Reasons Why Starting a Captive Insurance Company in CT is a

Great Idea:

#1 Workforce Talent and Skills in Abundance

Connecticut is home to a wide-ranging population of smart, resourceful employees who think big and work hard.  The workforce in Connecticut is well-educated and highly industrious, with deep knowledge of insurance practices, functions and operations.  According to WalletHub, a credit score and financial information site that publishes reports on jobs, Connecticut was the 3^rd highest ranked state in terms of education level.  Connecticut ranks #1 nationally in insurance employment as a percentage of total employment and #1 in the U.S. for the greatest concentration of actuaries per worker. 

This uniquely talented, creative workforce is meeting today’s challenges, defining tomorrow’s captive insurance innovations and setting the stage for the future of the industry.  This can be attributed to the industry’s workforce of relatively high-paying occupations including management, legal, computer and math professionals, and business and financial operations.  And we’re on the cutting edge - according to recent data from the Brookings Institution, Hartford, CT is the fourth best city in the country for tech jobs.  

People are your greatest asset as a business, and captive insurance companies can certainly capitalize on that in Connecticut!

For a complete list of the Top 10 Reasons to Form a Captive in Connecticut, please see http://conncaptives.blogspot.com/2018/09/top-10-reasons-10.html.

----------------------------------------------------------------------------------

#2 Competitive Operating Costs for Captives

Connecticut’s operating costs are highly competitive and among the lowest in the U.S. in the insurance space.  A wide variety of business facilities are available at highly competitive costs, with prime office rents among the lowest in the Northeast. Cost efficient insurance is readily available, and tax and investment professionals are abundant.

With the recent trends to monitor expenses more closely, companies are choosing more frequently to re-domicile their captive in a convenient location.  As you saw in Reason #7, CT’s location is ideally suited to keep costs down!

Come hear why InsurTech start-ups have chosen Hartford rather than other larger cities on October 16/17 at the 2018 CCIA Collaborative!

----------------------------------------------------------------------------------------

#3 Connecticut Captive Insurance On-Line “Tool Kit”

In 2017, the Connecticut Insurance Department created an on-line resource for business owners exploring ways to control insurance costs and manage their risk. It is called CT Captive Solutions for Business.  This tool kit was launched under the auspices of CT State Insurance Commissioner Katharine Wade. The tool kit includes instructions on licensing a captive in Connecticut, a list of recognized captive managers, FAQs and Insurance Department contacts. Click CT CT Captive Solutions for the “Tool Kit.”

Don't miss the chance to meet Commissioner Wade, Captive Program Director Janet Grace, and other Connecticut Insurance Department representatives at the 2018 CCIA Collaborative on October 16/17 in Hartford!

---------------------------------------------------------------------------------------

#4 Innovative Captive Law

In 2018, the Connecticut General Assembly passed Senate Bill 377, PA 18-151, establishing agency captives as a new permissible captive type.  This is another example of the collaborative efforts between the Connecticut state legislature, the Captive Division of the Connecticut Insurance Department, and CCIA. 

This 2018 legislative activity continued the momentum from 2017, when the General Assembly passed Public Act 17-198 (An Act Concerning Captive Insurance Companies).  This Act created a number innovative policies that make Connecticut a tremendous domicile option for new and re-domiciling captives.  The law allows the insurance commissioner to waive capital and paid-in surplus requirements for certain captives and lowers the minimum surplus requirements for sponsored captives.  It also establishes an innovative new category of “Dormant Captive Insurers” so businesses can stay current through different economic cycles and re-start quickly as new business opportunities present themselves.

Come hear Janet Grace, Program Manager of the Captive Division of the Connecticut Insurance Department, give an update on the latest activity in captives in Connecticut at the 2018 CCIA Annual Collaborative on October 16/17 in Hartford.

--------------------------------------------------------------------------------

#5 InsurTech in Hartford

The rise of the Hartford InsurTech Hub, along with InsurTech Hartford, is undeniable evidence of how CT is innovative in the insurance space.  Captives can most certainly benefit from this innovation, and CCIA has been actively involved with the many (emphasis: many) ongoing events happening in the Hartford insurance innovation “ecosystem.”

