Tennessee Touts 2021 Changes to State’s Captive Law and Record 2020 Formations
Newly approved updates to Tennessee’s captive insurance statute will help boost the state’ reputation as preferred domicile for companies looking to establish a captive insurance company, according to the state’s insurance regulator.
Tennessee Governor Bill Lee recently signed the latest changes to the state’s captive laws that include authorizing parametric insurance coverage and reducing the statutory capital needed by protected cell captive insurers to commence operations from $250,000 to $100,000, amongst other improvements.
A captive insurance company is an option for corporations and groups wanting to form their own insurance company. The Tennessee Department of Commerce & Insurance (TDCI) is responsible for regulating captives.
“By reducing the minimum capital and surplus needed to start protected cell captive insurance companies, Tennessee is sending a strong message that we value companies’ freedom to invest their money to obtain the highest return on investment possible rather than allocate money in excess of what is needed to support the potential risk of insurance losses in their captive,” said TDCI Captive Insurance Section Director Belinda Fortman.
Fortman added that reducing the minimum coverage for protected cell captive insurers as well as including parametric insurance coverage for the first time should create incentives for captive owners to choose Tennessee as their domicile.
Last year was another record-setting year for Tennessee’s captive insurance section as captive premium volume topped $1.6 billion and the number of active captives in Tennessee increased to 146, bringing the state;’s total to more than 750.
Also, through the first five months of 2021,Tennessee has averaged 10 new captive formations a month.
Source: Tennessee Department of Commerce & Insurance
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