 304 
employee on an eligible education loan [on behalf of such qualified 305 
employee] that was used to finance the qualified employee's attendance 306 
at an institution of higher education may claim a credit against the tax 307 
imposed under this chapter or chapter 207. Such credit shall be granted 308 
in an amount equal to fifty per cent of the amount of payments made to 309 
the outstanding principal balance of such loans by the qualified 310 
employer during the calendar or income year, provided (A) the credit 311 
shall not be allowed against the tax imposed under this chapter and 312 
chapter 207 for the same loan payment, and (B) the amount of credit 313 
allowed for any calendar or income year with respect to a specific 314 
qualified employee shall not exceed two thousand six hundred twenty-315 
five dollars. 316 
(2) A qualified employer may claim the credit under subdivision (1) 317 
of this subsection for a payment made during the part of the calendar or 318 
income year the qualified employee worked and resided in the state, 319 
provided a qualified employee who worked and resided in the state for 320 
any part of a month shall be deemed to have worked and resided in the 321 
state for the entire month for purposes of this section. 322 
(c) A qualified employer that claims the credit under subsection (b) 323 
of this section shall provide any documentation required by the 324 
[Commissioner of Revenue Services] commissioner in a form and 325 
manner prescribed by the commissioner. 326 
(d) (1) A qualified small business may apply to the commissioner in 327 
accordance with the provisions of subdivision (2) of this subsection to 328 
exchange any credit allowed under subsection (b) of this section for a 329 
credit refund equal to the value of the credit. Any amount of credit 330 
refunded under this subsection shall be refunded to the qualified small 331 
business in accordance with the provisions of this chapter or chapter 332  Governor's Bill No.  11 
 
 
 
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207, as applicable. No interest shall be allowed or paid on any amount 333 
of credit refunded under this subsection. Any amount of credit refunded 334 
under this subsection shall be subject to the provisions of section 12-39h. 335 
(2) Each application for a credit refund under this subsection shall be 336 
filed, on such forms and containing such information as prescribed by 337 
the commissioner, on or before the original due date of the return 338 
prescribed under section 12-205 or 12-222, as applicable, for the calendar 339 
or income year for which such credit was earned or, if applicable, the 340 
extended due date of such year's return. No application for a credit 341 
refund under this subsection may be filed after the due date or extended 342 
due date, as the case may be, of such return. 343 
Sec. 4. Section 453 of public act 21-2 of the June special session is 344 
repealed and the following is substituted in lieu thereof (Effective from 345 
passage): 346 
The Comptroller shall transfer to the General Fund from funds 347 
allocated, in accordance with the provisions of special act 21-1, from the 348 
federal funds designated for the state pursuant to the provisions of 349 
Section 604 of Subtitle M of Title IX of the American Rescue Plan Act of 350 
2021, P.L. 117-2, as amended from time to time, [: (1) Five hundred fifty-351 
nine million nine hundred thousand dollars, for the fiscal year ending 352 
June 30, 2022; and (2) one billion one] nine hundred ninety-four million 353 
nine hundred thousand dollars for the fiscal year ending June 30, 2023. 354 
Sec. 5. (Effective from passage) The Comptroller shall reserve eighty-355 
three million two hundred thousand dollars of General Fund revenue 356 
received from the federal government during the fiscal year ending June 357 
30, 2022, pursuant to Section 9817 of the American Rescue Plan Act of 358 
2021, P.L. 117-2, for federal revenue collections during the fiscal year 359 
ending June 30, 2023. 360 
Sec. 6. Section 38a-91aa of the general statutes is repealed and the 361 
following is substituted in lieu thereof (Effective July 1, 2022): 362 
As used in [sections 38a-91aa to 38a-91tt] this section, sections 38a-363  Governor's Bill No.  11 
 
 
 
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91bb to 38a-91uu, inclusive, as amended by this act, and sections 38a-364 
91ww and 38a-91xx: 365 
(1) "Affiliated company" means any company in the same corporate 366 
system as a parent, an industrial insured or a member organization by 367 
virtue of common ownership, control, operation or management. 368 
(2) "Agency captive insurance company" means a captive insurance 369 
company that: 370 
(A) Is owned or directly or indirectly controlled by one or more 371 
insurance agents or insurance producers licensed in accordance with 372 
sections 38a-702a to 38a-702r, inclusive; 373 
(B) Only insures against risks covered by insurance policies sold, 374 
solicited or negotiated through the insurance agents or insurance 375 
producers that own or control such captive insurance company; and 376 
(C) Does not insure against risks covered by any health insurance 377 
policy or plan. 378 
(3) "Alien captive insurance company" means any insurance 379 
company formed to write insurance business for its parent and affiliated 380 
companies and licensed pursuant to the laws of an alien jurisdiction that 381 
imposes statutory or regulatory standards on companies transacting the 382 
business of insurance in such jurisdiction that the commissioner deems 383 
to be acceptable. 384 
(4) "Association" means any legal association of individuals, 385 
corporations, limited liability companies, partnerships, associations or 386 
other entities, [that has been in continuous existence for at least one 387 
year,] where the association itself or some or all of the member 388 
organizations: 389 
(A) Directly or indirectly own, control or hold with power to vote all 390 
of the outstanding voting securities or other voting interests of an 391 
association captive insurance company incorporated as a stock insurer; 392  Governor's Bill No.  11 
 
 
 
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(B) Have complete voting control over an association captive 393 
insurance company incorporated as a mutual corporation or formed as 394 
a limited liability company; or 395 
(C) Constitute all of the subscribers of an association captive 396 
insurance company formed as a reciprocal insurer. 397 
(5) "Association captive insurance company" means any company 398 
that insures risks of the member organizations of an association, and 399 
includes a company that also insures risks of such member 400 
organizations' affiliated companies or of the association. 401 
(6) "Branch business" means any insurance business transacted in this 402 
state by a branch captive insurance company. 403 
(7) "Branch captive insurance company" means any alien captive 404 
insurance company or foreign captive insurance company licensed by 405 
the commissioner to transact the business of insurance in this state 406 
through a business unit with a principal place of business in this state. 407 
(8) "Branch operations" means any business operations in this state of 408 
a branch captive insurance company. 409 
(9) "Captive insurance company" means any (A) pure captive 410 
insurance company, agency captive insurance company, association 411 
captive insurance company, industrial insured captive insurance 412 
company, risk retention group, sponsored captive insurance company 413 
or special purpose financial captive insurance company that is 414 
domiciled in this state and formed or licensed under the provisions of 415 
[sections 38a-91aa] this section and sections 38a-91bb to 38a-91tt, 416 
inclusive, as amended by this act, or (B) branch captive insurance 417 
company. 418 
(10) "Ceding insurer" means an insurance company, approved by the 419 
commissioner and licensed or otherwise authorized to transact the 420 
business of insurance or reinsurance in its state or country of domicile, 421 
that cedes risk to a special purpose financial captive insurance company 422  Governor's Bill No.  11 
 
