OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sHB-5503
AN ACT CONCERNING INSURANCE MARKET CONDUCT AND
INSURANCE LICENSING, THE INSURANCE DEPARTMENT'S
TECHNICAL CORRECTIONS AND OTHER REVISIONS TO THE
INSURANCE STATUTES AND CAPTIVE INSURANCE.
Primary Analyst: MP 4/30/24
Contributing Analyst(s): MM, CW
Reviewer: JS
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 25 $ FY 26 $
Insurance Dept. GF - Potential
Revenue Gain
Minimal Minimal
Insurance Dept. GF - Revenue
Impact
-2.4 million 2.4 million
Department of Revenue Services GF - Potential
Revenue Gain
Minimal Minimal
Note: GF=General Fund
Municipal Impact: None
Explanation
The bill makes various unrelated changes to the insurance statutes,
resulting in the fiscal impacts below.
Section 1 allows for a penalty of up to $100,000 to be enforced, which
may result in a revenue gain to the General Fund; however, the potential
revenue gain is anticipated to be minimal because fines imposed by the
Insurance Department (DOI) under current law are typically paid
without the type of legal action permitted by the bill.
Sections 3 and 4 change the license renewal timing for motor vehicle
physical damage appraisers and casualty claims adjusters, which is
anticipated to shift approximately $2.4 million in General Fund renewal
fee revenue from FY 25 to FY 26 (and from odd to even numbered years
in the out years to the extent at least the same number of licensees 2024HB-05503-R010644-FN.DOCX Page 2 of 3
continue to renew). The revenue shift associated with existing licensees
that continue to renew is estimated to be approximately $2.4 million.
1
The amount of shift associated with new licensees will depend on the
timing of their birthdates and initial licensures.
Licensees currently pay DOI the $80 renewal fee for the period
ending June 30
th
in each odd-numbered year (e.g., 2025). Under the bill,
new initial licensees after October 1, 2024 will pay the renewal fee on
their birthday every other year. DOI intends to shift all licensees to the
birthday-date expiration schedule, which the department has the
discretion to do under the bill, with existing licensees renewing in the
12 months following October 1, 2024. This will result in renewal fee
revenue from the $80 renewal fee being incurred more evenly between
odd and even numbered years and does not change the amount of
license fee revenue the Insurance Department collects over a two-year
period.
Sections 14 and 15 allow sponsored captive insurance companies to
convert a protected cell into a new captive insurance company or certain
other entities. This may attract new captives to Connecticut or lead
existing protected cells to become separate captives. To the extent this
flexibility for captives leads additional captives to be established in the
state, the bill could result in a General Fund revenue gain beginning as
early as FY 25 to DOI, for each new captive, from: (1) application and
formation fees of $1,050, (2) a fee for initial license of $375, and (3) annual
license renewal fees in subsequent fiscal years of $375.
2
To the extent
new captives are established, the section may also result in a revenue
gain to the General Fund from insurance premium taxes beginning in
FY 25.
1
According to the Insurance Department, there are currently 5,874 licensed motor
vehicle physical damage appraisers and 116,392 licensed casualty claims adjusters.
Under current law, fee revenue will total approximately $9.8 million in FY 25 if all
licensees renew. Under the bill, 25% of existing licensees are assumed to pay renewal
fees based on birthdays between July 1, 2025 and September 30, 2025, with that $2.4
million in fee revenue being paid in FY 26.
2
According to DOI, there are 42 captive insurance companies fully licensed and
currently writing business in Connecticut. 2024HB-05503-R010644-FN.DOCX Page 3 of 3
According to DOI there are currently 24 protected cells within
sponsored captives. To the extent existing protected cells are converted
into new captives, there will be a minimal General Fund revenue gain
to DOI associated with those entities paying separate $375 license fees
annually. A converted captive would not pay an initial application fee.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to inflation, the timing of applications
and renewals of motor vehicle physical damage appraiser and casualty
claims adjuster licenses, and the amount of any new captive insurers
established and their written premiums.