[Watch and read] Expansion and continuing innovation
Carter Lawrence (pictured) of the Tennessee Department of Commerce & Insurance talks with Captive International about what has set Tennessee apart as a captive domicile.
The Tennessee Department of Commerce & Insurance has reported another year of robust growth in the state’s captive insurance sector, marking a significant milestone in what has been an ongoing trend of expansion and innovation.
Carter Lawrence, the department’s Commissioner, shed light on the state’s achievements and the factors driving its success in a conversation that revealed the strategy and the philosophy behind Tennessee’s thriving captive insurance market.
Tennessee’s captive insurance landscape has been on a consistent upward trajectory, and the latest figures underscore this trend.
“Over the last year, there was a greater than 21 percent increase in captives. Our active count is now 168 captives and 541 cells,” Lawrence reported. This significant growth is not just a random spike but rather a continuation of the momentum that Tennessee has been building over the past several years.”
The increase in numbers is a testament to the state’s effective regulatory environment and its strategic efforts to attract and retain captives.
“We’re very excited about the growth and momentum that we’re seeing in the state,” Lawrence added, emphasising the sense of optimism that pervades Tennessee’s approach to captive insurance.
“Come up, say hello to the team, and find out how Tennessee can better serve you.” Carter Lawrence
The role of a skilled team
The numbers are not just a point of pride but a reflection of a well-oiled machine that Lawrence attributes to several key factors. One of the primary drivers of the growth is the department’s team.
“I would attribute our growth first and foremost to our team. Many people on our team have come into the department with a lot of experience, and they’ve been able to apply that,” he said.
Lawrence highlighted the professional development initiatives within the department, noting that all staff members are certified with the International Center for Captive Insurance Education, and several are certified public accountants. This focus on continuous education ensures that the team is knowledgeable and capable of adapting to the evolving needs of the captive insurance industry.
He underscored the importance of a customer-focused approach. “Being personal, personable, responsive, approachable—that’s a core component of their being ambassadors for the state,” he explained. This philosophy of engagement and accessibility has evidently paid off, as captive owners and prospective clients are met with a level of service that helps Tennessee stand out.
Regulatory framework: evolving with the industry
Lawrence pointed to Tennessee’s dynamic regulatory framework as a vital element of the state’s success, in addition to the strength of the team. “We have been able to evolve to the needs of the industry to have a regulatory framework that best fits the needs of captives in Tennessee,” he said.
This adaptability is facilitated through a close partnership with the Tennessee Captive Insurance Association, which works alongside the department to propose and implement necessary changes to the state’s laws and regulations.
This year, the association successfully brought a package of updates to the statutory framework, which Lawrence believes will further enhance Tennessee’s attractiveness to captives. The ability to quickly and effectively respond to industry demands ensures that Tennessee remains competitive and continues to provide an environment conducive to growth and innovation.
Emerging trends and new opportunities
The growth in Tennessee’s captive insurance sector is not just about the numbers; it’s also about the diversification and innovation within the industry. Lawrence noted several emerging trends that are shaping the landscape.
“Captives are finding new and innovative ways to grow,” he observed, citing examples such as property programmes, self-insured workers’ compensation, tenant liability, general liability, and employer health stop-loss.
These developments are particularly significant because they illustrate how captives are becoming a more viable option for mid-market and smaller companies, which historically may not have found captives feasible.
“As companies are continuing to diversify their portfolios in an attempt to maximise the benefit of captives in their risk programmes, we know that will be another growth opportunity,” Lawrence added.
A notable area of interest has been the increase in protected cell captives and risk retention groups. While it’s difficult to pinpoint the exact causes of this growth, Lawrence believes it’s a combination of factors, including the department’s effective team and the state’s responsive regulatory environment.
Innovative regulatory initiatives
One of the most significant regulatory innovations in Tennessee is the creation of the Tennessee Captive Insurance Company, which allows the state to self-insure for property and general liability. This initiative is a testament to the state’s commitment to innovation and a practical solution for managing risk across its vast portfolio of properties.
“With its creation, the state of Tennessee is able to operate with a higher degree of efficiency as it works to ensure property losses up to the deductible limits, access wholesale reinsurance markets, reduce premiums, minimise volatility in pricing, and underwrite the state’s unique risks,” Lawrence explained.
He cited Nealon Stadium, home to the Tennessee Volunteers, the university football team, as an example. As a major state-owned property, it presents a unique risk profile, and the captive insurance company is designed to address such specific needs.
Why Tennessee?
Given the state’s impressive track record, it’s worth asking: what makes Tennessee so attractive to new captives? According to Lawrence, it boils down to three main factors: the team, the regulatory framework, and the state’s geographic and economic advantages.
“Tennessee is geographically central to 80 percent of the US,” Lawrence pointed out, adding that the state’s quality of life and continued economic growth, particularly in metropolitan areas such as Nashville, make it an attractive place for business. The state’s ongoing infrastructure improvements, such as the expansion of Nashville’s airport, are further enhancing its appeal by increasing connectivity with other major markets, including Asia.
Looking ahead
As Tennessee continues to build on its success, Lawrence is keenly aware of the competitive nature of the captive insurance industry. “We know we can’t rest on our laurels, and we have to keep reinforcing what sets us apart,” he acknowledged. Lawrence believes that what truly sets the state apart is its team’s commitment to service and excellence.
Lawrence invites industry professionals to engage with the department at conferences and events. “Come up, say hello to the team, and find out how Tennessee can better serve you,” he encouraged.
In conclusion, Tennessee’s captive insurance sector is thriving due to a combination of skilled personnel, a responsive regulatory framework, and strategic location advantages. As the state continues to innovate and adapt, it is well-positioned to remain a leader in the captive insurance industry for years to come.
Carter Lawrence is commissioner of the Tennessee Department of Commerce & Insurance. To find out more contact captive.insurance@tn.gov
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