The 2017 legislation, enacted as Public Chapter 354, was signed into law on 12 May, further modernising the Revised Tennessee Captive Insurance Act of 2011.
“Tennessee’s captive laws already make the Volunteer State the strongest domicile in the world for the operation of cell companies,” said Michael Corbett, captive insurance section director at the Tennessee Department of Commerce & Insurance (TDCI).
“This legislation gives Tennessee protected cell captives even greater flexibility in moving cells between captives and spinning off individual cells into standalone captives. This is a significant efficiency for Tennessee companies.”
The legislation also allows captives to develop a process for a captive to exist in a dormant status so managers may procure insurance from the traditional market when advantageous and later return to the captive structure when the market fluctuates.
“This legislation reinforces the Volunteer State’s reputation as one of the nation’s premier captive domiciles,” added Tennessee Captive Insurance Association president Kevin Doherty.
Tennessee hosts 160 captive insurance companies and a total of 545 risk-bearing entities.
For the 2016 tax year, total premium dollars surpassed $1 billion for the first time in the state’s history and a 2016 economic development survey of captive managers attributed more than $650 million in direct and indirect spending in the state to the captive insurance industry.
TDCI commissioner Julie Mix McPeak commented: “Less than 10 years ago, successful Tennessee businesses had to look elsewhere to form a captive insurance company because there wasn’t a place for them here.”
“Today, Tennessee is at the forefront of the industry due in no small part to the leadership of governor Bill Haslam, the strong captive insurance team we have in-house led by director Michael Corbett, and the robust support that we receive from members of the General Assembly.”