The State of Tennessee is working to make itself a more attractive domicile to locate a captive insurance company with the introduction of new legislation.
Tennessee Governor Bill Haslam has signed into law Public Chapter 354, which aims to modernise the Revised Tennessee Captive Insurance Act of 2011.
The legislation is aimed at providing protected cell captives greater flexibility in moving cells between captives and spinning off individual cells into standalone captives.
It also allows captives to develop a process to exist in a dormant status so managers can procure insurance from the traditional market, when it is more advantageous. It can then return to the captive structure when the market fluctuates.
“Less than ten years ago, successful Tennessee businesses had to look elsewhere to form a captive insurance company because there wasn’t a place for them here,” said Julie Mix McPeak, the commissioner of the Tennessee Department of Commerce & Insurance (TDCI).
“Today, Tennessee is at the forefront of the industry due in no small part to the leadership of Governor Bill Haslam, the strong captive insurance team we have in-house led by director Michael Corbett, and the robust support that we receive from members of the General Assembly.”
In 2011, there were only two captive risk-bearing entities (RBEs) in Tennessee.
The State now has over 160 captive insurance companies and a total of 545 RBEs.
For the first time in the State’s history, total premium dollars surpassed $1 billion in the 2016 tax year.
Furthermore, captive managers attributed more than $650 million in direct and indirect spending in the state to the captive insurance industry, according to a 2016 economic development survey.
“Tennessee’s captive laws already make the Volunteer State the strongest domicile in the world for the operation of cell companies,” said Michael Corbett, captive insurance section director at TDCI. “This legislation gives Tennessee protected cell captives even greater flexibility in moving cells between captives and spinning off individual cells into standalone captives. This is a significant efficiency for Tennessee companies.”
Kevin Doherty, president of the Tennessee Captive Insurance Association, commented: “This legislation reinforces the Volunteer State’s reputation as one of the nation’s premier captive domiciles.”
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Tennessee Department of Commerce & Insurance, Tennessee, Bill Haslam, Legislation, North America