Tennessee Captive Insurers Exceed $1B in Premiums in 2017

The state of Tennessee saw domestic captive insurance companies exceed $1 billion in written premiums in 2017 for the first time – a milestone for Tennessee’s burgeoning captive insurance marketplace.

In addition to setting a new benchmark in premiums, the Tennessee Department of Commerce and Insurance (TDCI) approved 52 new risk-bearing entities (RBEs) in 2017, including licensing another captive insurance company that relocated to Tennessee from outside the U.S.

A captive insurance company represents an option for many corporations and groups wanting to take financial control and manage risks by underwriting their own insurance. TDCI’s Insurance Division is responsible for properly regulating Tennessee’s captive insurance industry.

“Not only are the size of new captives increasing, we are seeing the maturation of the captive insurance marketplace,” said Director of Captive Insurance Michael Corbett. “Captive owners are discovering better ways to manage risk through their existing program and are putting more risk, and therefore more premiums, into their captives.”

Tennessee’s captive industry has grown both in company size and licensees every year since 2011 when Tennessee Governor Bill Haslam signed legislation that revamped Tennessee’s regulation of captive companies. In fiscal year 2017, total premiums from captive insurers grew by 54 percent to more than $1 billion.

The captive insurance industry has created jobs with total direct and indirect spending and investment approaching an estimated $700 million annually in Tennessee, including an estimated $3.1 million in state revenues projected to be generated in fiscal year 2018.

The state’s new captives are comprised of nine “pure” captives, meaning an insurance company with one owner, four protected cell captives and 39 cell companies. To date, companies have moved to Tennessee from Bermuda, Delaware, Montana, Nevada, South Carolina, South Dakota, Vermont and Cayman, St. Kitts and Nevis in the Caribbean.

At the end of 2017, Tennessee had 591 RBEs representing a nine percent increase over the number of RBEs in 2016. Four years ago, Tennessee only had two captive insurance companies.

“Tennessee’s reputation as a business friendly state has helped us become one of the first states now mentioned when corporations discuss where to establish a captive insurance company,” said TDCI Commissioner Julie Mix McPeak. “We are proud that our responsible growth and regulation has resulted in the creation of new jobs and a reported economic impact of over $692 million.”