Do a captive's service providers have to be based in Tennessee?
No requirement to hire locally, but two local providers waive the in state meeting
Mark Wiedeman separates two things that owners tend to conflate. There is no requirement that a captive's service providers be actual in state Tennessee providers, so an owner can keep the manager, auditor and actuary they already work with. Separately, Tennessee does require an annual meeting to be held in the state. The two connect through an incentive rather than a rule: if a company happens to utilize two service providers that are in the state, it can get a waiver of the in state requirement for that annual meeting. He adds that the department tracks and vets auditors, actuaries and captive managers as approved in Tennessee, and corrects an earlier remark by noting that list is not currently published on the website.
The first half of the answer is the one that removes a barrier. No provider has to be based in Tennessee, which means domiciling there does not force a company to rebuild the panel it already trusts.
The second half adds one back. An annual meeting is required to be held in the state, which is a real travel obligation for an out of state owner and worth putting in the calendar before it is a surprise.
Key takeaways
There is no requirement that a captive's service providers be based in Tennessee.
Tennessee does require an annual meeting in the state, but a captive using two in state providers can get a waiver of that requirement.
The department tracks and vets auditors, actuaries and captive managers, though Wiedeman says the list is not currently published on the website.
The waiver is where the two meet, and it is the most practical thing in the answer. Wiedeman says a company using two in state service providers can get a waiver of the in state requirement for that annual meeting.
So the choice is not compliance or non compliance, it is travel or local hiring. Read as a design, it is a way of encouraging the local market without ever mandating it.
From the conversation
Mark Wiedeman
Director, Captive Insurance Section, Tennessee Department of Commerce and Insurance
“there is no requirement that the providers have to be actual in-state Tennessee providers”
This answer begins at 11:26 of the full conversation. Watch or listen to the whole thing.
Citations
Sources
- Captive Insurance Section, Tennessee Department of Commerce and Insurancehttps://www.tn.gov/commerce/insurance/captive-insurance.html
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