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General Assembly Substitute Bill No. 11
February Session, 2022
AN ACT MAKING ADJUSTMENTS TO STATE REVENUE AND
CONCERNING CAPTIVE INSURANCE COMPANIES.
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the general statutes is repealed and the following is substituted in lieu 2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
(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 Substitute Bill No. 11
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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section 12-701 of the 2022 supplement to the general statutes is repealed 21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
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 Substitute Bill No. 11
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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
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 Substitute Bill No. 11
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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
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 Substitute Bill No. 11
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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
(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 Substitute Bill No. 11
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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 individual 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
to federal adjusted gross income pursuant to subparagraph (A)(xi) of 174
this subdivision in computing Connecticut adjusted gross income for a 175 Substitute Bill No. 11
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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
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 Substitute Bill No. 11
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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
taxable years; [and] 239 Substitute Bill No. 11
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(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
Sec. 3. Section 12-217qq of the general statutes is repealed and the 272 Substitute Bill No. 11
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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
allowed. 301 Substitute Bill No. 11
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(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
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 Substitute Bill No. 11
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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 hundred ninety-four] nine hundred 353
forty-four million nine hundred thousand dollars for the fiscal year 354
ending June 30, 2023. 355
Sec. 5. (Effective from passage) The Comptroller shall reserve eighty-356
three million two hundred thousand dollars of General Fund revenue 357
received from the federal government during the fiscal year ending June 358
30, 2022, pursuant to Section 9817 of the American Rescue Plan Act of 359
2021, P.L. 117-2, for federal revenue collections during the fiscal year 360
ending June 30, 2023. 361
Sec. 6. Section 38a-91aa of the general statutes is repealed and the 362
following is substituted in lieu thereof (Effective July 1, 2022): 363
As used in [sections 38a-91aa to 38a-91tt] this section, sections 38a-364
91bb to 38a-91uu, inclusive, as amended by this act, and sections 38a-365 Substitute Bill No. 11
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91ww and 38a-91xx: 366
(1) "Affiliated company" means any company in the same corporate 367
system as a parent, an industrial insured or a member organization by 368
virtue of common ownership, control, operation or management. 369
(2) "Agency captive insurance company" means a captive insurance 370
company that: 371
(A) Is owned or directly or indirectly controlled by one or more 372
insurance agents or insurance producers licensed in accordance with 373
sections 38a-702a to 38a-702r, inclusive; 374
(B) Only insures against risks covered by insurance policies sold, 375
solicited or negotiated through the insurance agents or insurance 376
producers that own or control such captive insurance company; and 377
(C) Does not insure against risks covered by any health insurance 378
policy or plan. 379
(3) "Alien captive insurance company" means any insurance 380
company formed to write insurance business for its parent and affiliated 381
companies and licensed pursuant to the laws of an alien jurisdiction that 382
imposes statutory or regulatory standards on companies transacting the 383
business of insurance in such jurisdiction that the commissioner deems 384
to be acceptable. 385
(4) "Association" means any legal association of individuals, 386
corporations, limited liability companies, partnerships, associations or 387
other entities, [that has been in continuous existence for at least one 388
year,] where the association itself or some or all of the member 389
organizations: 390
(A) Directly or indirectly own, control or hold with power to vote all 391
of the outstanding voting securities or other voting interests of an 392
association captive insurance company incorporated as a stock insurer; 393 Substitute Bill No. 11
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(B) Have complete voting control over an association captive 394
insurance company incorporated as a mutual corporation or formed as 395
a limited liability company; or 396
(C) Constitute all of the subscribers of an association captive 397
insurance company formed as a reciprocal insurer. 398
(5) "Association captive insurance company" means any company 399
that insures risks of the member organizations of an association, and 400
includes a company that also insures risks of such member 401
organizations' affiliated companies or of the association. 402
(6) "Branch business" means any insurance business transacted in this 403
state by a branch captive insurance company. 404
(7) "Branch captive insurance company" means any alien captive 405
insurance company or foreign captive insurance company licensed by 406
the commissioner to transact the business of insurance in this state 407
through a business unit with a principal place of business in this state. 408
(8) "Branch operations" means any business operations in this state of 409
a branch captive insurance company. 410
(9) "Captive insurance company" means any (A) pure captive 411
insurance company, agency captive insurance company, association 412
captive insurance company, industrial insured captive insurance 413
company, risk retention group, sponsored captive insurance company 414
or special purpose financial captive insurance company that is 415
domiciled in this state and formed or licensed under the provisions of 416
[sections 38a-91aa] this section and sections 38a-91bb to 38a-91tt, 417
inclusive, as amended by this act, or (B) branch captive insurance 418
