Tennessee governor Bill Lee has approved the latest modernisations to the Volunteer State’s captive laws, which is set to fuel its “growing reputation as a first-choice domicile”.
The legislative updates include authorising parametric insurance coverage and reducing the statutory capital needed by protected cell captive insurers to commence operations from $250,000 to $100,000, among other improvements.
By reducing the minimum capital and surplus needed to start protected cell captive insurance companies, Tennessee Department of Commerce & Insurance (TDCI) captive sector director Belinda Fortman says: “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.”
Last year was a record-setting year for the state’s captive insurance section as captive premium volume topped $1.6 billion and the number of active captives in Tennessee increased to 146.
Through the first five months of 2021, Tennessee has averaged 10 new captive formations a month. Fortman explains: “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,” she adds.
Tennessee Captive Insurance Association (TCIA) president Kevin Doherty comments: “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.”
