12 October 2022ArticleAnalysis

Staying ahead of the captive insurance pack

“The Volunteer State is providing strong incentives for owners to choose Tennessee as the domicile for their captives.”

Carter Lawrence, Tennessee Department of Commerce and Insurance

Why did Tennessee decide to become a captive insurance domicile?

In 1978, Tennessee became one of the first states to adopt captive insurance legislation. In 2011, state leaders realised the need to modernise Tennessee’s captive laws to allow the Volunteer State to show the world our dedication to providing a business-friendly environment where companies can flourish.Today, Tennessee ranks among the “best in class” captive domiciles—both nationally and internationally.

What regulations or changes make the state captive-friendly?

Tennessee’s captive insurance laws have been updated several times in recent years to provide reasonable regulation and adapt to the needs of the captive insurance industry. Most recently, Tennessee’s laws were updated to authorise parametric coverage and reduce the minimum statutory capital required for protected cell captive insurers from $250,000 to $100,000.By modernising Tennessee’s captive insurance statute to reduce the minimum capital for protected cell captive insurers as well as including parametric insurance coverage, the Volunteer State is providing strong incentives for owners to choose Tennessee as the domicile for their captives.

How many captives are now based in Tennessee?

More than 500 licensed captives call Tennessee home, making our state the sixth largest domestic captive domicile and the 10th largest captive domicile worldwide.

Why should a captive consider redomiciling or setting up in Tennessee?

Tennessee’s location, our team, and our commitment to maintaining a regulatory landscape where captive insurance can flourish offers proof of what many captive insurance managers have already discovered: that Tennessee is the ideal home for their captive.Beyond Tennessee’s captive insurance statutes, our Captive Insurance Section team makes the difference. We have real-world industry experience, leadership, and expertise that translates into solving regulatory challenges faced by captive insurance companies choosing to establish a domicile in Tennessee.

“Our licensed captives have a wide range of coverages, across a diverse range of industries.”

How did you handle things when everyone was working from home?

Despite the many issues surrounding the COVID-19 pandemic, Tennessee’s Captive Insurance Section was fully operational during the outbreak. We were quite fortunate that the Department of Commerce and Insurance’s leadership recognised years ago the value of working remotely, and we were able to shift seamlessly to an online environment with 100 percent of staff working remotely with full capability.In addition, our implementation of a paperless environment meant uninterrupted support of our captive insurance companies and service providers, processing new applications, and ongoing requests. During the pandemic, we able to process requests with the same speed and efficiency as before.

Does Tennessee want to attract any particular kind of captives?

Due to our regulations and legislation, we are fortunate in Tennessee to be able to work with all types of captive licences. Our licensed captives have a wide range of coverages, across a diverse range of industries, and we encourage that.

What does the future hold for the Tennessee captive insurance market?

The future is bright. Tennessee governor Bill Lee’s leadership, with a continued focus on being business-friendly, ensures Tennessee will remain a top domicile for captive insurance companies, and continue to attract new captive insurance companies to Tennessee. This leadership makes the Volunteer State a domicile where businesses want to start—and grow—their captive insurance companies.In addition, there are handfuls of existing captives looking to relocate their existing companies from other states and countries around the world.