What kinds of captives and coverages are being formed in Tennessee?
Cells are growing, and the coverage list is widening
Mark Wiedeman says Tennessee has seen a fairly steady uptick in cell captive programs, and reads it as middle market and smaller companies wanting to benefit from a captive without the upfront cost of standing one up alone. He describes a cell as a way to dip your toe in the water and see whether a captive is right for you. On industry he says there is a wide variety and would not name one over another, but on coverage lines he is specific: commercial auto, property coverages, especially with the hardening market in coastal areas, cyber, medical stop loss, and interest in holding employee benefit programs inside a captive. Michael Schulz adds that the department is not beholden to those lines, and describes working with new groups to try getting to a yes.
The structural trend is the cell. Wiedeman reports a fairly steady uptick in cell captive programs and attributes it to middle market and smaller companies, for whom the upfront cost of a standalone captive is the thing that stops the project.
His framing is worth keeping because it is honest about what a cell is for: a way to dip a toe in the water and see if the captive is right for you, rather than a permanent structure chosen on the merits.
Key takeaways
Wiedeman reports a fairly steady uptick in cell captive programs, driven by middle market and smaller companies avoiding standalone upfront cost.
The coverage lines he names are commercial auto, property, cyber, medical stop loss and employee benefits.
Schulz says the department is not beholden to those lines and works with new groups to try getting to a yes.
On industry he declines to pick one, saying there is a wide variety and he would not say one particular industry over another. That is a more useful answer than a ranking, because it means the structure is not concentrated in a single sector.
The coverage list is where the market pressure shows. He names commercial auto and property coverages, and ties property to the hardening market, especially in coastal areas.
From the conversation
Tennessee Department of Commerce and Insurance
Captive Insurance Section, State of Tennessee
“cell programs are a great way to be able to sort of dip your toe in the water”
This answer begins at 18:56 of the full conversation. Watch or listen to the whole thing.
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