TDCI relaxes rules to help captives cope with the COVID crisis

21-04-2020

TDCI relaxes rules to help captives cope with the COVID crisis

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The Tennessee Department of Commerce and Insurance (TDCI) has relaxed rules requiring applicants for new captive insurance companies meet the TDCI in person, given the travel restrictions that have been imposed due to COVID-19. 

TDCI has offered to meet prospective captive owners by WebEx until travel restrictions have been lifted. It has also introduced more flexibility around board meetings, for the same reasons. 

“The Department will grant a waiver to companies who believe they will not be able to organise, plan and hold their meeting in state in calendar year 2020,” it said. “All companies will still be required to hold a teleconference meeting with their Tennessee resident board member.” 

The comments came as part of new guidance TDCI has published for captive insurance companies domiciled in the state, which is designed to answer commonly asked questions and concerns related to the COVID-19 crisis. 

The guidance also offers some flexibility around audits. TDCI acknowledged auditors may not be able to complete the audited financial report by the June 30 filing date, saying it may grant an extension of up to 60 days in 30-day increments. Captives needing such an extension should submit a request by letter to the appropriate analyst, stating the specific issues related to COVID-19’s impact on the audit as good cause. 

It noted that many companies will be experiencing losses outside of what is covered by their insurance policies. Captives can provide support by leveraging captive surplus through distributions and loan backs, or by changing business plans to expand, pause or cancel specific captive coverages, it said. They can also decide not to renew, and elect dormancy status until the parent company is fully operational, it added. 

“The Department recognises that each captive company is unique, and we will be closely monitoring the solvency and liquidity in considering each request,” TDCI said. “Any approval to distribute funds from the captive is dependent on the financial soundness and surplus capacity of the captive company.” 

TDCI has also issued guidance that applies to risk retention groups (RRGs), addressing filing extension flexibility. It noted captive RRGs do not require hard copy filings in the normal course of business. 

Otherwise, TDCI assured captives that it remains fully operational, having shifted seamlessly onto an online environment. All of its staff are working remotely, and the regulator is “able to process requests with the same speed and efficiency as before,” TDCI said. 

“Our recent implementation of a paperless environment means uninterrupted support of our captive insurance companies and service providers, processing new applications and ongoing requests,” TDCI added. 

Tennessee Department of Commerce and Insurance, TDCI, COVID-19

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