Tennessee enhances captive market with new regulation
Tennessee has recently enhanced its insurance legislation in a bid to augment its jurisdiction as a go-to domicile in the captive industry.
According to the Tennessee Department of Commerce and Insurance (TDCI)’s captive insurance section, the provisions in the 2016 legislation allow companies wishing to re-domesticate there to utilise a seamless procedure effectively transferring the entity directly from the old domicile into Tennessee.
Additionally, captives re-domesticating from offshore to Tennessee are now eligible to forego paying premium taxes in either the first or second year of their operation, provided they commit to staying in operation for five years or pay back the foregone premium tax with interest.
Signed into law by Tennessee Governor Bill Haslam, the legislation represents the third update to the Revised Tennessee Captive Insurance Act of 2011, which the General Assembly approved earlier in the year.
Tennesse’s captive industry has flourished since the act has passed, with 133 captive insurance companies and 321 cell companies for a total of 454 risk-bearing entities (RBEs) based in the domicile, compared to only two in 2011.
Michael Corbett, the captive insurance section director, said: “The captive insurance industry operates in a competitive, fast-moving environment that demands competitors keep pace or be left behind.
“Tennessee must be nimble and forward-looking if we are going to surpass the goals we’ve established and continue our unprecedented growth. I’m grateful for the foresight that Governor Bill Haslam and Commissioner Julie Mix McPeak have shown by supporting these changes in the legislation.”
Kevin Doherty, president of the Tennessee Captive Insurance Association, added: “With this legislation in place, if you are a Tennessee business there is now no reason to have your captive based anywhere else.”