 
 
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pursuant to a reinsurance contract. 423 
(11) "Commissioner" means the Insurance Commissioner. 424 
(12) "Controlled unaffiliated business" means any person: 425 
(A) Who, (i) in the case of a pure captive insurance company, is not 426 
in the corporate system of a parent and the parent's affiliated companies, 427 
[or] (ii) in the case of an industrial insured captive insurance company, 428 
is not in the corporate system of an industrial insured and the industrial 429 
insured's affiliated companies, or (iii) in the case of a sponsored captive 430 
insurance company, is not in the corporate system of a participant and 431 
the participant's affiliated companies; 432 
(B) Who, (i) in the case of a pure captive insurance company, has an 433 
existing contractual relationship with a parent or one of the parent's 434 
affiliated companies, [or] (ii) in the case of an industrial insured captive 435 
insurance company, has an existing contractual relationship with an 436 
industrial insured or one of the industrial insured's affiliated companies, 437 
or (iii) in the case of a sponsored captive insurance company, has an 438 
existing contractual relationship with a participant or one of the 439 
participant's affiliated companies; and 440 
(C) Whose risks are managed by a pure captive insurance company, 441 
[or] an industrial insured captive insurance company or a sponsored 442 
captive insurance company, as applicable, in accordance with section 443 
38a-91qq, as amended by this act. 444 
(13) "Excess workers' compensation insurance" means, in the case of 445 
an employer that has insured or self-insured its workers' compensation 446 
risks in accordance with applicable state or federal law, insurance in 447 
excess of a specified per-incident or aggregate limit established by the 448 
commissioner. 449 
(14) "Foreign captive insurance company" means any insurance 450 
company formed to write insurance business for its parent and affiliated 451 
companies and licensed pursuant to the laws of a foreign jurisdiction 452  Governor's Bill No.  11 
 
 
 
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that imposes statutory or regulatory standards on companies 453 
transacting the business of insurance in such jurisdiction that the 454 
commissioner deems to be acceptable. 455 
[(14)] (15) "Incorporated protected cell" means a protected cell that is 456 
established as a corporation or a limited liability company, separate 457 
from the sponsored captive insurance company with which it has 458 
entered into a participant contract. 459 
[(15)] (16) "Industrial insured" means an insured: 460 
(A) Who procures the insurance of any risk or risks by use of the 461 
services of a full-time employee acting as an insurance manager or 462 
buyer; 463 
(B) Whose aggregate annual premiums for insurance on all risks total 464 
at least twenty-five thousand dollars; and 465 
(C) Who has at least twenty-five full-time employees. 466 
[(16)] (17) "Industrial insured captive insurance company" means any 467 
company that insures risks of the industrial insureds that comprise an 468 
industrial insured group, and includes a company that also insures risks 469 
of such industrial insureds' affiliated companies. 470 
[(17)] (18) "Industrial insured group" means any group of industrial 471 
insureds that collectively: 472 
(A) Directly or indirectly own, control or hold with power to vote all 473 
of the outstanding voting securities or other voting interests of an 474 
industrial insured captive insurance company incorporated as a stock 475 
insurer; 476 
(B) Have complete voting control over an industrial insured captive 477 
insurance company incorporated as a mutual corporation or formed as 478 
a limited liability company; or 479 
(C) Constitute all of the subscribers of an industrial insured captive 480  Governor's Bill No.  11 
 
 
 
LCO No. 641   	17 of 39 
 
insurance company formed as a reciprocal insurer. 481 
[(18)] (19) "Insurance securitization" or "securitization" means a 482 
transaction or a group of related transactions, which may include capital 483 
market offerings, that are effected through related risk transfer 484 
instruments and facilitating administrative agreements, in which all or 485 
part of the result of such transaction is used to fund a special purpose 486 
financial captive insurance company's obligations under a reinsurance 487 
contract with a ceding insurer and by which: 488 
(A) A special purpose financial captive insurance company directly 489 
or indirectly obtains proceeds through the issuance of securities by such 490 
company or any other person; or 491 
(B) A person provides, for the benefit of a special purpose financial 492 
captive insurance company, one or more letters of credit or other assets 493 
that the commissioner has authorized such company to treat as 494 
admitted assets for purposes of its annual report. "Insurance 495 
securitization" or "securitization" does not include the issuance of a 496 
letter of credit for the benefit of the commissioner to satisfy all or part of 497 
a special purpose financial captive insurance company's capital and 498 
surplus requirements under section 38a-91dd, as amended by this act. 499 
[(19)] (20) "Member organization" means any individual, corporation, 500 
limited liability company, partnership, association or other entity that 501 
belongs to an association. 502 
[(20)] (21) "Mutual corporation" means a corporation organized 503 
without stockholders and includes a nonprofit corporation with 504 
members. 505 
[(21)] (22) "Parent" means any individual, corporation, limited 506 
liability company, partnership or other entity that directly or indirectly 507 
owns, controls or holds with power to vote more than fifty per cent of 508 
the outstanding voting: 509 
(A) Securities of a pure captive insurance company organized as a 510  Governor's Bill No.  11 
 
 
 
