Aug. 03--Connecticut has just become a little more captivating for companies looking to provide for their own insurance needs.
Proof that Connecticut has begun to make inroads in the so-called "captives" insurance market came Thursday with Gov. Dannel P. Malloy's announcement that the international media company Thomson Reuters has moved its U.S. insurance subsidiary from Delaware to Connecticut. The subsidiary, Thomson Reuters Risk Management Inc., essentially self-insures the parent company, a move that saves money and provides more coverage flexibility than is allowed under traditional insurance plans.
"Connecticut is a logical place for our captive as we have a significant corporate presence in Stamford," said Kevan Parekh, treasurer of Thomson Reuters, in a statement.
Reuters became the first company to register in the state as a captive insurance company. State law did not allow captive insurance firms in Connecticut until 2008, and amendments made to regulations this year during the governor's jobs summit -- including a lower tax rate on insurance premiums -- was intended to make a move here more attractive.
"The much-needed changes we made to outdated laws have done exactly what we intended -- encourage and attract more business and revenue," Malloy said in a statement.
It's unclear how much revenue will be generated from the relocation, and no immediate jobs will result from the move, according to the Connecticut Insurance Department. But department spokeswoman Donna Tommelleo said the amended law should be a boost to several companies in Connecticut that provide services to the captive-insurance industry, including Marsh Captive Solutions, which has offices in Norwalk and Hartford and manages Reuters' insurance program.
"We're glad that Connecticut certainly is on the map," said Michael Serricchio, senior vice president of Marsh's Captive Solutions Group, in a phone interview. "They've really done everything right."
Serrichio said Connecticut's law closely mirrors the favorable captive-insurance atmosphere in Vermont, which until recently had been one of the two hotbeds for the industry, the other being Bermuda. Now, according to Tom Hodson, president of the nine-member Connecticut Captives Association, 36 states have captive-insurance laws, as political leaders embrace the growing industry and its potential for generating revenue.
Hodson said that Connecticut auditing, actuarial and legal firms would be among those seeing benefits from the law. He added that the convention and travel industry may also see a boost.
Vermont, which has more than 900 licensed captive-insurance firms, brings in more than $16 million in revenue from taxes on insurance premiums, according to Hodson. Tax revenue is expected to cover the cost of regulating captive-insurance firms, he added.
"It will create jobs and tax revenue," Hodson said. "Connecticut's central location (between Boston and New York City) is very attractive."
Malloy pointed out that the insurance industry is one of the state's economic engines. And Hartford, long known as the insurance capital of the United States, has most of the infrastructure in place to be attractive as a captive-insurance leader.
"There is no place better to grow the industry than the insurance capital," Malloy said. "I am confident that because of the environment we have established in Connecticut, more captive insurance companies will put down roots here."
"Through professional and consistent regulation, the Insurance Department will make certain that Connecticut-based captives will be noted for their quality and financial stability," added Insurance Commissioner Thomas B. Leonardi in a statement.
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