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”
Transcript
Read the full transcript 6 turns
HostTennessee, do these service providers need to be based locally in Tennessee, or are just a handful of them to be local? And if someone were to form a captive in Tennessee, do they have annual board meeting requirements where they have to be in the state? And if you could touch on those points
Mark Wiedeman. Great question. Sure. So, there is no requirement that the providers have to be actual in-state Tennessee providers. However, to your annual meeting requirement question, it does tie in. So, we do require an annual meeting to be held in the state of Tennessee. However, if a company happens to utilize two service providers that are in the state, then they can
Mark Wiedemanactually get a waiver of the in-state requirement for that annual meeting. So, though
Michael Schulznot required to be in-state, there is a benefit to a captive if they do utilize in-state providers
Michael Schulz. And we keep lists that are on our website. If anybody's interested in domiciling a captive in Tennessee, we keep lists of approved service providers. It's not a complete list, meaning it's captive managers, Mark, correct me, attorneys are on the list
Mark Wiedeman. We actually have recently made a change. We actually don't have them currently on our website, but we do track and we vet auditors, actuaries, and captive managers as approved to be in the state of Tennessee
Citations
Sources
- Captive Insurance Section, Tennessee Department of Commerce and Insurancehttps://www.tn.gov/commerce/insurance/captive-insurance.html
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