From: Captive International
The State of Tennessee has established its own captive, which it will initially use to insure property and cyber liability policies. The move was made possible by the Tennessee General Assembly enacting legislation permitting the State Treasurer David Lillard to create the state captive with the approval of the Tennessee Board of Claims.
Administered by the Tennessee Department of Treasury, Division of Claims and Risk Management, the State of Tennessee is self-insured for property and general liability. This covers all state-owned buildings and contents, including the campuses of Tennessee public institutions of higher learning, with a total property value of $31.4 billion as of July 2022.
The state said the Tennessee Captive Insurance Company will allow it to operate with a higher degree of efficiency to insure property losses up to deductible limits, access the wholesale reinsurance markets to reduce premiums, minimize volatility in pricing, and underwrite the state’s own unique risks.
The Division of Claims and Risk also expects the captive to help them 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 nonprofit state captive authority to operate, following its recent approval of the authorizing legislation by the Tennessee General Assembly.
“Commerce & Insurance has advocated for captive insurance as a smart business option to lower costs and increase specifically tailored protections,” said Department of Commerce & Insurance Commissioner Carter Lawrence. “Now that the State is establishing a captive insurance company, taxpayers will benefit from these same advantages.”