The Tennessee governor, Bill Haslam, has signed the new captive bill, HB 2228, into law, effective 28 April.
Last week, the Tennessee Senate signed the bill after it received 31 votes to none.
Most notably, the legislation establishes a new way for captives to redomesticate to the state.
Before the new law, companies needed to create a new Tennessee captive and then either merge the old insurer into the new one, or place its policies and assets in the new captive.
The new legislation means that companies can simply register a transfer of the captive’s domicile once the insurance department has approved the redomestication.
The legislation also requires legal actions brought against a protected cell captive to specify which protected cells are a party to a suit. The change addresses industry concerns that the walls between cells will not be respected by courts.
Tennessee’s new captive legislation also reforms self-procurement tax forgiveness. Tennessee companies with foreign captives facing a liability on current or past-due procurement taxes will have those liabilities forgiven if they redomesticate that captive back to Tennessee by the end of 2018.
Companies will receive self-procurement tax forgiveness if they transfer a complete line of business into a newly formed Tennessee captive with at least $15 million of capital and $30 million of annual premium.
Finally, the legislation clarifies and sets a uniform due date of 15 March for annual reports and payment of premium taxes, although risk retention groups must still file their annual report by 1 March.