LCO No. 641   	18 of 39 
 
stock insurer; or 511 
(B) Membership interests of a pure captive insurance company 512 
organized as a nonprofit corporation or as a limited liability company. 513 
[(22)] (23) "Participant" means any association, corporation, limited 514 
liability company, partnership, trust or other entity, and any affiliated 515 
company or controlled unaffiliated business thereof, that is insured by 516 
a sponsored captive insurance company pursuant to a participant 517 
contract. 518 
[(23)] (24) "Participant contract" means a contract entered into by a 519 
sponsored captive insurance company and a participant by which the 520 
sponsored captive insurance company insures the risks of the 521 
participant and limits the losses of each such participant to its pro rata 522 
share of the assets of one or more protected cells identified in such 523 
participant contract. 524 
[(24)] (25) "Protected cell" means a separate account established by a 525 
sponsored captive insurance company, in which assets are maintained 526 
for one or more participants in accordance with the terms of one or more 527 
participant contracts to fund the liability of the sponsored captive 528 
insurance company assumed on behalf of such participants as set forth 529 
in such participant contracts. 530 
[(25)] (26) "Pure captive insurance company" means any company 531 
that insures risks of its parent and affiliated companies or controlled 532 
unaffiliated business. 533 
[(26)] (27) "Reinsurance contract" means a contract entered into by a 534 
special purpose financial captive insurance company and a ceding 535 
insurer by which the special purpose financial captive insurance 536 
company agrees to provide reinsurance to the ceding insurer for risks 537 
associated with the ceding insurer's insurance or reinsurance business. 538 
[(27)] (28) "Risk retention group" means a captive insurance company 539 
organized under the laws of this state pursuant to the federal Liability 540  Governor's Bill No.  11 
 
 
 
LCO No. 641   	19 of 39 
 
Risk Retention Act of 1986, 15 USC 3901 et seq., as amended from time 541 
to time, as a stock insurer or mutual corporation, a reciprocal or other 542 
limited liability entity.  543 
[(28)] (29) "Security" has the same meaning as provided in section 544 
36b-3 and includes any form of debt obligation, equity, surplus 545 
certificate, surplus note, funding agreement, derivative or other 546 
financial instrument that the commissioner designates as a security for 547 
purposes of [sections 38a-91aa] this section and sections 38a-91bb to 38a-548 
91tt, inclusive, as amended by this act. 549 
[(29)] (30) "Special purpose financial captive insurance company" 550 
means a company that is licensed by the commissioner in accordance 551 
with section 38a-91bb, as amended by this act. 552 
[(30)] (31) "Special purpose financial captive insurance company 553 
security" means a security issued by (A) a special purpose financial 554 
captive insurance company, or (B) a third party, the proceeds of which 555 
are obtained directly or indirectly by a special purpose financial captive 556 
insurance company. 557 
[(31)] (32) "Sponsor" means any association, corporation, limited 558 
liability company, partnership, trust or other entity that is approved by 559 
the commissioner to organize and operate a sponsored captive 560 
insurance company and to provide all or part of the required 561 
unimpaired paid-in capital and surplus. 562 
[(32)] (33) "Sponsored captive insurance company" means a captive 563 
insurance company: 564 
(A) In which the minimum required unimpaired paid-in capital and 565 
surplus are provided by one or more sponsors; 566 
(B) That insures risks of its participants only through separate 567 
participant contracts; and 568 
(C) That funds its liability to each participant through one or more 569 
protected cells and segregates the assets of each protected cell from the 570  Governor's Bill No.  11 
 
 
 
LCO No. 641   	20 of 39 
 
assets of other protected cells and from the assets of the sponsored 571 
captive insurance company's general account. 572 
[(33)] (34) "Surplus note" means an unsecured subordinated debt 573 
obligation possessing characteristics consistent with the National 574 
Association of Insurance Commissioners Statement of Statutory 575 
Accounting Principles No. 41, as amended from time to time, and as 576 
modified or supplemented by the commissioner.  577 
Sec. 7. (Effective July 1, 2022) (a) As used in this section, "alien captive 578 
insurance company", "branch captive insurance company" and "foreign 579 
captive insurance company" have the same meanings as provided in 580 
section 38a-91aa of the general statutes, as amended by this act. 581 
(b) The Commissioner of Revenue Services shall waive any and all 582 
penalties that would otherwise be due under section 38a-277 of the 583 
general statutes for any taxable period beginning on or after July 1, 2019, 584 
and ending prior to July 1, 2022, if, not later than June 30, 2023, the 585 
insured: 586 
(1) Establishes a branch captive insurance company in this state or 587 
transfers the domicile of its alien captive insurance company or foreign 588 
captive insurance company to this state in accordance with the 589 
provisions of section 38a-58a of the general statutes; and 590 
(2) Pays all taxes and interest due and outstanding under section 38a-591 
277 of the general statutes for all taxable periods ending on or after July 592 
1, 2019, but prior to July 1, 2022. 593 
(c) Any insured that satisfies the provisions of subsection (b) of this 594 
section shall not be liable for any taxes, interest and penalties that would 595 
otherwise be due under section 38a-277 of the general statutes for any 596 
taxable period ending prior to July 1, 2019. 597 
Sec. 8. Section 38a-91bb of the general statutes is repealed and the 598 
following is substituted in lieu thereof (Effective July 1, 2022): 599 
(a) Any captive insurance company, when permitted by its articles of 600  Governor's Bill No.  11 
 
 
 
LCO No. 641   	21 of 39 
 
association, charter or other organizational document, may apply to the 601 
[Insurance Commissioner] commissioner for a license to do the business 602 
of insurance against any kind of loss, damage or liability properly a 603 
subject of insurance, if such insurance is not prohibited by law or [is not] 604 
disapproved by the commissioner as being contrary to public policy, 605 
including life insurance, annuities, health insurance, as defined in 606 
section 38a-469, and commercial risk insurance, as defined in section 607 
38a-663, provided: 608 
(1) No pure captive insurance company may insure any risks other 609 
than those of its parent and affiliated companies or controlled 610 
unaffiliated business; 611 
(2) No association captive insurance company may insure any risks 612 
other than those of its association, the member organizations of its 613 
association, and the member organizations' affiliated companies; 614 
(3) No industrial insured captive insurance company may insure any 615 
risks other than those of (A) the industrial insureds that comprise the 616 
industrial insured group, (B) the industrial insureds' affiliated 617 
companies, or (C) the industrial insureds' controlled unaffiliated 618 
businesses; 619 
(4) No risk retention group may insure any risks other than those of 620 
its members and owners; 621 
(5) No captive insurance company may provide personal risk 622 
insurance, as defined in section 38a-663, for private passenger motor 623 
vehicle or homeowners insurance coverage or any component thereof; 624 
(6) No captive insurance company may accept or cede reinsurance 625 
except as provided in section 38a-91kk, as amended by this act; 626 
(7) Any captive insurance company may provide excess workers' 627 
compensation insurance to its parent and affiliated companies, unless 628 
prohibited by the laws of the state having jurisdiction over the 629 
transaction or by federal law. Any captive insurance company may 630  Governor's Bill No.  11 
 