Much of this innovation activity originated from collaboration between state and local leadership and private company support. CTNext, a quasi-public entity, was created to support the growth and success of companies and entrepreneurs by providing guidance, resources, and networks. CTNext and three prominent Connecticut insurers joined forces with Startupbootcamp to launch the United States’ first accelerator for insurance technology, in Hartford. The accelerator, part of what’s called Hartford InsurTech Hub, also receives matching grants from insurers and other investors. The goal is to bring innovation to the insurance industry in Hartford and to foster new insurtech companies and growth in local jobs.

CCIA is proud to participate in this ecosystem and has been active in providing captive education. Earlier this year, John Thomson and Steve DiCenso took part in a panel regarding captives and insurtech that was hosted by Upward Hartford, the entrepreneurial worksite which is the host of our 2018 CCIA Collaborative. The audience became much more familiar with the benefits of captives and their future uses in the insurtech age.

Come listen to Hartford Mayor Luke Bronin and these panelists discuss their experiences with this ecosystem, and see how CCIA and insurtech are collaborating in Hartford on October 16/17!

--------------------------------------------------------------------------------------

#6 Excellent University & Captive Insurance Linkages

Connecticut’s internationally renowned universities have been key drivers in the development of the region’s technology and knowledge industries.  Home to over 40 colleges and universities, including the University of Connecticut, Yale University, and the University of Hartford, Connecticut’s higher education programs are unique in the nation and the world.

UCONN has an undergraduate major in Actuarial Science, which is one of only a few in New England.  UCONN's Actuarial Science Program has been named a “Center of Actuarial Excellence,” one of only 12 chosen by the Society of Actuaries.  The UCONN School of Business offers an M.S. in Actuarial Science and an M.S. in Financial Risk Management.  And most recently, UCONN has relocated its West Hartford Branch to downtown Hartford in the renovated and growing Front Street area.

The Yale Graduate School of Management offers a unique Masters of Management Studies in Systemic Risk for employees of central banks and other major regulatory agencies with a mandate to manage systemic risk.  The year-long program focuses in global financial regulation, monetary economics, capital markets, and central banking.

The University of Hartford’s Barney School of Business offers a major in Risk Management and Insurance.  The Barney School is second among all U.S. colleges and universities in insurer hiring of 2012–13 graduates of undergraduate risk management and insurance programs.

-------------------------------------------------------------------------------

#7 Location, Location, Location!

Connecticut, strategically and conveniently located between New York and Boston, is ideally positioned geographically for captive insurance companies. Connecticut is within 500 miles of one-third of the total U.S. population and two-thirds of the total Canadian population. It also offers a robust transportation network, including a growing international airport, an integrated network of major highways, the new CTrail commuter rail, Amtrak services, bus rapid transit and bus routes.

And with so many of your insurance professionals in such a convenient location, it makes economic sense to choose Connecticut as a captive domicile.

If you have not seen Hartford in a while, CCIA encourages you to come see how the Insurance Capital of the World has changed at our upcoming Collaborative on October 16/17 in Hartford.

------------------------------------------------------------------------------

#8 Strong and Dynamic Insurance Economy

With over 1,400 insurance companies licensed to do business in the state, Connecticut’s insurance industry is one of the largest in the world and a key part of Connecticut’s economy.  Connecticut insurers write more than $32.8 billion in premiums annually and contribute $13.7 billion to, or 5.3% of, Connecticut’s Gross State Product (GSP). 

The state also leads the nation in insurance payroll, which contributes 5.3% of the total state payroll.  Connecticut employs over 60,000 insurance professionals.  The insurance industry in Connecticut ranks second nationally in GSP as a percentage of total gross state product.  Hartford has the highest concentration of actuaries per capita in the US.

----------------------------------------------------------------------------

#9 Pro-Insurance Business Climate

Connecticut has a pro-insurance, pro-captive insurance business climate. The Department of Economic and Community Development, Department of Insurance, and all branches of government are committed to developing new captives and encouraging innovation and insurance entrepreneurship. The state provides potential companies and associations with high-quality, abundant start-up tools and a welcoming and flexible regulatory leadership. The Connecticut Department of Insurance Captive Division has significant regulatory expertise and a collaborative and consultative approach that helps support and grow innovative captive insurance companies.

