CID: Captive Insurance Division

Captive Insurance Division

Janet Grace, Program Manager

Who We Are: 
  • The Captive Insurance Division evaluates licenses, regulates and examines the captive insurers and risk retention groups in the alternative risk market for the State of Connecticut.
  • A captive insurance company (captive) is an “insurance company” or risk-bearing entity that is owned by an organization (corporation or group/association) and formed to insure or fund the risks of its owners, and their affiliates.
  • A risk retention group (RRG) is a chartered “insurance company” or risk-bearing entity that is formed under the federal Liability Risk Retention Act (LRRA; 1982, 1986).  The purpose of the RRG is to increase the availability of commercial liability insurance which has become severely restricted in the traditional, commercial insurance market place.
    • A RRG may utilize a captive insurance company entity as a risk financing vehicle for risk acceptance, financing and payment of claims for the commercial liability its members.  The captive acts as a “reinsurance” company for the RRG.
    • There are, however, risk financing methods other than a captive that are utilized by RRG’s in providing commercial liability risk insurance of its members.
  • The captive insurance company may take several forms or structures and is typically tailored to address specific risk issues or risk opportunities.
  • The captive insurance company’s owners and insureds have significant involvement and influence over the captive company operations, including governance, underwriting, operations, claim management and investment policies.
What We Do: 
  • Provide a structured regulatory process for the initial evaluation of, licensing of, reporting by and examination of captive insurance companies domiciled in Connecticut;
  • Assess and evaluate the strategies and their execution by captive insurance entities, to help ensure operational success and sustained financial strength.
  • Work to protect the consumer and/or beneficiaries of captive insurance companies by ensuring that the insurance / risk financing entities can meet their contractual and financial obligations;
  • Understand the impacts of financial, operational and underwriting (risk acceptance) challenges on captive/RRG capital and its related costs;
  • Establish standards for business/professional support organizations that work with captive entities in the State of Connecticut, including:
    • Actuaries
    • Captive Managers
    • Accountants / Auditors; and
  • Support a business environment for the growth and prosperity of the captive insurance industry in the State of Connecticut.
Our Core Operating Foundation and Values:
  • Provide Fair and Consistent Regulation; Oversight of Capital Adequacy, Solvency and Enterprise and Strategic Risk Management; Conduct Market Conduct Examinations and Supervision
  • Leverage State of Connecticut Intra and Inter-Agency Expertise
  • Regulatory Excellence and Professionalism:
    • Approachable
    • Reputable
    • Willing to listen
    • Responsive
    • Efficient
    • Displays Personal Respect to all Parties
Our Regulatory Processes:
  • Uphold the Connecticut statutes and regulations and applicable federal legislation;
  • Endeavor to protect consumers and beneficiaries of captive insurance company and RRG programs, with respect their contractual and financial obligations, as well as their market practices, through regulation and monitoring of captive insurance company and RRG solvency, management of risk and market conduct examinations;
  • Educate various constituents through communication and thought leadership which draws on our expertise and experience; and
  • Promote the development and growth of the economy and a competitive risk marketplace.
What We Review:
  • Strategic Risk Management: How the captive or alternative risk management program supports the owner company's or members’ broader business strategies, including revenue growth, expense reduction, cost containment and market opportunities;
  • Traditional Risk & Insurance Market Assessment:  Documentation of the available current and prospective commercial risk and insurance market alternatives, relating to the proposed subject or business of the captive insurance company or RRG coverage, such as capacity and costs;
  • Actuarial Feasibility Study: The captive's utilization of rigorous and disciplined statistical analysis to assess historic premium and loss data and project an informed perspective of various future, potential operating and risk scenarios;
  • Pro Forma Financial Statements: Prospective income statements, balance sheets and cash flows; considering various underwriting outcomes, earnings retention, tax impacts and long term solvency;
  • Economic Feasibility and Sustainability: A demonstratable business case for the captive insurance company to provide economic, strategic and administrative value;
  • Risk Acceptance and Management: A thoughtful, active and disciplined management approach to:
    • Underwriting -- Analysis, pricing, coverage, and commitment of the captive insurance company assets for the acceptance/retention of risk;
    • Establishment of appropriate levels of risk retention;
    • Design and implementation of appropriate loss control and risk management programs which positively impact the risk program performance and which add value to the owner or members;
    • Adverse events and evolving claims;
  • Reinsurance Structure and Management: Evidence of a thoughtful and disciplined approach to the management of the analysis, pricing, coverage, and contractual documentation of risk sessions to solvent, qualified third party risk bearing entities by the captive insurance company;
  • Investment Management: Appropriate and qualified investment policies, strategies, and management; aligned with the operating, financial and risk management domains;
  • Entity Incorporation: The corporate structure of the captive insurance company or RRG, and its conformity to the requirements of the Connecticut Secretary of State;
  • Implementation and Operations Management: A time line for program implementation, key dependencies and contingency plans. Commitments as to the management responsibilities and processes that the captive or RRG ownership and leadership will follow
  • Service Provider Review: The competency of and an assessment of the performance of key service providers who provide operational, financial and tactical support for the captive insurance company or risk retention group
  • Governance: Processes insuring active and engaged corporate owner/member management of the captive insurance company or RRG, utilizing best management practices, tailored in an appropriate fashion to a captive insurer, in a rigorous and disciplined manner.

Content Last Modified on 8/29/2016 3:13:48 PM