 
 
LCO No. 641   	22 of 39 
 
reinsure a workers' compensation qualified self-insured plan of its 631 
parent and affiliated companies, unless prohibited by federal law; 632 
(8) Any captive insurance company that provides life insurance, 633 
annuities or health insurance shall comply with all applicable state and 634 
federal laws. 635 
(b) No captive insurance company shall do any insurance business in 636 
this state unless: 637 
(1) [It] The captive insurance company first obtains from the 638 
[Insurance Commissioner] commissioner a license authorizing [it] the 639 
captive insurance company to do insurance business in this state; 640 
(2) [Its] The captive insurance company's board of directors or 641 
committee of managers or, in the case of a reciprocal insurer, its 642 
subscribers' advisory committee holds at least one meeting each year in 643 
this state; 644 
(3) [It] The captive insurance company maintains its principal place 645 
of business in this state; and 646 
(4) [It] The captive insurance company appoints a registered agent to 647 
accept service of process and to otherwise act on its behalf in this state. 648 
Whenever such registered agent cannot with reasonable diligence be 649 
found at the registered office of the captive insurance company, the 650 
[Insurance Commissioner] commissioner shall be an agent of [such] the 651 
captive insurance company upon whom any process, notice or demand 652 
may be served. 653 
(c) (1) To be considered for a license, a captive insurance company 654 
shall: 655 
(A) File with the commissioner a certified copy of its organizational 656 
documents, a statement under oath of its president and secretary 657 
showing its financial condition, and any other statements or documents 658 
required by the commissioner; and 659  Governor's Bill No.  11 
 
 
 
LCO No. 641   	23 of 39 
 
(B) Submit to the commissioner for approval a description of the 660 
coverages, deductibles, coverage limits and rates and such additional 661 
information as the commissioner may require. In the event of any 662 
subsequent material change in any item in such description, the captive 663 
insurance company shall submit to the commissioner for approval an 664 
appropriate revision and shall not offer any additional kinds of 665 
insurance until a revision of such description is approved by the 666 
commissioner. The captive insurance company shall inform the 667 
commissioner of any material change in rates not later than thirty days 668 
after the adoption of such change. 669 
(2) Each applicant captive insurance company shall also file with the 670 
commissioner evidence of the following: 671 
(A) The amount and liquidity of the company's assets relative to the 672 
risks to be assumed; 673 
(B) The adequacy of the expertise, experience and character of the 674 
persons who will manage the company; 675 
(C) The overall soundness of the company's plan of operation; 676 
(D) The adequacy of the loss prevention programs of the company's 677 
insureds; and 678 
(E) Such other factors deemed relevant by the commissioner in 679 
ascertaining whether the proposed captive insurance company will be 680 
able to meet its policy obligations. 681 
(3) Each applicant sponsored captive insurance company shall also 682 
file with the commissioner: 683 
(A) Materials demonstrating how the applicant will account for the 684 
loss and expense experience of each protected cell at a level of detail 685 
deemed sufficient by the commissioner, and how [it] such applicant will 686 
report such experience to the commissioner; 687 
(B) A statement acknowledging that all financial records of the 688  Governor's Bill No.  11 
 
 
 
LCO No. 641   	24 of 39 
 
sponsored captive insurance company, including records pertaining to 689 
any protected cells, shall be made available for examination or 690 
inspection or by the commissioner or the commissioner's designee; 691 
(C) All contracts or sample contracts between the sponsored captive 692 
insurance company and any participants; and 693 
(D) Evidence that expenses shall be allocated to each protected cell in 694 
a fair and equitable manner. 695 
(4) Each applicant special purpose financial captive insurance 696 
company shall also: 697 
(A) Include with its plan of operation: 698 
(i) A complete description of all significant transactions, including 699 
reinsurance, reinsurance security arrangements, securitizations, related 700 
transactions or arrangements, and to the extent not included in the 701 
transactions listed in this clause, a complete description of all parties 702 
other than the special purpose financial captive insurance company and 703 
the ceding insurer that will be involved in the issuance of special 704 
purpose financial captive insurance company securities and a 705 
description of any pledge, hypothecation or grant of a security interest 706 
in any of the special purpose financial captive insurance company's 707 
assets and in any stock or limited liability company interest in the 708 
special purpose financial captive insurance company; 709 
(ii) The source and form of the special purpose financial captive 710 
insurance company's capital and surplus; 711 
(iii) The proposed investment policy of the special purpose financial 712 
captive insurance company; 713 
(iv) A description of the underwriting, reporting and claims payment 714 
methods by which losses covered by the reinsurance contract will be 715 
reported, accounted for and settled; 716 
(v) Pro forma balance sheets and income statements illustrating one 717  Governor's Bill No.  11 
 
 
 
LCO No. 641   	25 of 39 
 
or more adverse case scenarios, as determined under criteria required 718 
by the commissioner, for the performance of the special purpose 719 
financial captive insurance company under all reinsurance contracts; 720 
and 721 
(vi) The proposed rate and method for discounting reserves, if the 722 
special purpose financial captive insurance company is requesting 723 
authority to discount its reserves; 724 
(B) Submit an affidavit of its president, a vice president, its treasurer 725 
or its chief financial officer that includes the following statements, that 726 
to the best of such person's knowledge and belief after reasonable 727 
inquiry: 728 
(i) The proposed organization and operation of the special purpose 729 
financial captive insurance company comply with all applicable 730 
provisions of this chapter; 731 
(ii) The special purpose financial captive insurance company's 732 
investment policy reflects and takes into account the liquidity of assets 733 
and the reasonable preservation, administration and management of 734 
such assets with respect to the risks associated with the reinsurance 735 
contract and the insurance securitization transaction. With respect to a 736 
special purpose financial captive insurance company, "management" 737 
means the board of directors, managing board or other individual or 738 
individuals vested with overall responsibility for the management of the 739 
affairs of such company, including, but not limited to, officers or other 740 
agents elected or appointed to act on behalf of such company; and 741 
(iii) The reinsurance contract and any arrangement for securing the 742 
special purpose financial captive insurance company's obligations 743 
under such reinsurance contract, including, but not limited to, any 744 
agreements or other documentation to implement such arrangement, 745 
comply with the provisions of this chapter; and 746 
(C) Include with its application: 747  Governor's Bill No.  11 
 