company. 419
(10) "Ceding insurer" means an insurance company, approved by the 420
commissioner and licensed or otherwise authorized to transact the 421
business of insurance or reinsurance in its state or country of domicile, 422
that cedes risk to a special purpose financial captive insurance company 423 Substitute Bill No. 11
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pursuant to a reinsurance contract. 424
(11) "Commissioner" means the Insurance Commissioner. 425
(12) "Controlled unaffiliated business" means any person: 426
(A) Who, (i) in the case of a pure captive insurance company, is not 427
in the corporate system of a parent and the parent's affiliated companies, 428
[or] (ii) in the case of an industrial insured captive insurance company, 429
is not in the corporate system of an industrial insured and the industrial 430
insured's affiliated companies, or (iii) in the case of a sponsored captive 431
insurance company, is not in the corporate system of a participant and 432
the participant's affiliated companies; 433
(B) Who, (i) in the case of a pure captive insurance company, has an 434
existing contractual relationship with a parent or one of the parent's 435
affiliated companies, [or] (ii) in the case of an industrial insured captive 436
insurance company, has an existing contractual relationship with an 437
industrial insured or one of the industrial insured's affiliated companies, 438
or (iii) in the case of a sponsored captive insurance company, has an 439
existing contractual relationship with a participant or one of the 440
participant's affiliated companies; and 441
(C) Whose risks are managed by a pure captive insurance company, 442
[or] an industrial insured captive insurance company or a sponsored 443
captive insurance company, as applicable, in accordance with section 444
38a-91qq, as amended by this act. 445
(13) "Excess workers' compensation insurance" means, in the case of 446
an employer that has insured or self-insured its workers' compensation 447
risks in accordance with applicable state or federal law, insurance in 448
excess of a specified per-incident or aggregate limit established by the 449
commissioner. 450
(14) "Foreign captive insurance company" means any insurance 451
company formed to write insurance business for its parent and affiliated 452
companies and licensed pursuant to the laws of a foreign jurisdiction 453 Substitute Bill No. 11
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that imposes statutory or regulatory standards on companies 454
transacting the business of insurance in such jurisdiction that the 455
commissioner deems to be acceptable. 456
[(14)] (15) "Incorporated protected cell" means a protected cell that is 457
established as a corporation or a limited liability company, separate 458
from the sponsored captive insurance company with which it has 459
entered into a participant contract. 460
[(15)] (16) "Industrial insured" means an insured: 461
(A) Who procures the insurance of any risk or risks by use of the 462
services of a full-time employee acting as an insurance manager or 463
buyer; 464
(B) Whose aggregate annual premiums for insurance on all risks total 465
at least twenty-five thousand dollars; and 466
(C) Who has at least twenty-five full-time employees. 467
[(16)] (17) "Industrial insured captive insurance company" means any 468
company that insures risks of the industrial insureds that comprise an 469
industrial insured group, and includes a company that also insures risks 470
of such industrial insureds' affiliated companies. 471
[(17)] (18) "Industrial insured group" means any group of industrial 472
insureds that collectively: 473
(A) Directly or indirectly own, control or hold with power to vote all 474
of the outstanding voting securities or other voting interests of an 475
industrial insured captive insurance company incorporated as a stock 476
insurer; 477
(B) Have complete voting control over an industrial insured captive 478
insurance company incorporated as a mutual corporation or formed as 479
a limited liability company; or 480
(C) Constitute all of the subscribers of an industrial insured captive 481 Substitute Bill No. 11
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insurance company formed as a reciprocal insurer. 482
[(18)] (19) "Insurance securitization" or "securitization" means a 483
transaction or a group of related transactions, which may include capital 484
market offerings, that are effected through related risk transfer 485
instruments and facilitating administrative agreements, in which all or 486
part of the result of such transaction is used to fund a special purpose 487
financial captive insurance company's obligations under a reinsurance 488
contract with a ceding insurer and by which: 489
(A) A special purpose financial captive insurance company directly 490
or indirectly obtains proceeds through the issuance of securities by such 491
company or any other person; or 492
(B) A person provides, for the benefit of a special purpose financial 493
captive insurance company, one or more letters of credit or other assets 494
that the commissioner has authorized such company to treat as 495
admitted assets for purposes of its annual report. "Insurance 496
securitization" or "securitization" does not include the issuance of a 497
letter of credit for the benefit of the commissioner to satisfy all or part of 498
a special purpose financial captive insurance company's capital and 499
surplus requirements under section 38a-91dd, as amended by this act. 500
[(19)] (20) "Member organization" means any individual, corporation, 501
limited liability company, partnership, association or other entity that 502
belongs to an association. 503
[(20)] (21) "Mutual corporation" means a corporation organized 504
without stockholders and includes a nonprofit corporation with 505
members. 506
[(21)] (22) "Parent" means any individual, corporation, limited 507
liability company, partnership or other entity that directly or indirectly 508
owns, controls or holds with power to vote more than fifty per cent of 509
the outstanding voting: 510
(A) Securities of a pure captive insurance company organized as a 511 Substitute Bill No. 11
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stock insurer; or 512
(B) Membership interests of a pure captive insurance company 513
organized as a nonprofit corporation or as a limited liability company. 514
[(22)] (23) "Participant" means any association, corporation, limited 515
liability company, partnership, trust or other entity, and any affiliated 516
company or controlled unaffiliated business thereof, that is insured by 517
a sponsored captive insurance company pursuant to a participant 518
contract. 519
[(23)] (24) "Participant contract" means a contract entered into by a 520
sponsored captive insurance company and a participant by which the 521
sponsored captive insurance company insures the risks of the 522
