Survey: Tennessee Captive Insurance Creates $692 Million Economic Impact

NASHVILLE – For the fourth consecutive year, the State of Tennessee is a finalist for the U.S. Captive Domicile of the Year Award, the premier recognition in the captive insurance industry. Organized by London-based Captive Review magazine, the U.S. Captive Services Awards recognize captive insurance regulators, products, and services that demonstrated excellence during the previous year.

The Tennessee Department of Commerce & Insurance’s (TDCI) Captive Insurance Section is responsible for regulating the state’s captive insurance industry. Captive insurance represents an option for corporate groups that want to take financial control and manage risks by underwriting their own insurance rather than paying premiums to third-party insurers.

Tennessee’s consistent inclusion among the ranks of top national and international captive domiciles comes on the heels of the latest annual survey of Tennessee captive insurance professionals. According to the survey, the captive insurance sector has generated an economic impact of over $692 million during calendar year 2016 in Tennessee which represents an increase of 59 percent compared to calendar year 2015.

The survey was completed by 193 captive insurance professionals who provided information on economic activities related to investments and deposits as well as direct and indirect spending associated with Tennessee’s captive insurance sector. Survey results show direct capital investments of over $665 million and total spending exceeding $27 million. Additionally, 98 professional jobs dedicated to captive insurance were reported at the end of 2016 – 16 more than were reported in 2015.

“Governor Haslam had a vision in 2011 that we could revitalize the state’s fledgling captive industry and remake it in order to greater benefit the Volunteer State,” said TDCI Commissioner Julie Mix McPeak. “The captive sector’s success is paying dividends for Tennessee by promoting investments, direct spending, and creating new job opportunities with high-paying salaries. Our latest inclusion on the Captive Domicile of the Year shortlist demonstrates, again, that Tennessee’s reputation continues to rise among risk managers, companies, and employers.”

The U.S. Captive Services Awards ceremony will be held on Monday, August 7, at the Hilton in Burlington, Vermont. Judges will award the prize based on the highest standards of regulation, accessibility, innovation and other criteria.

Captive Insurance Section Director Michael Corbett added: “Being nominated for the Domicile of the Year award is further proof that Tennessee remains at the forefront of captive insurance, and the national and international captive insurance communities are taking notice. After years of getting close, we’re hoping to take home the trophy in 2017!”

A comparison of growth is below:

Captive Section Economic Development Survey 2015 2016 Percent Increase 2015-2016
Reporting Companies 176 193 10%
Full Time Employment 82 98.1 20%
Total Spending1 $25,640,397 $27,059,678 6%
Total Direct Capital Investment2 $410,444,633 $665,841,627 62%
Total Economic Impact $436,085,030 $692,901,305 59%

[1] Spending includes Direct spending: Payroll, rent, legal services, actuarial services, accounting services, audit services, captive management fees, director fees, banking fees, equipment purchases, annual meeting costs and premium taxes and Indirect Spending: Food, lodging and conference/meeting space expenses.

[2] Direct capital investment includes: Letters of credit, cash deposits and investments in TN Financial Institutions.

At the end of calendar year 2016, 538 risk-bearing entities (RBEs) had been established in Tennessee representing a 24 percent increase over 2015.

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