New Rules Set Tennessee Apart Among U.S. Captive Insurance Domiciles
NASHVILLE – With an eye toward increasingly balanced regulation, the Tennessee Department of Commerce & Insurance (TDCI) is ushering in new, more modern rules to guide the Volunteer State’s burgeoning captive insurance industry.
Three new rules set Tennessee apart from other U.S. domiciles. First, Tennessee would allow individual protected cells to go dormant and later to be restarted. Second, new captives and cell companies would no longer be required to be audited if they were formed in the last quarter of a year, thus representing cost-savings for the for captives and cell companies. Finally, a full financial exam will not be required where specific limited questions have arisen about the operation of a captive company. The new rules take effect Dec. 21.
“These rule changes represent six years’ of lessons learned in licensing and regulating captive insurance companies and again demonstrate Tennessee’s commitment to growing an important economic component,” said TDCI Commissioner Julie Mix McPeak.
TDCI’s Captive Insurance Section is responsible for regulating the state’s captive insurance industry. Captive insurance represents an option for corporate groups that want to take financial control and manage risks by underwriting their own insurance rather than paying premiums to third-party insurers.
Earlier this year, Tennessee was included for the fourth consecutive time as a finalist for the U.S. Captive Domicile of the Year Award by Captive Review magazine. Additionally, the latest annual survey of Tennessee captive insurance professionals shows that Tennessee’s captive insurance sector has generated an economic impact of over $692 million during calendar year 2016 in Tennessee. That represents an increase of 59 percent compared to calendar year 2015.