participant and limits the losses of each such participant to its pro rata 523
share of the assets of one or more protected cells identified in such 524
participant contract. 525
[(24)] (25) "Protected cell" means a separate account established by a 526
sponsored captive insurance company, in which assets are maintained 527
for one or more participants in accordance with the terms of one or more 528
participant contracts to fund the liability of the sponsored captive 529
insurance company assumed on behalf of such participants as set forth 530
in such participant contracts. 531
[(25)] (26) "Pure captive insurance company" means any company 532
that insures risks of its parent and affiliated companies or controlled 533
unaffiliated business. 534
[(26)] (27) "Reinsurance contract" means a contract entered into by a 535
special purpose financial captive insurance company and a ceding 536
insurer by which the special purpose financial captive insurance 537
company agrees to provide reinsurance to the ceding insurer for risks 538
associated with the ceding insurer's insurance or reinsurance business. 539
[(27)] (28) "Risk retention group" means a captive insurance company 540
organized under the laws of this state pursuant to the federal Liability 541 Substitute Bill No. 11
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Risk Retention Act of 1986, 15 USC 3901 et seq., as amended from time 542
to time, as a stock insurer or mutual corporation, a reciprocal or other 543
limited liability entity. 544
[(28)] (29) "Security" has the same meaning as provided in section 545
36b-3 and includes any form of debt obligation, equity, surplus 546
certificate, surplus note, funding agreement, derivative or other 547
financial instrument that the commissioner designates as a security for 548
purposes of [sections 38a-91aa] this section and sections 38a-91bb to 38a-549
91tt, inclusive, as amended by this act. 550
[(29)] (30) "Special purpose financial captive insurance company" 551
means a company that is licensed by the commissioner in accordance 552
with section 38a-91bb, as amended by this act. 553
[(30)] (31) "Special purpose financial captive insurance company 554
security" means a security issued by (A) a special purpose financial 555
captive insurance company, or (B) a third party, the proceeds of which 556
are obtained directly or indirectly by a special purpose financial captive 557
insurance company. 558
[(31)] (32) "Sponsor" means any association, corporation, limited 559
liability company, partnership, trust or other entity that is approved by 560
the commissioner to organize and operate a sponsored captive 561
insurance company and to provide all or part of the required 562
unimpaired paid-in capital and surplus. 563
[(32)] (33) "Sponsored captive insurance company" means a captive 564
insurance company: 565
(A) In which the minimum required unimpaired paid-in capital and 566
surplus are provided by one or more sponsors; 567
(B) That insures risks of its participants only through separate 568
participant contracts; and 569
(C) That funds its liability to each participant through one or more 570 Substitute Bill No. 11
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protected cells and segregates the assets of each protected cell from the 571
assets of other protected cells and from the assets of the sponsored 572
captive insurance company's general account. 573
[(33)] (34) "Surplus note" means an unsecured subordinated debt 574
obligation possessing characteristics consistent with the National 575
Association of Insurance Commissioners Statement of Statutory 576
Accounting Principles No. 41, as amended from time to time, and as 577
modified or supplemented by the commissioner. 578
Sec. 7. (Effective July 1, 2022) (a) As used in this section, "alien captive 579
insurance company", "branch captive insurance company" and "foreign 580
captive insurance company" have the same meanings as provided in 581
section 38a-91aa of the general statutes, as amended by this act. 582
(b) The Commissioner of Revenue Services shall waive any and all 583
penalties that would otherwise be due under section 38a-277 of the 584
general statutes for any taxable period beginning on or after July 1, 2019, 585
and ending prior to July 1, 2022, if, not later than June 30, 2023, the 586
insured: 587
(1) Establishes a branch captive insurance company in this state or 588
transfers the domicile of its alien captive insurance company or foreign 589
captive insurance company to this state in accordance with the 590
provisions of section 38a-58a of the general statutes; and 591
(2) Pays all taxes and interest due and outstanding under section 38a-592
277 of the general statutes for all taxable periods ending on or after July 593
1, 2019, but prior to July 1, 2022. 594
(c) Any insured that satisfies the provisions of subsection (b) of this 595
section shall not be liable for any taxes, interest and penalties that would 596
otherwise be due under section 38a-277 of the general statutes for any 597
taxable period ending prior to July 1, 2019. 598
Sec. 8. Section 38a-91bb of the general statutes is repealed and the 599
following is substituted in lieu thereof (Effective July 1, 2022): 600 Substitute Bill No. 11
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(a) Any captive insurance company, when permitted by its articles of 601
association, charter or other organizational document, may apply to the 602
[Insurance Commissioner] commissioner for a license to do the business 603
of insurance against any kind of loss, damage or liability properly a 604
subject of insurance, if such insurance is not prohibited by law or [is not] 605
disapproved by the commissioner as being contrary to public policy, 606
including life insurance, annuities, health insurance, as defined in 607
section 38a-469, and commercial risk insurance, as defined in section 608
38a-663, provided: 609
(1) No pure captive insurance company may insure any risks other 610
than those of its parent and affiliated companies or controlled 611
unaffiliated business; 612
(2) No association captive insurance company may insure any risks 613
other than those of its association, the member organizations of its 614
association, and the member organizations' affiliated companies; 615
(3) No industrial insured captive insurance company may insure any 616
risks other than those of (A) the industrial insureds that comprise the 617
industrial insured group, (B) the industrial insureds' affiliated 618
companies, or (C) the industrial insureds' controlled unaffiliated 619
businesses; 620
(4) No risk retention group may insure any risks other than those of 621
its members and owners; 622
(5) No captive insurance company may provide personal risk 623
insurance, as defined in section 38a-663, for private passenger motor 624
vehicle or homeowners insurance coverage or any component thereof; 625
(6) No captive insurance company may accept or cede reinsurance 626
