16 March 2023ArticleAnalysis

Volunteering for success

The number of captives and risk-bearing entities in Tennessee—the “Volunteer State”—has hit more than 560, and is predicted to keep rising.

Michael Schulz, director, business development at the Insurance Division of the Tennessee Department of Commerce & Insurance (TDCI) told Captive International that the domicile grew by 13 new captives and more than 100 cells in 2022, taking the total registered with the division to more than 560.

Tennessee introduced captive insurance legislation in 1978. By 2011 the TDCI recognised a need to overhaul its statutes and approached the governor with a legislative proposal to amend the laws passed 30 years before. The need to update the statutes to stay competitive in a more modern industry was fully recognised and completed by the state legislature and Tennessee is now the sixth largest captive insurance domicile in the US.

Schulz said that Tennessee’s legislature has a long-standing reputation for being business-friendly and that the TDCI and the Insurance Division work closely with them to ensure effective statutes.

“Tennessee offers a wide range of selling points to those wishing to form or redomicile a captive,” Schulz said. “Our legislature is business-friendly. They fully recognise the importance of attracting and retaining businesses in this state. Our captive division has a dedicated staff of 13 professionals who are ACI-certified, and many are CPAs.”

Captives have the convenience of electronic filing, Schulz explained, as everything from submitting applications, to the annual statements, as well as the payment of fees and taxes, is done online.

The domicile has a strong captive support industry, with accountants, actuaries, captive managers, lawyers and owners all calling the state of Tennessee home, he added.

Growth and other trends

Looking at the market as a whole, most of the trends the TDCI has seen lately have involved increasing the scope of coverage offered in existing captives and more organisations “dipping their toes in the water” through cell facilities. Interest in the captives sector continues to grow and coverages continue to expand as people are priced out of, or are unable to obtain, the coverages they desire in the traditional market.

“We expect to see additional formations as time goes on and awareness of the industry spreads. We are growing as a team so we can continue to meet that increased demand for captive insurance in Tennessee,” Schulz concluded.

In February 2023 the TDCI announced that Mark Wiedeman had been appointed director of TDCI’s Captive Insurance Section, with the task of taking Tennessee further up the list of US captive insurance domiciles.