Carter Lawrence, commissioner of the Tennessee Department of Commerce & Insurance, explains how an assembled dream team at the regulator is helping establish the state as a captive domicile

A growing number of US states are entering the captive insurance space and vying to become domiciles of choice.

This is making it hard for some to stand out from the pack, but in Tennessee significant investment has been made from the state to bolster its regulator’s team.

The aim is to create a team of regulatory staff who are responsive to the industry’s concerns.

To find out more about the importance of this, and how the captives sector is developing in the volunteer state, Captive Review recently spoke to Carter Lawrence, commissioner of the Tennessee Department of Commerce & Insurance.

Captive Review (CR): In the past 12 months, how has Tennessee developed as a captive domicile? What kind of growth in terms of numbers has been recorded in the state?

Carter Lawrence (CL): As a captive insurance domicile, Tennessee’s positive momentum has continued. We’ve seen an increase of more than 21% in captives – 12% single parent and 9% cell growth – with an active count of 168 captives and 541 cells. We are very excited about the growth and the momentum we are seeing in the state, especially knowing there are many better things to come.

CR: How is Tennessee able to differentiate itself in an increasingly competitive captives market?

CL: It is indeed an increasingly competitive market, but what sets Tennessee aside is, first and foremost, the quality of our team. Here at the Tennessee Department of Commerce & Insurance, the captive insurance division has an award-winning team of 16 experienced and dedicated captive insurance professionals. All of them are certified by the International Center for Captive Insurance Education (ICCIE), with several members also licensed CPAs.

Any time a new member joins the team, we get them enrolled in the Associate in Captive Insurance programme administered by ICCIE. We work hard to bring in great people, develop them further and then use this expertise to serve the captive insurance community in the state. This customer -focused approach has already made a difference. We recently had a pretty significant redomestication and I know a driving factor to that was comfort in the Tennessee team’s ability to handle the complexity of the case.

They saw first-hand we are not a new, upstart domicile but have an experienced team of professionals to help them – some of whom are leveraging full careers in the captive insurance industry. We have people such as Mark Weideman, director of the captive insurance division; Keith Boring, assistant commissioner for external affairs; Michael Schulz, business development director – and many others. I’m very proud of the team we have put together here.

It’s a true team effort, but this isn’t the only reason we are rapidly establishing Tennessee as a domicile of choice for captives. In addition, we are differentiating our proposition through our modernised statutes, the business-friendly environment of the state and the great relationship we have with legislators and the private industry.

Being responsive is key to this – captives teams in Tennessee know they can have a conversation with the state authorities if they have any questions, concerns or ideas they want to discuss. For instance, yesterday I received a text message from a member of industry who wanted to chat about a regulation-linked issue. That’s the level of approachability I expect for every member of the team.

If people in the industry want to speak to their regulator, it should be easy to do so and not only by navigating a maze of bureaucracy. There is also another factor at play, which isn’t specific to captives or insurance in general, but it’s important. Tennessee is a great place to live and work, and the location is beneficially central in the US. Within Tennessee we have three international airports, with Nashville’s airport currently being expanded, so it’s an easy place to get to.

CR: How does regulation play a role in Tennessee’s appeal and ability as a strong captive insurance domicile?

CL: As a regulated industry, it’s important that captives here have a regulatory infrastructure that is firm but fair and able to meet the needs of the captive insurance community as a whole. Earlier this year, legislation was signed by the Tennessee governor to make several updates to the state’s captive laws. These covered areas such as examinations, in-person board meeting requirements, materiality for business plan changes, as well as language addressing agency captives.

We worked with industry professionals in the state on this and, broadly speaking, these changes were identified as needs by the captive insurance community in Tennessee. We met them and they showed us a wish list of what they wanted. To be fully transparent, we were not comfortable with every request so we worked with them to reach a legislative compromise that appeased everyone.

This continues the theme of keeping Tennessee’s captive insurance regulations best positioned to respond to changes in the industry. Of course, there may not always be complete agreement between a regulator and the industry it regulates, but we will always ensure our position is defensible, logical and not a surprise. This chimes with Tennessee’s legislative history where the responsibility for updating legislation has traditionally been shared between regulators and industries.

CR: In terms of trends, what is the makeup of captives in Tennessee?

CL: We have seen an increase in protected cell captives, as well as positive movement in the numbers of regular and pure captives. There has been an increase in interest in risk retention groups.

It’s hard to pinpoint one thing that has led to this growth, but I’m of the firm opinion that it’s the team we have here in the Tennessee Department of Commerce & Insurance that has made a difference. We’re the front line dealing with the industry and are potentially every captive owner’s first contact with Tennessee. Again, being personable, responsible and approachable is a core part of this – they are ambassadors for the state, and keen to represent everything good about what we are building here.

CR: What does the future hold for Tennessee as a captive domicile?

CL: As we’ve discussed, the captive insurance world is a very competitive space for domiciles so we can’t be satisfied with our growth so far and rest on our laurels. We have to keep reinforcing what sets us apart. While other domiciles can amend their legislation to try and replicate what we offer, they can’t mimic our central location, quality of life or highly qualified team with a service-oriented approach.

I’m very proud of the team we have here – the education, attention to detail, professionalism and customer-focused approach. This sets us apart. We have great ambassadors for the state, and we need them to continue spreading the message. This means attending major conferences, not just those in the captives industry but across insurance in general.

We’re continuing to look for new audiences and at how Tennessee can complement companies’ risk management strategies. I am looking forward to meeting more participants of the captives industry at these events, including potentially readers of Captive Review!