except as provided in section 38a-91kk, as amended by this act; 627
(7) Any captive insurance company may provide excess workers' 628
compensation insurance to its parent and affiliated companies, unless 629
prohibited by the laws of the state having jurisdiction over the 630 Substitute Bill No. 11
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transaction or by federal law. Any captive insurance company may 631
reinsure a workers' compensation qualified self-insured plan of its 632
parent and affiliated companies, unless prohibited by federal law; 633
(8) Any captive insurance company that provides life insurance, 634
annuities or health insurance shall comply with all applicable state and 635
federal laws. 636
(b) No captive insurance company shall do any insurance business in 637
this state unless: 638
(1) [It] The captive insurance company first obtains from the 639
[Insurance Commissioner] commissioner a license authorizing [it] the 640
captive insurance company to do insurance business in this state; 641
(2) [Its] The captive insurance company's board of directors or 642
committee of managers or, in the case of a reciprocal insurer, its 643
subscribers' advisory committee holds at least one meeting each year in 644
this state; 645
(3) [It] The captive insurance company maintains its principal place 646
of business in this state; and 647
(4) [It] The captive insurance company appoints a registered agent to 648
accept service of process and to otherwise act on its behalf in this state. 649
Whenever such registered agent cannot with reasonable diligence be 650
found at the registered office of the captive insurance company, the 651
[Insurance Commissioner] commissioner shall be an agent of [such] the 652
captive insurance company upon whom any process, notice or demand 653
may be served. 654
(c) (1) To be considered for a license, a captive insurance company 655
shall: 656
(A) File with the commissioner a certified copy of its organizational 657
documents, a statement under oath of its president and secretary 658
showing its financial condition, and any other statements or documents 659 Substitute Bill No. 11
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required by the commissioner; and 660
(B) Submit to the commissioner for approval a description of the 661
coverages, deductibles, coverage limits and rates and such additional 662
information as the commissioner may require. In the event of any 663
subsequent material change in any item in such description, the captive 664
insurance company shall submit to the commissioner for approval an 665
appropriate revision and shall not offer any additional kinds of 666
insurance until a revision of such description is approved by the 667
commissioner. The captive insurance company shall inform the 668
commissioner of any material change in rates not later than thirty days 669
after the adoption of such change. 670
(2) Each applicant captive insurance company shall also file with the 671
commissioner evidence of the following: 672
(A) The amount and liquidity of the company's assets relative to the 673
risks to be assumed; 674
(B) The adequacy of the expertise, experience and character of the 675
persons who will manage the company; 676
(C) The overall soundness of the company's plan of operation; 677
(D) The adequacy of the loss prevention programs of the company's 678
insureds; and 679
(E) Such other factors deemed relevant by the commissioner in 680
ascertaining whether the proposed captive insurance company will be 681
able to meet its policy obligations. 682
(3) Each applicant sponsored captive insurance company shall also 683
file with the commissioner: 684
(A) Materials demonstrating how the applicant will account for the 685
loss and expense experience of each protected cell at a level of detail 686
deemed sufficient by the commissioner, and how [it] such applicant will 687 Substitute Bill No. 11
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report such experience to the commissioner; 688
(B) A statement acknowledging that all financial records of the 689
sponsored captive insurance company, including records pertaining to 690
any protected cells, shall be made available for examination or 691
inspection or by the commissioner or the commissioner's designee; 692
(C) All contracts or sample contracts between the sponsored captive 693
insurance company and any participants; and 694
(D) Evidence that expenses shall be allocated to each protected cell in 695
a fair and equitable manner. 696
(4) Each applicant special purpose financial captive insurance 697
company shall also: 698
(A) Include with its plan of operation: 699
(i) A complete description of all significant transactions, including 700
reinsurance, reinsurance security arrangements, securitizations, related 701
transactions or arrangements, and to the extent not included in the 702
transactions listed in this clause, a complete description of all parties 703
other than the special purpose financial captive insurance company and 704
the ceding insurer that will be involved in the issuance of special 705
purpose financial captive insurance company securities and a 706
description of any pledge, hypothecation or grant of a security interest 707
in any of the special purpose financial captive insurance company's 708
assets and in any stock or limited liability company interest in the 709
special purpose financial captive insurance company; 710
(ii) The source and form of the special purpose financial captive 711
insurance company's capital and surplus; 712
(iii) The proposed investment policy of the special purpose financial 713
captive insurance company; 714
(iv) A description of the underwriting, reporting and claims payment 715 Substitute Bill No. 11
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methods by which losses covered by the reinsurance contract will be 716
reported, accounted for and settled; 717
(v) Pro forma balance sheets and income statements illustrating one 718
or more adverse case scenarios, as determined under criteria required 719
by the commissioner, for the performance of the special purpose 720
financial captive insurance company under all reinsurance contracts; 721
and 722
(vi) The proposed rate and method for discounting reserves, if the 723
special purpose financial captive insurance company is requesting 724
authority to discount its reserves; 725
(B) Submit an affidavit of its president, a vice president, its treasurer 726
or its chief financial officer that includes the following statements, that 727
to the best of such person's knowledge and belief after reasonable 728
inquiry: 729
(i) The proposed organization and operation of the special purpose 730
financial captive insurance company comply with all applicable 731
provisions of this chapter; 732
(ii) The special purpose financial captive insurance company's 733
investment policy reflects and takes into account the liquidity of assets 734