In a later post, we will focus on the insurance innovation that is being fostered in Hartford, thanks largely to the foresight and leadership of a collaborative state government and private insurance sector.

Our upcoming CCIA Collaborative is a testament to these efforts.

----------------------------------------------------------------------------

#10 Generous Support and Financial Assistance for Captives 

Connecticut provides many options for attractive and lucrative support packages of financial incentives, recruitment and training, research and development support tailored to each captive insurance company’s needs. The state works with captive insurance companies in an ongoing partnership to ensure all the necessary support is given from the start-up phase and throughout the lifetime of the captive insurance companies’ growth to develop and expand the business and to improve legal and financial soundness.

The state offers a wide range of programs to help companies prosper in Connecticut with financing, tax credits and other incentives including site selection services.  Connecticut also has a strategic venture capital arm that serves as a leading source of financing and ongoing support for innovative, growing companies. 

For additional information, please visit CCIA's website and review our October 2018 Annual Collaborative agenda. Registration is open.  Sponsorships are also available.

Connecticut: Still revolutionary in captive insurance

The previous blog post I wrote for this Connecticut Captive Insurance Association (CCIA) site was related to the innovative use of a captive to fund the crisis of crumbling foundations that has hit homeowners in portions of eastern Connecticut. This is a complex, difficult issue and progress continues to be made, led by one of our CCIA members, Michael Maglaras & Company. Connecticut is also pushing forward to form a captive to help stabilize special education costs for towns and municipalities across the state. This is another very difficult issue that Connecticut has decided to tackle head-on with a revolutionary approach.

So why would you be surprised to hear about CCIA’s revolutionary upcoming annual event, the Cap-a-thon? It is a dynamic, “design sprint” approach to learning more about why and how the fastest-growing risk in our business, cyber insurance, is being placed into captives. The structure is a “hack” on a hackathon, which is a concept born out of the tech world, and will provide a condensed amount of time for collaborative, team-based work.

With the standard captive insurance conference competently covered by other domiciles, CCIA tries to continually reengineer and reinvigorate its annual event. This year, we are capitalizing on the innovative hackathon concept with our Cap-a-thon event. By encouraging intense collaboration and teamwork, focused on particular industries, we aim to help attendees uncover new captive solutions that open the door to further business opportunities and relationships. We believe that captive insurance owners, risk managers from companies considering the formation of captive entities, and emerging start-up companies will all benefit from the sharing of innovative solutions to emerging cyber risk issues. In addition to having access to a few cyber expert panelists who will set the stage for approaches to understanding, managing, and quantifying cyber risk, team members will be offered access to live cyber industry data under the direction of a cyber subject matter expert.

The genesis of this idea came from John Thomson, who is currently serving as CCIA’s Executive Director. John, CCIA board member Dawne Ware of Ware Consulting LLC, and I have been actively involved with the many (and I mean many) ongoing events happening in the Hartford insurance innovation “ecosystem.” Much of this activity originated from collaboration between state and local leadership and private company support. CTNext, a quasi-public entity, was created to support the growth and success of companies and entrepreneurs by providing guidance, resources, and networks. CTNext and three prominent Connecticut insurers joined forces with Startupbootcamp to launch the United States’ first accelerator for insurance technology, in Hartford. The accelerator, part of what’s called Hartford InsurTech Hub, also receives matching grants from insurers and others. The goal is to bring innovation to the insurance industry in Hartford and to foster new insurtech companies and growth in local jobs. In addition to the deliberate efforts in insurtech, CTNext has partnered with others in the community to gather large, Hartford-based innovation partners in other industries such as digital health and additive manufacturing. Over the course of the next year, you can expect to see accelerator programs supporting these industries, as well as insurtech, kicking off in downtown Hartford.

CCIA is proud to participate in this ecosystem. Earlier this year, John and I took part in a panel regarding captives and insurtech that was hosted by Upward Hartford. The audience became much more familiar with the benefits of captives and their future uses in the insurtech age. Captives are proven commercial risk-financing vehicles that allow companies to better manage their risks. We and others in the captive industry believe that insurtech and other innovations will have as big an impact on captives as they do traditional commercial insurance.  On October 16/17, with Upward Hartford as our host, we will endeavor to create an exciting new learning environment for furthering growth in captive insurance in Connecticut.  Register here!