 
 
LCO No. 641   	26 of 39 
 
(i) Copies of all agreements and documentation described in 748 
subparagraph (A) of this subdivision unless otherwise approved by the 749 
commissioner, and any other statements or documents required by the 750 
commissioner to evaluate the special purpose financial captive 751 
insurance company's application for licensure; and 752 
(ii) An opinion of qualified legal counsel, in a form acceptable to the 753 
commissioner, that the offer and sale of any special purpose financial 754 
captive insurance company securities complies with all applicable 755 
registration requirements or applicable exemptions from or exceptions 756 
to such requirements of the federal securities laws and that the offer and 757 
sale of securities by the special purpose financial captive insurance 758 
company itself comply with all registration requirements or applicable 759 
exemptions from or exceptions to such requirements of the securities 760 
laws of this state. Such opinion shall not be required as part of the 761 
application if the special purpose financial captive insurance company 762 
includes a specific statement in its plan of operation that such opinions 763 
will be provided to the commissioner in advance of the offer or sale of 764 
any special purpose financial captive insurance company securities. 765 
(5) A sponsored captive insurance company may apply to be licensed 766 
as a special purpose financial captive insurance company. Such 767 
company shall be subject to the provisions of sections 38a-91aa to 38a-768 
91tt, inclusive, as amended by this act, applicable to a sponsored captive 769 
insurance company and to a special purpose financial captive insurance 770 
company. In the event of conflict between such provisions applicable to 771 
a sponsored captive insurance company and to a special purpose 772 
financial captive insurance company, the provisions applicable to a 773 
special purpose financial captive insurance company shall control. 774 
(6) Information submitted pursuant to this subsection shall be and 775 
shall remain confidential and shall not be made public by the 776 
commissioner or an employee or agent of the commissioner without the 777 
written consent of the company, except that: 778 
(A) Such information may be discoverable by a party in a civil action 779  Governor's Bill No.  11 
 
 
 
LCO No. 641   	27 of 39 
 
or contested case to which the captive insurance company that 780 
submitted such information is a party upon a showing by the party 781 
seeking to discover such information that: 782 
(i) The information sought is relevant to and necessary for the 783 
furtherance of such action or case; 784 
(ii) The information sought is unavailable from other nonconfidential 785 
sources; and 786 
(iii) A subpoena issued by a judicial or administrative officer of 787 
competent jurisdiction has been submitted to the commissioner, 788 
provided such submission requirement shall not apply to a risk 789 
retention group; and 790 
(B) The commissioner may, in the commissioner's discretion, disclose 791 
such information to a public official having jurisdiction over the 792 
regulation of insurance in another state, provided: 793 
(i) Such public official agrees, in writing, to maintain the 794 
confidentiality of such information; and 795 
(ii) The laws of the state in which such public official serves require 796 
such information to be and [to] remain confidential. 797 
(d) (1) Each captive insurance company shall pay to the commissioner 798 
a nonrefundable fee of eight hundred dollars for examining, 799 
investigating and processing its application for a license. The 800 
commissioner may retain legal, financial and examination services from 801 
outside the department for the licensing and financial oversight of a 802 
captive insurance company, the reasonable cost of which may be 803 
charged against such company. The provisions of subdivisions (2) to (5), 804 
inclusive, of subsection (k) of section 38a-14 shall apply to this 805 
subdivision. 806 
(2) Each captive insurance company shall pay a license fee for the first 807 
year of licensure and a renewal fee for each year thereafter as set forth 808 
in section 38a-11. 809  Governor's Bill No.  11 
 
 
 
LCO No. 641   	28 of 39 
 
(e) (1) If the commissioner finds that the documents and statements 810 
that a captive insurance company, other than a special purpose financial 811 
captive insurance company, has filed comply with the provisions of 812 
sections 38a-91aa to 38a-91tt, inclusive, as amended by this act, the 813 
commissioner may grant a license authorizing the company to do 814 
insurance business in this state until April first thereafter. The captive 815 
insurance company may apply to renew such license on such forms as 816 
the commissioner prescribes. 817 
(2) (A) The commissioner may grant a license authorizing a special 818 
purpose financial captive insurance company to do reinsurance 819 
business in this state until April first thereafter upon the commissioner's 820 
finding that (i) the proposed plan of operation provides for a reasonable 821 
and expected successful operation, (ii) the terms of the reinsurance 822 
contract and related transactions comply with sections 38a-91aa to 38a-823 
91tt, inclusive, as amended by this act, (iii) the proposed plan of 824 
operation is not hazardous to any ceding insurer, and (iv) the insurance 825 
regulator of the state of domicile of each ceding insurer has notified the 826 
commissioner in writing or has otherwise provided assurance 827 
satisfactory to the commissioner that such regulator has approved or 828 
has not disapproved the transaction, provided the commissioner shall 829 
not be precluded from issuing a license to a special purpose financial 830 
captive insurance company if such regulator has not responded with 831 
respect to all or any part of the transaction. 832 
(B) In conjunction with granting such license, the commissioner may 833 
issue an order to the special purpose financial captive insurance 834 
company of any additional provisions, terms or conditions regarding 835 
the organization, licensing or operation of such company that are not 836 
inconsistent with the provisions of this chapter and are deemed 837 
appropriate by the commissioner. 838 
(3) The commissioner shall not grant a license to a branch captive 839 
insurance company unless the alien captive insurance company or 840 
foreign captive insurance company grants the commissioner authority 841 
to examine the alien captive insurance company or foreign captive 842  Governor's Bill No.  11 
 
 
 