and the reasonable preservation, administration and management of 735
such assets with respect to the risks associated with the reinsurance 736
contract and the insurance securitization transaction. With respect to a 737
special purpose financial captive insurance company, "management" 738
means the board of directors, managing board or other individual or 739
individuals vested with overall responsibility for the management of the 740
affairs of such company, including, but not limited to, officers or other 741
agents elected or appointed to act on behalf of such company; and 742
(iii) The reinsurance contract and any arrangement for securing the 743
special purpose financial captive insurance company's obligations 744
under such reinsurance contract, including, but not limited to, any 745
agreements or other documentation to implement such arrangement, 746 Substitute Bill No. 11
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comply with the provisions of this chapter; and 747
(C) Include with its application: 748
(i) Copies of all agreements and documentation described in 749
subparagraph (A) of this subdivision unless otherwise approved by the 750
commissioner, and any other statements or documents required by the 751
commissioner to evaluate the special purpose financial captive 752
insurance company's application for licensure; and 753
(ii) An opinion of qualified legal counsel, in a form acceptable to the 754
commissioner, that the offer and sale of any special purpose financial 755
captive insurance company securities complies with all applicable 756
registration requirements or applicable exemptions from or exceptions 757
to such requirements of the federal securities laws and that the offer and 758
sale of securities by the special purpose financial captive insurance 759
company itself comply with all registration requirements or applicable 760
exemptions from or exceptions to such requirements of the securities 761
laws of this state. Such opinion shall not be required as part of the 762
application if the special purpose financial captive insurance company 763
includes a specific statement in its plan of operation that such opinions 764
will be provided to the commissioner in advance of the offer or sale of 765
any special purpose financial captive insurance company securities. 766
(5) A sponsored captive insurance company may apply to be licensed 767
as a special purpose financial captive insurance company. Such 768
company shall be subject to the provisions of sections 38a-91aa to 38a-769
91tt, inclusive, as amended by this act, applicable to a sponsored captive 770
insurance company and to a special purpose financial captive insurance 771
company. In the event of conflict between such provisions applicable to 772
a sponsored captive insurance company and to a special purpose 773
financial captive insurance company, the provisions applicable to a 774
special purpose financial captive insurance company shall control. 775
(6) Information submitted pursuant to this subsection shall be and 776
shall remain confidential and shall not be made public by the 777 Substitute Bill No. 11
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commissioner or an employee or agent of the commissioner without the 778
written consent of the company, except that: 779
(A) Such information may be discoverable by a party in a civil action 780
or contested case to which the captive insurance company that 781
submitted such information is a party upon a showing by the party 782
seeking to discover such information that: 783
(i) The information sought is relevant to and necessary for the 784
furtherance of such action or case; 785
(ii) The information sought is unavailable from other nonconfidential 786
sources; and 787
(iii) A subpoena issued by a judicial or administrative officer of 788
competent jurisdiction has been submitted to the commissioner, 789
provided such submission requirement shall not apply to a risk 790
retention group; and 791
(B) The commissioner may, in the commissioner's discretion, disclose 792
such information to a public official having jurisdiction over the 793
regulation of insurance in another state, provided: 794
(i) Such public official agrees, in writing, to maintain the 795
confidentiality of such information; and 796
(ii) The laws of the state in which such public official serves require 797
such information to be and [to] remain confidential. 798
(d) (1) Each captive insurance company shall pay to the commissioner 799
a nonrefundable fee of eight hundred dollars for examining, 800
investigating and processing its application for a license. The 801
commissioner may retain legal, financial and examination services from 802
outside the department for the licensing and financial oversight of a 803
captive insurance company, the reasonable cost of which may be 804
charged against such company. The provisions of subdivisions (2) to (5), 805
inclusive, of subsection (k) of section 38a-14 shall apply to this 806 Substitute Bill No. 11
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subdivision. 807
(2) Each captive insurance company shall pay a license fee for the first 808
year of licensure and a renewal fee for each year thereafter as set forth 809
in section 38a-11. 810
(e) (1) If the commissioner finds that the documents and statements 811
that a captive insurance company, other than a special purpose financial 812
captive insurance company, has filed comply with the provisions of 813
sections 38a-91aa to 38a-91tt, inclusive, as amended by this act, the 814
commissioner may grant a license authorizing the company to do 815
insurance business in this state until April first thereafter. The captive 816
insurance company may apply to renew such license on such forms as 817
the commissioner prescribes. 818
(2) (A) The commissioner may grant a license authorizing a special 819
purpose financial captive insurance company to do reinsurance 820
business in this state until April first thereafter upon the commissioner's 821
finding that (i) the proposed plan of operation provides for a reasonable 822
and expected successful operation, (ii) the terms of the reinsurance 823
contract and related transactions comply with sections 38a-91aa to 38a-824
91tt, inclusive, as amended by this act, (iii) the proposed plan of 825
operation is not hazardous to any ceding insurer, and (iv) the insurance 826
regulator of the state of domicile of each ceding insurer has notified the 827
commissioner in writing or has otherwise provided assurance 828
satisfactory to the commissioner that such regulator has approved or 829
has not disapproved the transaction, provided the commissioner shall 830
not be precluded from issuing a license to a special purpose financial 831
captive insurance company if such regulator has not responded with 832
respect to all or any part of the transaction. 833
(B) In conjunction with granting such license, the commissioner may 834
