Connecticut Adopts Act Authorizing Domestic Insurers to Divide
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- Connecticut this week enacted a statute (effective October 1, 2017) allowing insurers to divide into two or more insurance companies, potentially permitting Connecticut-domiciled insurers to isolate a block of business for sale to a third party or to separate an active book of business from a troubled run-off block.
- Insurers seeking to divide would need to develop a plan of division and would need to seek internal approval, certain third-party approvals and approval of the Connecticut Insurance Department.
- How commonly the division statute will be used and whether similar statutes will be adopted by other states remains to be seen as there are several legal issues that would need to be considered in a division, but the statute could prove to be a powerful tool for insurers seeking to separate a block of business.