Tennessee
Tennessee looks to the future
The Volunteer State has built a team to tackle tomorrow’s challenges.
“With the help of our team leaders and our legislative team we never miss an opportunity to improve on our existing laws.”
Mark Wiedeman
Tennessee Department of Commerce and Insurance
It’s been a busy year so far for Tennessee as a captive insurance domicile, as it looks to build on the successes of 2022 and then look forward, to 2024 and beyond.
Mark Wiedeman was appointed director of the Tennessee Department of Commerce and Insurance’s (TDCI) Captive Insurance Section in February 2023 and has had six months to assess where the state stands as a captive insurance domicile.
Wiedeman told Captive International that at the end of 2022 Tennessee had increased both its premium volume and the number of captives registered in the Volunteer State. He stressed that the captives that had arrived in the state were solid ones, along with a number of cell captives. Net premiums at the end of 2022 were around $2.1 billion, he said—and have increased since then.
He said that Tennessee is now the ninth largest captive domicile in the US, when ranked by number of captives, and that he has been impressed by the staff that he found at TDCI when he joined, stressing their skills and dedication to the job.
“When you call us, you don’t get someone who may not know what they’re talking about—you’ll get somebody able to respond in a timely manner,” Wiedeman explained. “We have a reputation in the industry that we can be proud of, and we aim to improve on it.”
Wiedeman added that Tennessee’s always looking to better position itself as a domicile. TDCI consistently looks at its regulations to make sure it’s maintaining a regulatory framework that is reasonable but firm.
He underlined that TDCI wants to see good sustainable growth.
“We don’t want to be the type of regulator that automatically says: ‘No’. We don’t want to be an adversarial component to a captive’s success.
“We want to see captives succeed, whether it be in Tennessee or anywhere else, and do anything we can to help give them a framework they can operate and succeed in. Captives are regulated entities, the regulation is part of the process, but we want to make that regulation work for the captive and not against.”
Tennessee prides itself on its customer service. One of the things it encourages is relationship-building between its team of analysts and assigned customers. TDCI hopes to see the captives industry grow in this state, making sure that when people think of Tennessee, they’ll think of a face and a person—a personal connection.
Challenging times
There are challenges ahead however, including the decision by the Internal Revenue Service (IRS) to scrutinise the captives market and especially microcaptives, with a recent proposed regulation. Wiedeman says TDCI will not take a position, but adds that the Tennessee Captive Insurance Association was working on a letter to the IRS apart from the Department.
However, he added, IRS scrutiny can have a good side. When the IRS examined the captives market back in 2016, a number captives re-evaluated their programmes. Some left the market, others re-structured their programmes to become more compliant with the IRS guidance at the time. What resulted were more robust captive programmes that benefited the industry as a whole.
He believes the captive insurance team at the department is agile and adaptive. Should the proposal be adopted, his team will be ready to work with the IRS and get the best guidance possible to limit potential barriers to entry for new captives.
He highlighted the importance of keeping Tennessee’s regulations current, relevant and reasonable. “One benefit we have in Tennessee is that our governor and state legislature recognise the importance of captives,” he said. “We have the backing of the governor and the legislature which is huge—not all domiciles have that benefit. With the help of our team leaders and our legislative team we never miss an opportunity to improve on our existing laws, making Tennessee attractive for captives.”
Retaining the best in the business
The state is growing, as more people move to the Volunteer State to live and take advantage of the infrastructure and beautiful natural scenery.
This was particularly relevant, said Wiedeman, in light of the impact of the Great Resignation, the post-COVID-19 surge of resignations by people who want to change careers.
“In all kinds of industries, including within state and federal government, talent retention is a challenge—and even getting talent can sometimes be a challenge as well,” he said. “Not only do we have the Great Resignation, but I’ve been told that we don’t have the labour force we used to out there either.
“From a government standpoint, you can only do so much—it’s a matter for people individually to choose their career, but I strongly believe that by working to make Tennessee an attractive domicile to live and work in, this can help to attract and retain the talent the captives industry needs.”
He underlined education and other initiatives being carried out by the state and the industry, such as the Captive Insurance Companies Association’s work on getting more women and young people into captive insurance.
TDCI is especially focused on talent retention because there has been a tendency in recent years for employers from out of the state to try to cherry-pick its staff due to their experience and depth of skill in the market. The division has been working hard to grow talent from within, something that it has been working hard on for years now. It was assisted by the decision last year to introduce statewide pay rises for state employees, again to encourage the retention of talent.
Wiedeman concluded by citing some of the work that TDCI has been doing in outreach to universities to attract the best graduates possible, adding that this outreach is already reaping rewards.
“We’re starting to see more of an interest in the industry, which is great, especially from a younger perspective. If we can get more of that talent into the industry, the better the industry is going to be in the future, whether it be from a regulatory standpoint, or just the sector as a whole.”
To contact the Captive Insurance Section of the Tennessee Department of Commerce and Insurance visit www.tn.gov/commerce/insurance/captive/contact.html
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