HARTFORD, Conn. (AP) — Connecticut’s venerable insurance industry is making a pitch for business just as the new federal health insurance marketplace begins to take shape.
The Connecticut Captive Insurance Association, a trade group, has scheduled a meeting on Wednesday in Stamford to share information. Captive insurance companies are subsidiaries set up by large companies to insure the company’s risks. Companies can save money that would otherwise go to the bottom line of insurance companies.
The objective is to “raise the profile of Connecticut” as the home state for captive insurance business, said Tom Hodson, president of the group.
The state Insurance Department has recently established a division in the agency that regulates and works with companies specializing in captive insurance to boost business and create jobs.
Gov. Dannel P. Malloy and the legislature pushed through changes last year equipping the Insurance Department to compete with dozens of other states that are seeking captive insurance business. The intent was to capitalize on Connecticut’s reputation as an early center of the U.S. insurance industry and the numerous insurance companies and small, specialized agencies that operate in the state.
Two large state-based companies, Stanley Black & Decker in New Britain and Thomson Reuters in Stamford, have so far established captive insurance businesses in Connecticut.
John Thomson, program manager for the state Insurance Department’s captive insurance unit, that said after a year in business, Connecticut’s captive insurance initiative has “just now sort of broken through” as state officials field inquiries from companies seeking to move to Connecticut or seeking information.
Promoters of captive insurance say its value is the ability by companies to stabilize health, worker liability and other insurance costs, said Thomson, who is not associated with the Thomson Reuters company.
“You can maintain your employee population, you can hire more people. That’s where the real economic impact comes,” he said.
The start of the health exchanges is now forcing businesses to focus on new ways to finance their insurance packages, Thomson said.
“Employers say, ‘I’ll think about this health care thing tomorrow’ and tomorrow is here,” he said. “Employers realize employees and their dependents are looking to the employer as the source of health care benefits.”
John O’Connell, co-owner of C.M. Smith Agency Inc., an employee benefits brokerage firm in Glastonbury, said captive insurance allows employers, by self-insuring, to avoid what he called “layers of taxes” in the Affordable Care Act that health insurers have said they will pass on in added charges.
Self-insured employers have more flexibility financing and designing benefits plans that minimize risks and keep health care costs lower, O’Connell said.