We look forward to seeing you there!

Stephen R. DiCenso, President, CCIA

Captive to their crumbling foundations

It’s not very often that those of us who work in the captive insurance industry can state that the main reason a captive is being formed is to directly improve the lives of individuals. After all, captives are commercial entities typically formed with the intent to improve a company’s risk management processes and reduce its cost of risk.

But we here in Connecticut are still revolutionary, as our state’s advertising campaign indicates, and our state government officials have developed a potentially revolutionary solution to an unexpected problem that has recently beset thousands of Connecticut residents. In June 2017, the state legislature passed SB 1502, which authorized the future formation of a nonprofit captive insurance company to manage the “crumbling foundations” exposure to many Connecticut residents’ homes.

The damage to these homes’ foundations was caused by the use in concrete of a stone aggregate mined from a quarry that contained the chemical pyrrhotite. The ugly cracks that are forming manifested decades after the foundation was poured. Homeowners insurance companies have generally (i.e., with some exceptions) denied coverage, stating that this type of event does not fall within their “sudden and accidental collapse” coverage provision. And the home builders also were not required to carry a home warranty policy that could have provided coverage for such a latent exposure.

The extent of the frequency of damage is still unclear—the Connecticut Mirror reports that nearly 600 homeowners in over 35 towns in eastern Connecticut have seen damage. Estimates of the potential number of homes affected are very difficult to make and have varied widely, but the same Connecticut Mirror report puts it around 5,000. With the cost of raising a home and re-pouring a complete foundation frequently running from $150,000 to $200,000, the total exposure to loss could be in the billions.

Upon licensure by the Connecticut Insurance Department, the proposed not-for-profit captive will be funded by the newly created Crumbling Foundations Assistance Fund. The main contribution to this Fund comes from the state’s authority to issue bonds. The total authorization will not exceed $100 million in aggregate, with a maximum of $20 million authorized for each of the next five fiscal years. The captive funds will allow affected residents to repair or replace their foundations, and will also fund various other programs designed to provide relief to affected homeowners.

A captive structure has a number of advantages over a general state fund: 1) a board of directors will be established, 2) homeowner eligibility guidelines will be developed, 3) the expected payouts will be estimated by an actuary, 4) the claims payments to eligible contractors will be managed closely to ensure a fair distribution, 5) overhead expenses of the captive will be capped, and 6) the captive will provide regular claims and financial reporting to the legislature.

At this pre-formation stage, it appears that the proposed and likely non-profit captive will not be a risk-taking vehicle; it will operate with a maximum payout, likely established by the actuarial estimate. The captive is essentially providing retroactive insurance coverage. Bottom line, it will operate as an insurance company and have multiple layers of oversight, not the least of which is the strong regulatory framework in place at the Connecticut Insurance Department.

We at the Connecticut Captive Insurance Association wholeheartedly support this innovative use of a captive insurance company, and we will support the insurance department’s efforts to get this captive formed and operational. But, more importantly, we hope that it provides true relief for the many homeowners impacted by this very unfortunate set of circumstances.

Stephen R. DiCenso, President, CCIA

Captive Insurance Collaborative in Connecticut

Business owners and captive insurance service providers joined together in Stamford with the Connecticut Captive Insurance Association and the Connecticut Insurance Department for the 2017 Collaborative on Captive Insurance to engage and learn about this important -- and growing -- industry.

Stamford Advocate Features Collaborative on Captive Insurance

Read all about the Connecticut Captive Insurance Association's Collaborative on Captive Insurance in Paul Schott's story in the Stamford Advocate.

“We call the conference the ‘idea factory’ because it is a generator of ideas,” said Michael Maglaras, chairman of the CCIA’s board of directors and principal of the Ashford-based insurance and risk management consultancy Michael Maglaras & Co. “There will be ample opportunity during each of the sessions for business owners, captive-insurance service providers and members of the public to engage, ask questions and have a dialogue with the speakers.”

The conference is this Thursday and Friday at the Stamford Sheraton.  Don't miss it!  Register at this link.