issue an order to the special purpose financial captive insurance 835
company of any additional provisions, terms or conditions regarding 836
the organization, licensing or operation of such company that are not 837
inconsistent with the provisions of this chapter and are deemed 838 Substitute Bill No. 11
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appropriate by the commissioner. 839
(3) The commissioner shall not grant a license to a branch captive 840
insurance company unless the alien captive insurance company or 841
foreign captive insurance company grants the commissioner authority 842
to examine the alien captive insurance company or foreign captive 843
insurance company in the jurisdiction in which the alien captive 844
insurance company or foreign captive insurance company is formed, 845
operates or maintains books and records. 846
Sec. 9. Section 38a-91dd of the general statutes is repealed and the 847
following is substituted in lieu thereof (Effective July 1, 2022): 848
(a) (1) [The Insurance Commissioner] Except as provided in 849
subdivision (3) of this subsection, the commissioner shall not issue a 850
license to a captive insurance company or allow the company to retain 851
such license unless the company has and maintains unimpaired paid-in 852
capital and surplus of: 853
(A) In the case of a pure captive insurance company, not less than 854
[two hundred fifty thousand dollars;] the greater of: 855
(i) Fifty thousand dollars; or 856
(ii) An amount that the commissioner determines is necessary for the 857
pure captive insurance company to meet such pure captive insurance 858
company's policy obligations; 859
(B) In the case of an association captive insurance company, not less 860
than [five hundred thousand dollars;] the greater of: 861
(i) Two hundred fifty thousand dollars; or 862
(ii) An amount that the commissioner determines is necessary for the 863
association captive insurance company to meet such association captive 864
insurance company's policy obligations; 865
(C) In the case of an industrial insured captive insurance company, 866 Substitute Bill No. 11
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not less than [five hundred thousand dollars;] the greater of: 867
(i) Two hundred fifty thousand dollars; or 868
(ii) An amount that the commissioner determines is necessary for the 869
industrial insured captive insurance company to meet such industrial 870
insured captive insurance company's policy obligations; 871
(D) In the case of a risk retention group, not less than one million 872
dollars; 873
(E) In the case of a sponsored captive insurance company, not less 874
than [two hundred twenty-five thousand dollars;] the greater of: 875
(i) Seventy-five thousand dollars; or 876
(ii) An amount that the commissioner determines is necessary for the 877
sponsored captive insurance company to meet such sponsored captive 878
insurance company's policy obligations; 879
(F) In the case of a special purpose financial captive insurance 880
company, not less than [two hundred fifty thousand dollars;] the greater 881
of: 882
(i) Two hundred fifty thousand dollars; or 883
(ii) An amount that the commissioner determines is necessary for the 884
special purpose financial captive insurance company to meet such 885
special purpose financial captive insurance company's policy 886
obligations; 887
(G) In the case of a sponsored captive insurance company licensed as 888
a special purpose financial captive insurance company, not less than 889
[five hundred thousand dollars;] the greater of: 890
(i) Two hundred fifty thousand dollars; or 891
(ii) An amount that the commissioner determines is necessary for 892 Substitute Bill No. 11
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such captive insurance company to meet such captive insurance 893
company's policy obligations; and 894
(H) In the case of an agency captive insurance company, not less than 895
[five hundred thousand dollars] the greater of: 896
(i) Two hundred fifty thousand dollars; or 897
(ii) An amount that the commissioner determines is necessary for the 898
agency captive insurance company to meet such agency captive 899
insurance company's policy obligations. 900
(2) (A) The [Insurance Commissioner] commissioner shall not issue a 901
license to a branch captive insurance company or allow the branch 902
captive insurance company to retain such license unless the branch 903
captive insurance company has and maintains, as security for the 904
payment of liabilities attributable to the branch operations: 905
(i) Not less than [two hundred fifty thousand dollars;] the greater of: 906
(I) Fifty thousand dollars; or 907
(II) An amount that the commissioner determines is necessary to 908
secure the payment of liabilities attributable to the branch captive 909
insurance company's operations; and 910
(ii) Reserves on such insurance policies or such reinsurance contracts 911
as may be issued or assumed by the branch captive insurance company 912
through its branch operations, including reserves for losses, allocated 913
loss adjustment expenses, incurred but not reported losses and 914
unearned premiums with regard to business written through the branch 915
operations. The commissioner may permit a branch captive insurance 916
company to credit against any such reserves any [security for loss 917
reserves that the branch captive insurance company posts with a ceding 918
insurer or is posted by a reinsurer with the branch captive insurance 919
company, so long as such security remains posted] assets belonging to: 920 Substitute Bill No. 11
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(I) The branch captive insurance company that are held in trust for, 921
or otherwise segregated or controlled by, a ceding insurer, that secure 922
the branch captive insurance company's reinsurance obligations to the 923
ceding insurer; or 924
(II) A reinsurer that are held in trust for, or otherwise under the 925
control of, the branch captive insurance company, that secure the 926
reinsurer's reinsurance obligations to the branch captive insurance 927
company. 928
(B) The amounts required under subparagraph (A) of this 929
subdivision may be held, with the prior approval of the commissioner, 930
in the form of: 931
(i) [a] A trust formed under a trust agreement and funded by assets 932
acceptable to the commissioner; [,] 933
(ii) [an] An irrevocable letter of credit issued or confirmed by a bank 934
approved by the commissioner; [,] 935
(iii) [with] With respect to the amount required under subparagraph 936
(A)(i) of this subdivision only, cash on deposit with the commissioner; 937
[,] or 938
(iv) [any] Any combination [thereof] of the forms described in 939
subparagraphs (B)(i) to (B)(iii), inclusive, of this subdivision. 940
(3) The commissioner may exempt a branch captive insurance 941
company from the provisions of subdivisions (1) and (2) of this 942
subsection if the branch captive insurance company is a foreign captive 943
