NU Online News Service, June 14, 2:53 p.m. EDT
Tennessee Gov. Bill Haslam has signed legislation that will allow the formation of captive-insurance companies in the state.
The new legislation, passed unanimously by both the Tennessee House and Senate in May, could change risk management for corporations both within and outside of Tennessee, according to Nashville, Tenn.-based Burr & Forman LLP partner Kevin M. Doherty, who helped draft the legislation.
Doherty worked closely with Tennessee Commerce and Insurance Commissioner Julie McPeak, a former Burr & Forman attorney, and members of the Tennessee General Assembly to draft the legislation and advocate for its passage.
“This law puts Tennessee at the forefront of the captive-insurance industry and will allow companies throughout the country to bring their captive-insurance programs to Tennessee and take advantage of our cutting-edge law,” Doherty says in a statement.
The law, one of the most progressive in the country, allows for the formation of new types of captive-insurance companies in the state, Burr & Forman says. It will add incorporated-cell captives, branch captives and special-purpose financial captives in addition to the standard single-owner, association, industrial-insured and risk-retention-group captives.
In addition to standard property and casualty coverages, the law now permits the formation of captives to write workers’ compensation for entities that qualify as self-insureds, as well as employee-benefits and medical stop-loss captives.
Doherty, head of the firm’s Insurance Group, notes that this could change risk management for many companies in Tennessee and elsewhere.
“The formation of or participation in a captive can be an effective risk-management technique for virtually any company,” says Doherty.