“When captives flourish, jobs are created and people are put to work,” Maglaras said. “The more captives we have, the stronger growth we have. We’ve got a fantastic regulator in Katharine Wade. She is someone who understands how to be a good regulator to make sure captives are of the highest quality and who is also business friendly.”

What?...You’ve Not Registered for the Connecticut Captive Insurance Association 2017 Collaborative?

The title is not a joke...this is an event you will not want to miss. 

I go to a lot of captive industry meetings and have for more than thirty years. The Connecticut Captive Insurance Association's  Collaborative, which will be held at the Stamford Sheraton Hotel on October 25 and 26, will be...I can tell you...unique in our industry.

We’re going to tackle some tough issues. We’re going to challenge some notions. We’re going to shake things up. You will hear some distinguished speakers, and, what’s more important, you will be a part of the dialogue. We’ve used three words continually in this year’s Collaborative agenda. Those three words are “Dialogue, Debate, Disruption.”

The Connecticut captive movement is filled with entrepreneurial and talented people who aren’t afraid of challenging the norms, whether those norms be about what constitutes a good business plan under the new rules for 831(b)s...or whether it’s about challenging some notions about why a captive can’t actually write workers’ compensation coverage on a direct basis.

Check out the agenda for the CCIA Collaborative...and while you’re at it, register. It’s not too late to become a sponsor.

We can’t guarantee that all the probing questions asked will get an answer. But we can guarantee that the questions will be asked, and you will walk away with stuff you can use in your business to shape your strategy to self-insure part of your risk.

I promise you an interesting, enlightening, and worthwhile experience.

The 2017 Connecticut Captive Insurance Association Collaborative. Connecticut...Still Revolutionary!

Michael Maglaras, Chairman, Connecticut Captive Insurance Association

Painting a New Future

Janet Grace, Program Manager
Captive Division
Connecticut Insurance Department

You’ve seen those ads selling you the new “paint color of the year”. They show a clean fresh space with the right accents placed perfectly, no clutter of actual day-to-day living in sight and a bowl of fresh lemons or oranges on the table. They appeal to us. They portray what we all secretly desire, a better start - a fresh perspective that builds on the bones of our homes’ architecture and furnishings. To achieve the look one needn’t empty the house and fully remodel the space. A simple coat of paint, well applied, and just a few tweaks to the furniture or throw pillows and you’ve got a transformation.

A small business captive won’t drastically alter your existing company but, like that fresh coat of paint, it can inspire a whole new way to view and use risk to enhance your business. It won’t become your business but will amplify your success the same way as if you choose the right color and properly prep the walls before painting that room. Choose the wrong green, slap it on, and you’ll have nothing but angst until you strip the room and start over, which can be draining and expensive. Done right, with the help of professionals and heeding expert advice to use the right tools and prepare, you can be sitting pretty for a long time into the future.

The captive industry is full of old soothsayers - professionals who have been in and around captives for a very long time. They’d have you believing captive insurance isn’t for the faint of heart: that it’s really only of benefit to the biggest and brightest companies. That your little bungalow can never be as beautiful as their penthouse. They’re right, to a point. But I’m here to tell you that your cottage make over can make the cover of Better Homes and, done well, a captive insurance entity can be an integral tool for your small business.

Did she just say small business?

As a matter of fact, I did. There are rules that level the playing field for small Insurance companies, allowing them to compete more effectively with the big companies those soothsayers ramble on about. Together, with a sound risk management program and the sound regulatory climate in Connecticut, they are the foundation for the small business captive initiative in Connecticut. Our climate is just right for painting your future using the small business captive tool kit to utilize captive insurance effectively for your small to medium size business.

There will be more about the Connecticut Small Business Captive Tool Kit revealed at this month’s Collaborative on Captive Insurance presented by the Connecticut Captive Insurance Association. You won’t want to miss it!  It’s being held October 25 and 26 in Stamford.

Click here to register for the Connecticut Captive Insurance Association’s 2017 Collaborative on Captive Insurance; or here to learn more about how you can become part of the Connecticut captive scene.

Janet Grace 

Connecticut Insurance Department 
Program Manager, Captive Division