With a new insurance commissioner and the governor standing behind Tennessee's captive insurance program, all the state needs to be a leader in the region is passage of some proposed captive statutes, according to an industry expert involved in formulating the changes.
Tennessee, a captive domicile since the 1970s, is set to replace its statute with a “cutting-edge” law, said Kevin M. Doherty, an attorney with Burr Forman LLP in Nashville, Tenn.
“To have a successful domicile,” he said, “you need a three-legged stool. You need the law; you need a commissioner and a department that will advocate and handle it; and third, you need a governor who is committed to it. Right now, we have two out of three, and if we get the law, we've got all three.”
What's driving the charge, he said, is that his former colleague, Julie McPeak, has become commissioner of the Tennessee Dept. of Commerce and Insurance, taking office on Jan. 15. She was appointed by then-Governor-Elect Bill Haslam.
Ms. McPeak, an advocate for captives, previously served as an insurance regulatory attorney for Burr & Forman LLP in Nashville, Tenn. She also served as the executive director of the Kentucky Office of Insurance.
As a candidate for governor, Mr. Haslam stopped by Mr. Doherty's office to discuss captive insurance. “I introduced Mr. Haslam to Julie, and shortly before Christmas, he called and asked Julie to be part of his administration,” he explained. “Part of his reason was to promote captive insurance companies.”
In the 1970s, Tennessee was the second domicile in the U.S. to have a captive law, after Colorado. “But over the years Tennessee lost interest and discouraged formations,” Mr. Doherty said, noting there are about five licensed captives in Tennessee.
“We will replace the law with [one] modeled on several other domiciles,” he said. “I drafted the bill, gave it to Julie, she submitted it to the governor, who decided to make it part of his legislative package. It's the number-one bill that's coming through her department as part of the legislative process.”
The bill, introduced in late February, “has a good chance. It could be passed soon, or at the end of the session, which will go until May or June,” Mr. Doherty said.
Of the surrounding states that are captive domiciles, “South Carolina has faltered, and Kentucky has not really promoted captives like they thought they were going to. If Tennessee does it right, it could become the regional go-to domicile.”
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