LCO No. 641   	29 of 39 
 
insurance company in the jurisdiction in which the alien captive 843 
insurance company or foreign captive insurance company is formed, 844 
operates or maintains books and records. 845 
Sec. 9. Section 38a-91dd of the general statutes is repealed and the 846 
following is substituted in lieu thereof (Effective July 1, 2022): 847 
(a) (1) [The Insurance Commissioner] Except as provided in 848 
subdivision (3) of this subsection, the commissioner shall not issue a 849 
license to a captive insurance company or allow the company to retain 850 
such license unless the company has and maintains unimpaired paid-in 851 
capital and surplus of:  852 
(A) In the case of a pure captive insurance company, not less than 853 
[two hundred fifty thousand dollars;] the greater of: 854 
(i) Fifty thousand dollars; or 855 
(ii) An amount that the commissioner determines is necessary for the 856 
pure captive insurance company to meet such pure captive insurance 857 
company's policy obligations; 858 
(B) In the case of an association captive insurance company, not less 859 
than [five hundred thousand dollars;] the greater of: 860 
(i) Two hundred fifty thousand dollars; or 861 
(ii) An amount that the commissioner determines is necessary for the 862 
association captive insurance company to meet such association captive 863 
insurance company's policy obligations; 864 
(C) In the case of an industrial insured captive insurance company, 865 
not less than [five hundred thousand dollars;] the greater of: 866 
(i) Two hundred fifty thousand dollars; or 867 
(ii) An amount that the commissioner determines is necessary for the 868 
industrial insured captive insurance company to meet such industrial 869 
insured captive insurance company's policy obligations; 870  Governor's Bill No.  11 
 
 
 
LCO No. 641   	30 of 39 
 
(D) In the case of a risk retention group, not less than one million 871 
dollars; 872 
(E) In the case of a sponsored captive insurance company, not less 873 
than [two hundred twenty-five thousand dollars;] the greater of: 874 
(i) Seventy-five thousand dollars; or 875 
(ii) An amount that the commissioner determines is necessary for the 876 
sponsored captive insurance company to meet such sponsored captive 877 
insurance company's policy obligations; 878 
(F) In the case of a special purpose financial captive insurance 879 
company, not less than [two hundred fifty thousand dollars;] the greater 880 
of: 881 
(i) Two hundred fifty thousand dollars; or  882 
(ii) An amount that the commissioner determines is necessary for the 883 
special purpose financial captive insurance company to meet such 884 
special purpose financial captive insurance company's policy 885 
obligations; 886 
(G) In the case of a sponsored captive insurance company licensed as 887 
a special purpose financial captive insurance company, not less than 888 
[five hundred thousand dollars;] the greater of: 889 
(i) Two hundred fifty thousand dollars; or 890 
(ii) An amount that the commissioner determines is necessary for 891 
such captive insurance company to meet such captive insurance 892 
company's policy obligations; and 893 
(H) In the case of an agency captive insurance company, not less than 894 
[five hundred thousand dollars] the greater of: 895 
(i) Two hundred fifty thousand dollars; or 896 
(ii) An amount that the commissioner determines is necessary for the 897  Governor's Bill No.  11 
 
 
 
LCO No. 641   	31 of 39 
 
agency captive insurance company to meet such agency captive 898 
insurance company's policy obligations. 899 
(2) (A) The [Insurance Commissioner] commissioner shall not issue a 900 
license to a branch captive insurance company or allow the branch 901 
captive insurance company to retain such license unless the branch 902 
captive insurance company has and maintains, as security for the 903 
payment of liabilities attributable to the branch operations: 904 
(i) Not less than [two hundred fifty thousand dollars;] the greater of: 905 
(I) Fifty thousand dollars; or 906 
(II) An amount that the commissioner determines is necessary to 907 
secure the payment of liabilities attributable to the branch captive 908 
insurance company's operations; and 909 
(ii) Reserves on such insurance policies or such reinsurance contracts 910 
as may be issued or assumed by the branch captive insurance company 911 
through its branch operations, including reserves for losses, allocated 912 
loss adjustment expenses, incurred but not reported losses and 913 
unearned premiums with regard to business written through the branch 914 
operations. The commissioner may permit a branch captive insurance 915 
company to credit against any such reserves any [security for loss 916 
reserves that the branch captive insurance company posts with a ceding 917 
insurer or is posted by a reinsurer with the branch captive insurance 918 
company, so long as such security remains posted] assets belonging to: 919 
(I) The branch captive insurance company that are held in trust for, 920 
or otherwise segregated or controlled by, a ceding insurer, that secure 921 
the branch captive insurance company's reinsurance obligations to the 922 
ceding insurer; or 923 
(II) A reinsurer that are held in trust for, or otherwise under the 924 
control of, the branch captive insurance company, that secure the 925 
reinsurer's reinsurance obligations to the branch captive insurance 926 
company. 927  Governor's Bill No.  11 
 
 
 
LCO No. 641   	32 of 39 
 
(B) The amounts required under subparagraph (A) of this 928 
subdivision may be held, with the prior approval of the commissioner, 929 
in the form of: 930 
(i) [a] A trust formed under a trust agreement and funded by assets 931 
acceptable to the commissioner; [,]  932 
(ii) [an] An irrevocable letter of credit issued or confirmed by a bank 933 
approved by the commissioner; [,] 934 
(iii) [with] With respect to the amount required under subparagraph 935 
(A)(i) of this subdivision only, cash on deposit with the commissioner; 936 
[,] or  937 
(iv) [any] Any combination [thereof] of the forms described in 938 
subparagraphs (B)(i) to (B)(iii), inclusive, of this subdivision. 939 
(3) The commissioner may exempt a branch captive insurance 940 
company from the provisions of subdivisions (1) and (2) of this 941 
subsection if the branch captive insurance company is a foreign captive 942 
insurance company and the commissioner, in the commissioner's 943 
discretion, determines that the branch captive insurance company is 944 
financially stable. 945 
[(b) The commissioner may adopt regulations, in accordance with 946 
chapter 54, to establish additional capital and surplus requirements 947 
based upon the type, volume and nature of insurance business 948 
transacted.] 949 
[(c)] (b) Notwithstanding any other provision of this section, the 950 
commissioner shall have the discretion to allow a captive insurance 951 
company, other than a captive insurance company organized as a risk 952 
retention group, to maintain less than the required unimpaired paid-in 953 
capital and surplus set forth in subsection (a) of this section. The 954 
commissioner shall consider the type, volume and nature of the 955 
insurance or reinsurance business transacted by such a captive 956 
insurance company in establishing the amount of unimpaired paid-in 957  Governor's Bill No.  11 
 
