The State of Tennessee has established the Tennessee Captive Insurance Company to create additional efficiencies and savings when insuring state property.
The captive’s implementation is an initiative to allow the State to insure property losses up to deductible limits and access the wholesale reinsurance markets to reduce premiums.
The introduction of the company also looks to minimise volatility in pricing and underwrite the state’s own unique risks.
The Tennessee division of claims and risk expects the captive to help it insure unique and difficult risks and reduce overall insurance costs. The use of a captive will also allow the State to better evaluate and control the risks of Tennessee state government.
Captive insurance companies in Tennessee are regulated by the Tennessee Department of Commerce and Insurance, which recently granted the non-profit state captive authority to operate, following its recent approval of the authorising legislation by the Tennessee General Assembly.
According to the State, the potential savings from the new captive will benefit taxpayers as they will be used to write policies with lower premiums, or to return or invest the savings to prepare for future claim payouts, while saving taxpayers’ money.
The state captive insurance company will initially issue property and cyber liability policies. However the State may add other lines of coverage in the future.
The captive is governed by its Tennessee Captive Insurance Board, composed of Tennessee state officials, including the state treasurer, the commissioner of human resources, the commissioner of finance and administration, the comptroller of the treasury, and the secretary of state.
Carter Lawrence, commissioner of the Tennessee department of commerce and insurance, says: “Commerce & Insurance has advocated for captive insurance as a smart business option to lower costs and increase specifically tailored protections. Now that the State is establishing a captive insurance company, taxpayers will benefit from these same advantages.”
Tennessee State treasurer David Lillard, comments: “I thank the Tennessee General Assembly for giving our state the ability to operate in a fiscally smart manner. The Tennessee Captive Insurance Company will save Tennessee taxpayers millions of dollars in the coming years. This is yet another way Tennessee works to keep taxes low for our citizens.”