insurance company and the commissioner, in the commissioner's 944
discretion, determines that the branch captive insurance company is 945
financially stable. 946
[(b) The commissioner may adopt regulations, in accordance with 947
chapter 54, to establish additional capital and surplus requirements 948
based upon the type, volume and nature of insurance business 949 Substitute Bill No. 11
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transacted.] 950
[(c)] (b) Notwithstanding any other provision of this section, the 951
commissioner shall have the discretion to allow a captive insurance 952
company, other than a captive insurance company organized as a risk 953
retention group, to maintain less than the required unimpaired paid-in 954
capital and surplus set forth in subsection (a) of this section. The 955
commissioner shall consider the type, volume and nature of the 956
insurance or reinsurance business transacted by such a captive 957
insurance company in establishing the amount of unimpaired paid-in 958
capital and surplus the company is required to maintain. 959
[(d)] (c) Except as specified in subdivision (2) of subsection (a) of this 960
section, capital and surplus may be in the form of cash or an irrevocable 961
letter of credit issued by a bank approved by the commissioner. 962
(d) The commissioner may adopt regulations, in accordance with 963
chapter 54, to establish additional capital and surplus requirements 964
based upon the type, volume and nature of insurance business 965
transacted. 966
Sec. 10. Subsection (h) of section 38a-91ff of the general statutes is 967
repealed and the following is substituted in lieu thereof (Effective July 1, 968
2022): 969
(h) In the case of a captive insurance company licensed as a branch 970
captive insurance company, the alien captive insurance company or 971
foreign captive insurance company shall petition the commissioner to 972
issue a certificate setting forth the commissioner's finding that, after 973
considering the character, reputation, financial responsibility, insurance 974
experience, and business qualifications of the officers and directors of 975
the alien captive insurance company or foreign captive insurance 976
company, the licensing and maintenance of the branch operations will 977
promote the general good of the state. The alien captive insurance 978
company or foreign captive insurance company may register to do 979
business in this state after the commissioner's certificate is issued. 980 Substitute Bill No. 11
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Sec. 11. Subdivision (1) of subsection (b) of section 38a-91gg of the 981
general statutes is repealed and the following is substituted in lieu 982
thereof (Effective July 1, 2022): 983
(b) (1) (A) [Prior] Except as provided in subparagraph (B) of this 984
subdivision, prior to March first of each year and, in the case of pure 985
captive insurance companies and industrial insured captive insurance 986
companies, prior to March fifteenth of each year, each captive insurance 987
company [other than a branch captive insurance company shall submit 988
to the Insurance Commissioner] shall file with the commissioner a 989
report of [its] the captive insurance company's financial condition 990
verified by oath of two [of its] executive officers of the captive insurance 991
company. The commissioner shall establish the form and content of the 992
annual report to be filed by special purpose captive insurance 993
companies. 994
(B) [In the case of branch captive insurance companies, prior to March 995
first of each year, each such] Each branch captive insurance company 996
shall [submit to] file with the commissioner a copy of all reports and 997
statements required to be filed under the laws of the jurisdiction in 998
which the alien captive insurance company or foreign captive insurance 999
company is formed. Such reports and statements shall be verified by 1000
oath of two [of its] executive officers of the branch captive insurance 1001
company and filed with the commissioner on the same day that such 1002
reports and statements must be filed in the domiciliary jurisdiction of 1003
the alien captive insurance company or foreign captive insurance 1004
company. If the commissioner is satisfied that the annual report filed by 1005
the alien captive insurance company or foreign captive insurance 1006
company in [its] the domiciliary jurisdiction of the alien captive 1007
insurance company or foreign captive insurance company provides 1008
adequate information concerning the financial condition of the alien 1009
captive insurance company or foreign captive insurance company, the 1010
commissioner may waive the requirement for completion of the [captive 1011
annual statement for business written in the alien jurisdiction] annual 1012
report required under subparagraph (A) of this subdivision. If the 1013 Substitute Bill No. 11
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commissioner is not satisfied with such reports and statements, or if the 1014
branch captive insurance company is not required to file such reports 1015
and statements in the domiciliary jurisdiction of the alien captive 1016
insurance company or foreign captive insurance company, the branch 1017
captive insurance company shall file a report, at a time and in a form 1018
and manner prescribed by the commissioner, that provides the 1019
commissioner with adequate information concerning the financial 1020
condition of the alien captive insurance company or foreign captive 1021
insurance company. 1022
Sec. 12. Subsection (a) of section 38a-91hh of the general statutes is 1023
repealed and the following is substituted in lieu thereof (Effective July 1, 1024
2022): 1025
(a) (1) [At least once every three years, and additionally whenever the 1026
Insurance Commissioner] Except as provided in subdivision (3) of this 1027
subsection, the commissioner or the commissioner's designee shall, 1028
whenever the commissioner determines it to be prudent [, the 1029
commissioner or the commissioner's designee shall visit each captive 1030
insurance company and thoroughly] but not less frequently than once 1031
every five years, inspect and examine [its] each captive insurance 1032
company's affairs to ascertain [its] the captive insurance company's 1033
financial condition, [its] the captive insurance company's ability to fulfill 1034
its obligations and whether [it] the captive insurance company has 1035
complied with the provisions of sections 38a-91aa to 38a-91tt, inclusive, 1036
as amended by this act, and any other applicable provisions of this title. 1037
[The commissioner may extend the three-year period to five years, 1038
provided a captive insurance company is subject to a comprehensive 1039
annual audit during such period by independent auditors approved by 1040
the commissioner and of a scope satisfactory to the commissioner.] 1041