 
 
LCO No. 641   	33 of 39 
 
capital and surplus the company is required to maintain. 958 
[(d)] (c) Except as specified in subdivision (2) of subsection (a) of this 959 
section, capital and surplus may be in the form of cash or an irrevocable 960 
letter of credit issued by a bank approved by the commissioner. 961 
(d) The commissioner may adopt regulations, in accordance with 962 
chapter 54, to establish additional capital and surplus requirements 963 
based upon the type, volume and nature of insurance business 964 
transacted. 965 
Sec. 10. Subsection (h) of section 38a-91ff of the general statutes is 966 
repealed and the following is substituted in lieu thereof (Effective July 1, 967 
2022): 968 
(h) In the case of a captive insurance company licensed as a branch 969 
captive insurance company, the alien captive insurance company or 970 
foreign captive insurance company shall petition the commissioner to 971 
issue a certificate setting forth the commissioner's finding that, after 972 
considering the character, reputation, financial responsibility, insurance 973 
experience, and business qualifications of the officers and directors of 974 
the alien captive insurance company or foreign captive insurance 975 
company, the licensing and maintenance of the branch operations will 976 
promote the general good of the state. The alien captive insurance 977 
company or foreign captive insurance company may register to do 978 
business in this state after the commissioner's certificate is issued. 979 
Sec. 11. Subdivision (1) of subsection (b) of section 38a-91gg of the 980 
general statutes is repealed and the following is substituted in lieu 981 
thereof (Effective July 1, 2022): 982 
(b) (1) (A) [Prior] Except as provided in subparagraph (B) of this 983 
subdivision, prior to March first of each year and, in the case of pure 984 
captive insurance companies and industrial insured captive insurance 985 
companies, prior to March fifteenth of each year, each captive insurance 986 
company [other than a branch captive insurance company shall submit 987 
to the Insurance Commissioner] shall file with the commissioner a 988  Governor's Bill No.  11 
 
 
 
LCO No. 641   	34 of 39 
 
report of [its] the captive insurance company's financial condition 989 
verified by oath of two [of its] executive officers of the captive insurance 990 
company. The commissioner shall establish the form and content of the 991 
annual report to be filed by special purpose captive insurance 992 
companies. 993 
(B) [In the case of branch captive insurance companies, prior to March 994 
first of each year, each such] Each branch captive insurance company 995 
shall [submit to] file with the commissioner a copy of all reports and 996 
statements required to be filed under the laws of the jurisdiction in 997 
which the alien captive insurance company or foreign captive insurance 998 
company is formed. Such reports and statements shall be verified by 999 
oath of two [of its] executive officers of the branch captive insurance 1000 
company and filed with the commissioner on the same day that such 1001 
reports and statements must be filed in the domiciliary jurisdiction of 1002 
the alien captive insurance company or foreign captive insurance 1003 
company. If the commissioner is satisfied that the annual report filed by 1004 
the alien captive insurance company or foreign captive insurance 1005 
company in [its] the domiciliary jurisdiction of the alien captive 1006 
insurance company or foreign captive insurance company provides 1007 
adequate information concerning the financial condition of the alien 1008 
captive insurance company or foreign captive insurance company, the 1009 
commissioner may waive the requirement for completion of the [captive 1010 
annual statement for business written in the alien jurisdiction] annual 1011 
report required under subparagraph (A) of this subdivision. If the 1012 
commissioner is not satisfied with such reports and statements, or if the 1013 
branch captive insurance company is not required to file such reports 1014 
and statements in the domiciliary jurisdiction of the alien captive 1015 
insurance company or foreign captive insurance company, the branch 1016 
captive insurance company shall file a report, at a time and in a form 1017 
and manner prescribed by the commissioner, that provides the 1018 
commissioner with adequate information concerning the financial 1019 
condition of the alien captive insurance company or foreign captive 1020 
insurance company. 1021 
Sec. 12. Subsection (a) of section 38a-91hh of the general statutes is 1022  Governor's Bill No.  11 
 
 
 
LCO No. 641   	35 of 39 
 
repealed and the following is substituted in lieu thereof (Effective July 1, 1023 
2022): 1024 
(a) (1) [At least once every three years, and additionally whenever the 1025 
Insurance Commissioner] Except as provided in subdivision (3) of this 1026 
subsection, the commissioner or the commissioner's designee shall, 1027 
whenever the commissioner determines it to be prudent [, the 1028 
commissioner or the commissioner's designee shall visit each captive 1029 
insurance company and thoroughly] but not less frequently than once 1030 
every five years, inspect and examine [its] each captive insurance 1031 
company's affairs to ascertain [its] the captive insurance company's 1032 
financial condition, [its] the captive insurance company's ability to fulfill 1033 
its obligations and whether [it] the captive insurance company has 1034 
complied with the provisions of sections 38a-91aa to 38a-91tt, inclusive, 1035 
as amended by this act, and any other applicable provisions of this title. 1036 
[The commissioner may extend the three-year period to five years, 1037 
provided a captive insurance company is subject to a comprehensive 1038 
annual audit during such period by independent auditors approved by 1039 
the commissioner and of a scope satisfactory to the commissioner.] 1040 
(2) The examination of a branch captive insurance company pursuant 1041 
to this section shall be of branch business and branch operations only, 1042 
as long as the branch captive insurance company provides annually to 1043 
the commissioner a certificate of compliance or its equivalent, issued by 1044 
or filed with the licensing authority of the jurisdiction in which the 1045 
branch captive insurance company is formed, and demonstrates to the 1046 
commissioner's satisfaction that [it] such branch captive insurance 1047 
company is operating in sound financial condition in accordance with 1048 
all applicable laws and regulations of such jurisdiction. 1049 
(3) The commissioner may waive the requirement that the 1050 
commissioner or the commissioner's designee inspect and examine a 1051 
captive insurance company's affairs pursuant to this subsection if the 1052 
captive insurance company is a pure captive insurance company or a 1053 
branch captive insurance company of the pure captive insurance 1054 
company. 1055  Governor's Bill No.  11 
 
 
 
