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”
Transcript
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Hostwhat are some industries, or, are there any trends that you're seeing in the captive, space in Tennessee? Are there certain industries you're seeing that are more active, is it more PCC business? Is it more single parent? Is it more group, or maybe RRG? What, what's, what are you seeing, come across your desk? In Tennessee
Mark Wiedeman, we have seen a, fairly steady uptick of, cell captive programs. So I think that's because you're seeing more middle and middle market and smaller companies wanting to try and benefit from the use of a captive and cell programs are a great way to be able to sort of dip your toe in the water, so to speak, and, see if that captive is right for you without all the upfront costs of having to maintain and run it. as far as types
Mark Wiedemanof industries where we, have a wide variety. I wouldn't say that there's one particular industry over another, and then by way of coverages, we have been seeing an uptick in, commercial auto, proper, property, coverages, especially with the hardening market, when it comes to some of those coverages, like in coastal areas, but so
Mark Wiedeman, property coverages, cyber is another big one, as well as, medical, stop loss programs. and we've also seen, interest in employee benefits, employee benefit programs to be held within the captive. So quite a, quite a pretty, well, quite a wide variety of,
Michael Schulzoptions
Michael Schulz. And, God, it's important to note that we're not beholden to just those, we love innovation and the captive space is constantly in flux and there are a lot of great new ideas that are coming online, pretty much every day. And so we do enjoy
Michael Schulzwhen people bring us a new idea and we work with them in regards to try getting to a yes, you know, we want to start there and then evaluate to see, how we can get to the yes. So we, actively work with new groups and innovative groups when they come in and we do our best as we do it the best we can to make sure that we can say yes
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