Debra Korta, state legislative program manager, told NU Online News Service in June 2008 that funding for the captive division–allowing for three positions including a captive administrator–would not be effective until this October, adding that a hiring freeze is in effect, issued by Gov. Jodi Rell.

Connecticut spokesperson Dawn McDaniel told NU today that the freeze is still in effect with a contingency in place, but that the fiscal year ends June 30, "and we'll see what happens with the next fiscal year, once it goes through the budget process within our legislature."

Under Connecticut's new law–similar to captive statutes in Vermont, the largest U.S. domicile–public and private businesses of all sizes are permitted to own and operate a captive insurance company.

Marsh added that the state's new captive regulations offer a number of incentives for businesses that locate their captive insurance companies in Connecticut, including low premium taxes and no premium tax on reinsured business.

The new law requires that a captive have no less than three incorporators or three organizers, at least one who is a resident of the state. Connecticut also said it requires "unimpaired paid-in capital and surplus" of $250,000 for a pure captive; $750,000 for an association captive; $500,000 for an industrial insured; and $1 million for a risk retention group. (NU Online News 6/25/08)

According to Marsh, in the current economic environment, companies can increase their retentions and finance their retained risk through the use of a captive.

"Connecticut's excellent reputation as an insurance center and its outstanding knowledge base in accounting, law and technology already is drawing clients' interest in Connecticut as a location for their new and existing captive insurance companies," Julie Boucher, a managing director of Marsh's U.S. Captive Solutions Practice, said in a statement.

Firms based in Connecticut that choose to locate their captives there also may benefit from ease of travel for board meetings, proximity to the state's insurance department, mitigation of state self-procurement taxes, and simplified merger laws that may help to facilitate change of domicile from anywhere in the world to Connecticut, Marsh said.