Tennessee passes new protected cell legislation


Tennessee governor, Bill Haslam has signed new protected cell captive insurance legislation into law, lowering capital and surplus requirement for protected cell captives and eliminating the requirement for a holding company.

The bill, which was passed unanimously by both houses of the Tennessee General Assembly, lowers the capital and surplus requirement by 50 percent from $500,000 to $250,000.

In addition, it enables a person or a business entity to sponsor a protected cell captive insurance company and eliminates the requirement for a holding company. The bill also applies the maximum premium tax to the protected cell company as a whole rather than to each cell and allows risk participation by the cells on a direct basis for all the participants.

Kevin Doherty, president and chairman of the Tennessee Captive Insurance Association, told Captive International: “most protected cell captives will have less 10 or fewer cells, so this should be good news for the industry and access for companies to the captive law.”

The law also enables cells to provide direct insurance coverage as well as reinsure one another. “This is particularly helpful in the pool context where any groups of companies forming a protected cell captive together will need to pool their risk in order to achieve risk distribution for federal tax purposes.”

Doherty said: “this legislation was a huge priority for the TCIA. This legislation further strengthens Tennessee’s position as a leading domicile not only in the US, but worldwide.” 

Tennessee, captive insurance, protected cell companies, US, domiciles

Captive International