LCO No. 641   	36 of 39 
 
Sec. 13. Subdivision (1) of subsection (a) of section 38a-91ii of the 1056 
general statutes is repealed and the following is substituted in lieu 1057 
thereof (Effective July 1, 2022): 1058 
(a) (1) The commissioner may, at any time, for cause, suspend, revoke 1059 
or refuse to renew any license of a captive insurance company, or in lieu 1060 
of or in addition to suspension or revocation of such license, the 1061 
commissioner, after reasonable notice to and hearing of any holder of 1062 
such license, may impose a fine not to exceed ten thousand dollars. Such 1063 
hearings may be held by the commissioner or any person designated by 1064 
the commissioner. For purposes of this subsection, cause for such 1065 
administrative action shall include, but not be limited to, the following 1066 
reasons: (A) Insolvency or impairment of capital or surplus; (B) failure 1067 
to meet the requirements of section 38a-91dd, as amended by this act; 1068 
(C) refusal or failure to [submit] file an annual report, as required by 1069 
section 38a-91gg, as amended by this act, or any other report or 1070 
statement required by law or by lawful order of the commissioner; (D) 1071 
failure to comply with the provisions of its own charter, bylaws or other 1072 
organizational document; (E) failure to submit to or pay the cost of 1073 
examination or any legal obligation relative thereto; (F) use of methods 1074 
that, although not otherwise specifically prohibited by law, nevertheless 1075 
render its operation detrimental or its condition unsound with respect 1076 
to the public or to its policyholders; or (G) failure otherwise to comply 1077 
with the laws of this state. 1078 
Sec. 14. Subsection (a) of section 38a-91kk of the general statutes is 1079 
repealed and the following is substituted in lieu thereof (Effective July 1, 1080 
2022): 1081 
(a) Any captive insurance company may assume reinsurance from 1082 
any other insurer. [only on risks that such company is authorized to 1083 
write directly.]  1084 
Sec. 15. Section 38a-91qq of the general statutes is repealed and the 1085 
following is substituted in lieu thereof (Effective July 1, 2022): 1086 
The [Insurance Commissioner] commissioner may adopt regulations, 1087  Governor's Bill No.  11 
 
 
 
LCO No. 641   	37 of 39 
 
in accordance with chapter 54, as are necessary to carry out the 1088 
provisions of sections 38a-91aa to [38a-91tt] 38a-91uu, inclusive, as 1089 
amended by this act, and sections 38a-91ww and 38a-91xx and to 1090 
establish standards to ensure that a parent or affiliated company is able 1091 
to exercise control of the risk management function of any controlled 1092 
unaffiliated business to be insured by a pure captive insurance 1093 
company, an industrial insured captive insurance company or a 1094 
sponsored captive insurance company, except that until such 1095 
regulations are approved, the commissioner may approve the coverage 1096 
of such risks by a pure captive insurance company, an industrial insured 1097 
captive insurance company or a sponsored captive insurance company. 1098 
Sec. 16. Subparagraph (A) of subdivision (2) of subsection (g) of 1099 
section 38a-91ss of the general statutes is repealed and the following is 1100 
substituted in lieu thereof (Effective July 1, 2022): 1101 
(A) Proceeds from a special purpose financial captive insurance 1102 
company securitization or letters of credit or other assets described in 1103 
subdivision [(18)] (19) of section 38a-91aa, as amended by this act; 1104 
Sec. 17. Subsections (b) and (c) of section 38a-91uu of the general 1105 
statutes are repealed and the following is substituted in lieu thereof 1106 
(Effective July 1, 2022): 1107 
(b) A dormant captive insurance company that is domiciled in this 1108 
state may apply to the Insurance Commissioner for a certificate of 1109 
dormancy. The certificate of dormancy shall be subject to renewal once 1110 
every [two] five years, and shall be forfeited if the dormant captive 1111 
insurance company commences transacting insurance business or fails 1112 
to timely renew such certificate. 1113 
(c) A dormant captive insurance company that has been issued a 1114 
certificate of dormancy shall: 1115 
(1) Possess and maintain unimpaired, paid-in capital and surplus of 1116 
not less than [twenty-five] fifteen thousand dollars, provided such 1117 
dormant captive insurance company shall not be required to add capital 1118  Governor's Bill No.  11 
 
 
 
LCO No. 641   	38 of 39 
 
upon entering dormancy if such dormant captive insurance company 1119 
was never capitalized; 1120 
(2) Not later than March [15, 2018] fifteenth, annually, submit to the 1121 
commissioner a report on the financial condition of such company, 1122 
verified by oath of two executive officers of such company, in such form 1123 
as the commissioner prescribes; and 1124 
(3) Pay the license renewal fee specified in section 38a-11 for a captive 1125 
insurance company. 1126 
Sec. 18. Section 431 of public act 21-2 of the June special session is 1127 
repealed. (Effective from passage) 1128 
This act shall take effect as follows and shall amend the following 
sections: 
 
Section 1 from passage 12-704c(b) 
Sec. 2 from passage 12-701(a)(20)(B) 
Sec. 3 from passage and 
applicable to calendar and 
income years commencing 
on or after January 1, 2022 
12-217qq 
Sec. 4 from passage PA 21-2 of the June Sp. 
Sess., Sec. 453 
Sec. 5 from passage New section 
Sec. 6 July 1, 2022 38a-91aa 
Sec. 7 July 1, 2022 New section 
Sec. 8 July 1, 2022 38a-91bb 
Sec. 9 July 1, 2022 38a-91dd 
Sec. 10 July 1, 2022 38a-91ff(h) 
Sec. 11 July 1, 2022 38a-91gg(b)(1) 
Sec. 12 July 1, 2022 38a-91hh(a) 
Sec. 13 July 1, 2022 38a-91ii(a)(1) 
Sec. 14 July 1, 2022 38a-91kk(a) 
Sec. 15 July 1, 2022 38a-91qq 
Sec. 16 July 1, 2022 38a-91ss(g)(2)(A) 
Sec. 17 July 1, 2022 38a-91uu(b) and (c) 
Sec. 18 from passage Repealer section 
  Governor's Bill No.  11 
 
 
 
LCO No. 641   	39 of 39 
 
Statement of Purpose:   
To implement the Governor's budget recommendations. 
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except 
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not 
underlined.]