The Gold Standard of the South: Capturing Tennessee’s Domicile Milestones

Captive insurance companies have found a receptive home in Tennessee - beginning in 1978, as one of the first states to adopt captive legislation, to 2011 when our state’s leaders modernized the state’s captive laws. Tennessee is experiencing exceptional growth due to these prior and continued efforts. Before updating our captive legislation, Tennessee had licensed only two captive insurance companies. Since then, and as of December 2020, Tennessee has licensed 211 captive insurance companies and 489 cell captives – for a total of 700 risk bearing entities. The growth of the captive insurance industry remains a priority for Governor Lee and Commissioner Lawrence – ensuring a bright future for Tennessee as a captive insurance domicile. From an economic impact perspective, Tennessee has written over $6.4 billion in premium and collected over $16 million in taxes and fees. The captive insurance sector has an estimated economic impact in Tennessee of $31 million in direct annual spending and continues to project growth.

Tennessee has now emerged as a first choice for companies worldwide looking to create a captive insurance company or to relocate their existing one.  The Captive Division is known for our knowledgeable and responsive team of professionals who are dedicated to serving the needs of our captive companies. Recently, we announced that through our dedication and efforts, International Paper – a Memphis-based company that leads globally in packaging, pulp and paper products – chose to relocate their captive insurance company from Vermont to Tennessee. International Paper became our state’s 700^th risk bearing entity. This is a milestone for Tennessee, and I commend International Paper for choosing to relocate their captive insurance company here as it reaffirms their confidence in us and commitment to their global headquarters’ home state. This success is just one example that represents the culmination of years of efforts by former Governor Haslam, current Governor Lee, the Tennessee General Assembly, the Department of Commerce and Insurance and the members of the Tennessee Captive Insurance Association (“TCIA”) all working together in a productive public/private partnership.

As an industry veteran, my leadership style comes with a unique business perspective that differentiates Tennessee from other domiciles globally. My vision for 2021 is to continue to build on my relationships with industry leaders in order to create successful captive insurance programs and to provide excellent customer service through focusing on an open-door policy.  We are trusted by the captive industry to provide flexible and business friendly regulation through partnering with our captive managers and owners to ensure their captive programs meet their risk management goals. Additionally, my vision includes building out efficient communications through working closely with the TCIA, developing stakeholder newsletters and using technology to improve our interfacing with our industry. While we had a successful and beneficial 2020 TCIA virtual conference, I look forward to 2021 and finding CDC approved solutions to once again meet in person with industry leaders and Tennessee captive insurance stakeholders.

If your company is considering starting a captive or relocating, Nashville, Tennessee is currently one of America’s hottest cities – where amenities and opportunities abound. Tennessee offers the crucial infrastructure your captive must have to get started, including approved captive management experts, actuaries, CPA firms, financial institutions, law firms and other service providers, many available locally, to be part of your captive insurance team. When your captive is up and running, we can easily accommodate your travel and entertainment needs with an abundance of five-star hotels, fine dining and there are endless legendary live entertainment options, which is why we are nicknamed “The Music City.” Tennessee’s pro-business environment and our central location in the United States as a transportation hub provide an excellent incubator for captive business relocations and entrepreneurial-spirited economic development.

From a regulatory perspective, Tennessee’s captive advantages include permitting virtually all captive licensing types allowable under the captive statues of other leading domiciles. In addition, we are able to write medical stop loss directly, we have the ability to insure annuities, we have flexible options for the minimum capital and surplus, we provide in-house examinations to minimize your costs, we have options for the re-domestication process and we have competitive premium tax rates.  Further, for captive owner’s considering re-domesticating their captive from an offshore domicile, the first year $5,000 minimum premium tax is waived for alien re-domestications, which allows for a reduction or elimination of expenses. Furthermore, Tennessee is one of the few states offering the series limited liability corporate formation option. Tennessee law provides series cells to be formed and approved as incorporated cells at a lower cost and administrative burden, as well as offering additional flexibility for effective dates than incorporated cells created under other corporate formation types. We welcome your captive insurance company and look forward to listening to your specific needs.

Tennessee is thrilled to have reached the 700^th risk bearing entity milestone as we hold true to our title of being the gold standard of the south. We proudly welcome the opportunity to serve as your domicile and reach milestones together - whether you are a corporation based within or outside of our state, or an existing captive moving to Tennessee from other national or international domiciles. For more information please visit our website at www.captive.tn.gov  and the Tennessee Captive Insurance Association’s website at www.tncaptives.org.

Belinda Forman serves as the Director of the Captive Insurance Section at the Tennessee Department of Commerce and Insurance.

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