Connecticut 2024 2024 Regular Session

Connecticut House Bill HB05503 Introduced / Fiscal Note

Filed 05/03/2024

                    OFFICE OF FISCAL ANALYSIS 
Legislative Office Building, Room 5200 
Hartford, CT 06106  (860) 240-0200 
http://www.cga.ct.gov/ofa 
HB-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. 
AMENDMENT 
LCO No.: 5453 
File Copy No.: 644 
House Calendar No.: 253  
 
Primary Analyst: MP 	5/3/24 
Contributing Analyst(s): LD, MM, ES, CW 	() 
Reviewer: JS 
 
 
 
OFA Fiscal Note 
 
State Impact: 
Agency Affected Fund-Effect FY 25 $ FY 26 $ 
Social Services, Dept. GF - Savings Potential Potential 
Insurance Dept. 	IF - Revenue 
Impact 
-2.4 million 2.4 million 
Insurance Dept. 	GF - Potential 
Revenue Gain 
Minimal Minimal 
Department of Revenue Services GF - Potential 
Revenue Gain 
Minimal Minimal 
Note: GF=General Fund; IF=Insurance Fund  
Municipal Impact: None  
Explanation 
The amendment strikes the underlying bill and its associated fiscal 
impact. The amendment makes various unrelated changes to the 
insurance statutes, resulting in the fiscal impacts below.  
Sections 4 and 5 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 
to the extent at least the same number of licensees continue to renew).  2024HB-05503-R00LCO05453-FNA.DOCX 	Page 2 of 3 
 
 
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-R00LCO05453-FNA.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.  
Section 16 specifies that member benefits and cost-sharing only 
apply under the Covered Connecticut program if eligible individuals 
use in-network health care providers and in-network services. This may 
result in savings to the Department of Social Services to the extent that 
members would otherwise receive services out-of-network. 
The amendment also makes other changes that are not anticipated to 
have a fiscal impact to the state or municipalities. 
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.  
The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely 
for the purposes of information, summarization and explanation and does not represent the intent of the General 
Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of 
informational sources, including the analyst’s professional knowledge. Whenever applicable, agency data is 
consulted as part of the analysis, however final products do not necessarily reflect an assessment from any 
specific department.