Lee approves modernization of captive insurance laws

Gov. Bill Lee speaks at a groundbreaking event in Nashville on Dec. 13, 2019. (Erik Schelzig, Tennessee Journal)

A release from the state Department of Commerce and Insurance:

NASHVILLE – Newly approved updates to Tennessee’s captive insurance statute will help fuel the Volunteer State’s growing reputation as a first-choice domicile for companies looking to establish a captive insurance company.

Tennessee Governor Bill Lee recently approved the latest modernizations to Tennessee’s captive laws, including 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 (called a “captive”) represents an option for many corporations and groups wanting to take financial control and manage their business risks by forming their own insurance company. The Tennessee Department of Commerce & Insurance (TDCI) is responsible for properly regulating Tennessee’s captive insurance industry.

“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 Section Director Belinda Fortman. “By modernizing Tennessee’s captive insurance statute to reduce the minimum coverage for protected cell captive insurers as well as including parametric insurance coverage for the first time, the Volunteer State is providing strong incentives for captive owners to choose Tennessee as their captive domicile.”

2020 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. Today, over 750 risk-bearing entities call Tennessee home. Additionally, TDCI’s leadership has drawn international accolades as Fortman was recently named to Captive Review magazine’s “Power 50” list.

Said Fortman: “Through the first five months of 2021,Tennessee has averaged 10 new captive formations a month, which is an impressive pace that we hope to see continue. The growth of the captive insurance industry in Tennessee that we are seeing today is a byproduct of years of focused teamwork and the far-reaching vision of Tennessee’s leaders. I am thankful for the hard work and support of Governor Lee, the members of the Tennessee General Assembly and the captive insurance stakeholders who are helping make Tennessee truly the ‘Gold Standard’ of the South.”

Tennessee Captive Insurance Association (TCIA) President Kevin Doherty said: “The TCIA is grateful that the Department and the General Assembly, two of the three legs of the proverbial three-legged stool, have continued to support important updates like this to the captive law that help Tennessee remain at the forefront of our industry. Specifically, the TCIA supports the reduction in the minimum capital for protected cell captives to $100,000 and believes this will help to spur significant growth in cell captives in Tennessee. The TCIA also believes it is significant that Tennessee is leading the way now in permitting captives to offer parametric insurance that can offer innovative ways to cover large numbers of insureds in natural disasters or other similar events. As the third leg of the stool, the TCIA looks forward to continuing to work with the other two legs of this public private partnership to maintain Tennessee’s prominence as a captive insurance domicile.”

To learn more about captive insurance in Tennessee, visit captive.tn.gov or call (615) 741-3805, (855) 809-0069 (toll free) or email at captive.insurance@tn.gov.

6 Responses to Lee approves modernization of captive insurance laws

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    Cryan says:

    Free advice to Bill Lee’s primary opponents: Parametric insurance is a response to climate change. Bill Lee’s bureaucracy and policymaking is based on the assumption Global Warming is real and manmade.

    Put that on a mailer and the Tennessee * Report, and you’re a shoo-in, Mr. Glenn “KANE” Jacobs.

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    Phillip Lassiter says:

    Feckless Repubs won’t oust Lee. Too many Dems support him. It will be 2025 before they turn on him. Carry on

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      Cryan says:

      Bill Lee really is the best thing Tennessee Democrats could hope for in a governor right now. You may be right about him winning because Republicans are feckless. Kane is a coward if he doesn’t challenge Bill Lee.

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      Stuart I. Anderson says:

      Phillip, the Democratic Party is moribund in Tennessee with the exception of the two liberal ghettos which they can trash to their hearts content since no sentient conservative should ever think of living there so what else do Tennessee leftists have to do other than fantasize. Fantasize about someone being stupid enough to challenge Bill Lee next year and/or fantasize about some big “civil war” the Republicans are going to wage against each other. It’s so cute when they actually rhetorically say incendiary things to make that war come about as if any Republican pays the slightest attention to what leftists say or think.

      Please don’t spoil their fun Phillip. When they’re fantasizing, at least they are not destroying or defacing property or canceling and censoring things they don’t agree with. At least that’s something.

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    Taxpayer #314 says:

    This program seems akin to the BIG idea in Texas that was put in place (by republicans) for the energy companies to escape the rules that required financial investment for capital improvements to harden the infrastructure so that it could operate safely during an emergency. Those companies did save a lot of money but the electric system failed completely during the next big storm. Remember, Stuart that is when your big buddy, Edwardo Rafael Cruz took his family and escaped to the beach leaving all his constituents in dire straights to fair for themselves. This is just another sneaky short-cut method for conservatives to cut out a little more profit for them at the public’s expense. That is the way they operate and the public should indeed “spoil their fun.”

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    Taxpayer #314 says:

    And then we find out today that Lee also passed the same sort of sneaky bill that passes high fees for remediation of leaky underground storage (gas) tanks on to families and small businesses in our state. The conservatives figure out a new way to give tax breaks to the big corporations (Lee’s big donors) and save them money while they pass on the actual costs to small, family run businesses. The republicans always have a way for the rich to get richer and well, we just won’t talk about the rest…
    Is this really what the people of Tennessee deserve from our misguided politicians? I think the voters should be paying closer attention as the next election approaches. We can and should do much better! Most of our current, so called “leaders” are disgraceful and many of them have law suits pending.

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