(2) The examination of a branch captive insurance company pursuant 1042
to this section shall be of branch business and branch operations only, 1043
as long as the branch captive insurance company provides annually to 1044
the commissioner a certificate of compliance or its equivalent, issued by 1045
or filed with the licensing authority of the jurisdiction in which the 1046 Substitute Bill No. 11
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branch captive insurance company is formed, and demonstrates to the 1047
commissioner's satisfaction that [it] such branch captive insurance 1048
company is operating in sound financial condition in accordance with 1049
all applicable laws and regulations of such jurisdiction. 1050
(3) The commissioner may waive the requirement that the 1051
commissioner or the commissioner's designee inspect and examine a 1052
captive insurance company's affairs pursuant to this subsection if the 1053
captive insurance company is a pure captive insurance company or a 1054
branch captive insurance company of the pure captive insurance 1055
company. 1056
Sec. 13. Subdivision (1) of subsection (a) of section 38a-91ii of the 1057
general statutes is repealed and the following is substituted in lieu 1058
thereof (Effective July 1, 2022): 1059
(a) (1) The commissioner may, at any time, for cause, suspend, revoke 1060
or refuse to renew any license of a captive insurance company, or in lieu 1061
of or in addition to suspension or revocation of such license, the 1062
commissioner, after reasonable notice to and hearing of any holder of 1063
such license, may impose a fine not to exceed ten thousand dollars. Such 1064
hearings may be held by the commissioner or any person designated by 1065
the commissioner. For purposes of this subsection, cause for such 1066
administrative action shall include, but not be limited to, the following 1067
reasons: (A) Insolvency or impairment of capital or surplus; (B) failure 1068
to meet the requirements of section 38a-91dd, as amended by this act; 1069
(C) refusal or failure to [submit] file an annual report, as required by 1070
section 38a-91gg, as amended by this act, or any other report or 1071
statement required by law or by lawful order of the commissioner; (D) 1072
failure to comply with the provisions of its own charter, bylaws or other 1073
organizational document; (E) failure to submit to or pay the cost of 1074
examination or any legal obligation relative thereto; (F) use of methods 1075
that, although not otherwise specifically prohibited by law, nevertheless 1076
render its operation detrimental or its condition unsound with respect 1077
to the public or to its policyholders; or (G) failure otherwise to comply 1078
with the laws of this state. 1079 Substitute Bill No. 11
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Sec. 14. Subsection (a) of section 38a-91kk of the general statutes is 1080
repealed and the following is substituted in lieu thereof (Effective July 1, 1081
2022): 1082
(a) Any captive insurance company may assume reinsurance from 1083
any other insurer. [only on risks that such company is authorized to 1084
write directly.] 1085
Sec. 15. Section 38a-91qq of the general statutes is repealed and the 1086
following is substituted in lieu thereof (Effective July 1, 2022): 1087
The [Insurance Commissioner] commissioner may adopt regulations, 1088
in accordance with chapter 54, as are necessary to carry out the 1089
provisions of sections 38a-91aa to [38a-91tt] 38a-91uu, inclusive, as 1090
amended by this act, and sections 38a-91ww and 38a-91xx and to 1091
establish standards to ensure that a parent or affiliated company is able 1092
to exercise control of the risk management function of any controlled 1093
unaffiliated business to be insured by a pure captive insurance 1094
company, an industrial insured captive insurance company or a 1095
sponsored captive insurance company, except that until such 1096
regulations are approved, the commissioner may approve the coverage 1097
of such risks by a pure captive insurance company, an industrial insured 1098
captive insurance company or a sponsored captive insurance company. 1099
Sec. 16. Subparagraph (A) of subdivision (2) of subsection (g) of 1100
section 38a-91ss of the general statutes is repealed and the following is 1101
substituted in lieu thereof (Effective July 1, 2022): 1102
(A) Proceeds from a special purpose financial captive insurance 1103
company securitization or letters of credit or other assets described in 1104
subdivision [(18)] (19) of section 38a-91aa, as amended by this act; 1105
Sec. 17. Subsections (b) and (c) of section 38a-91uu of the general 1106
statutes are repealed and the following is substituted in lieu thereof 1107
(Effective July 1, 2022): 1108
(b) A dormant captive insurance company that is domiciled in this 1109 Substitute Bill No. 11
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state may apply to the Insurance Commissioner for a certificate of 1110
dormancy. The certificate of dormancy shall be subject to renewal once 1111
every [two] five years, and shall be forfeited if the dormant captive 1112
insurance company commences transacting insurance business or fails 1113
to timely renew such certificate. 1114
(c) A dormant captive insurance company that has been issued a 1115
certificate of dormancy shall: 1116
(1) Possess and maintain unimpaired, paid-in capital and surplus of 1117
not less than [twenty-five] fifteen thousand dollars, provided such 1118
dormant captive insurance company shall not be required to add capital 1119
upon entering dormancy if such dormant captive insurance company 1120
was never capitalized; 1121
(2) Not later than March [15, 2018] fifteenth, annually, submit to the 1122
commissioner a report on the financial condition of such company, 1123
verified by oath of two executive officers of such company, in such form 1124
as the commissioner prescribes; and 1125
(3) Pay the license renewal fee specified in section 38a-11 for a captive 1126
insurance company. 1127
Sec. 18. (NEW) (Effective July 1, 2023) (a) There is established an 1128
account to be known as the "children's trust account" which shall be a 1129
separate, nonlapsing account within the General Fund. The account 1130
shall contain any moneys required by law to be deposited in the account. 1131
(b) For the fiscal year ending June 30, 2024, and each fiscal year 1132
thereafter, an amount equal to the percentage remaining after the 1133
amounts have been calculated pursuant section 2-33c of the general 1134
statutes shall be transferred from the resources of the General Fund to 1135
the children's trust account. 1136
Sec. 19. Section 431 of public act 21-2 of the June special session is 1137
repealed. (Effective from passage) 1138 Substitute Bill No. 11
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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 July 1, 2023 New section
Sec. 19 from passage Repealer section
FIN Joint Favorable Subst.