Tennessee Announces 1,000th Risk-Bearing Entity Milestone

One of the First States to Adopt Captive Insurance Statute, Tennessee Commemorates 1,000th Risk-Bearing Entity
Monday, May 08, 2023 | 07:00am

NASHVILLE – The Tennessee Department of Commerce & Insurance (“TDCI”) announces that Tennessee has now licensed its 1,000th risk-bearing entity since the Captive Insurance Section began licensing this unique risk-management tool for businesses. 

Tennessee ranks as the 9th largest captive domicile in the United States by the Insurance Information Institute’s 2022 rankings and 13th largest domicile in the world according to Allianz Global 2022 rankings. Further, Tennessee businesses paid a total of $2.4 billion in premiums in 2022. 

“While Tennessee is one of the oldest domiciles in the U.S., it wasn’t until our captive insurance statutes were modernized in 2011 that the captive insurance market in Tennessee began to flourish,” said TDCI Commissioner Carter Lawrence. “Since then, Tennessee's captive industry has grown both in company size, licensees, and professional captive service providers every year. The support of Governor Bill Lee, the Tennessee General Assembly, and the Tennessee Captive Insurance Association has enabled captive insurance to grow steadily in Tennessee, and I am proud TDCI has been able to facilitate that development.” 

TDCI’s Captive Insurance Section is responsible for regulating the Tennessee captive insurance industry. Captive insurance represents an option for businesses that want to take financial control and manage risks by underwriting their own insurance coverage rather than paying premiums to third-party insurers. 

“Businesses utilizing captive insurance pays dividends for all Tennesseans,” said TDCI Captive Insurance Section Director Mark Wiedeman. “Captive insurance helps keep costs low which in turn helps companies create new jobs and make new investments that create direct and indirect economic impact in the years ahead. Tennessee’s reputation continues to rise among risk managers, captive managers, and other captive professionals. We are grateful and look forward to continuing to assist the industry by providing a balanced and predictable regulatory environment that allows for continued captive growth.” 

On the occasion of Tennessee licensing its 1,000th risk-bearing entity, captive insurance licensees are speaking about impact of the Department and its emphasis on responsible regulation.

Formed in 1983, Distributors Insurance Company, a wholly owned subsidiary of the Tennessee Valley Public Power Association (“TVPPA”), is the oldest continuously operating association captive insurance company domiciled in Tennessee.

TVPPA President and CEO Douglas Peters said the company was created “to provide workers’ compensation, general liability, and auto insurance to TVPPA member distribution utilities.”

Peters said, “The parent company and most of our members are located in Tennessee, so it was natural for us to consider Tennessee as the domicile for our captive. In addition to our location, Tennessee’s innovative approach to captive insurance regulation caused Distributors Insurance to choose to domicile in Tennessee and, we have found no reason since to question that original decision.”

Pinnacle Financial Partners redomesticated to Tennessee from Nevada because of Tennessee’s modernized captive insurance statute.

“Tennessee’s captive statute was, and still is, the gold standard for captive formations in the U.S.,” said Pinnacle Chairman, Rob McCabe.

Tennessee Captive Insurance Association President Kevin Doherty said, “This is a defining achievement for Tennessee and shows how the hard work of the domicile and everyone involved has helped to create dramatic growth over the last 12 years. It is also emblematic of the success of the public-private partnership in Tennessee pursuant to which the Department and the captive insurance industry have worked together to create one of the top U.S. domiciles.”

“As we commemorate the 1,000th risk-bearing entity, I want to thank the captive managers of the companies who were among the first to either open a domicile in Tennessee or move to the Volunteer State because of what the difference they found here,” said TDCI Assistant Commissioner for Insurance Bill Huddleston: “Whether a company has just begun their work in Tennessee or if they have been here for years, our team is ready to answer their questions and assist them in any we can.”

To learn more about the difference that companies can find in Tennessee, visit us online.