What does it cost to run a captive in Tennessee each year?
The state's own fees are a small part of the running cost
Mark Wiedeman's answer is that Tennessee does not charge much. He says there are really not very many fees, and names an application fee at formation, an annual reporting fee of $515, and the possibility of a fee attached to a material business plan change. What the answer does not cover, and what an owner should not read into it, is the rest of the annual cost: the captive manager, the auditor, the actuary and the legal work are the recurring spend, and they are set by the providers rather than by the state.
The recurring state charge is the annual reporting fee, which Wiedeman gives as $515. That is the number tied to the annual statement every captive files.
He also mentions a fee at application, and says a material business plan change may carry one as well. A business plan change is not a routine event, so for most captives the annual reporting fee is the state cost that repeats.
Key takeaways
Wiedeman puts Tennessee's annual reporting fee at $515, and says there are really not very many fees beyond it.
A material business plan change may carry its own fee; it is not a routine annual event.
State fees are not the running cost of a captive: the manager, auditor, actuary and legal work are set by the providers, not the department.
The important framing is what this answer leaves out. Wiedeman is answering about the fees his department charges, not about what it costs to run a captive in total.
The panel he describes elsewhere in this conversation is where the real recurring cost sits: a captive manager, an auditor, an actuary for the statement of actuarial opinion, and attorneys for the organizational documents. Those are priced by the providers, and they are the line items that decide whether a small program is worth forming.
From the conversation
Mark Wiedeman
Director, Captive Insurance Section, Tennessee Department of Commerce and Insurance
“there's really not very many fees that we have”
Transcript
Read the full transcript 2 turns
HostAnd what are the running costs or the annual costs of, I know it varies by class, but broadly speaking, of running a captive in Tennessee, are there annual filing fees? And then my follow-up question from that is going to be, what vendors, to someone looking to form a captive, what's the panel they need to put together? So, by
Mark Wiedemanway of fees, there's really not very many fees that we have. We have an application fee, I believe it's $65. We have a license fee of 515, or sorry, an annual reporting fee of 515. And if they do a business, a material business plan change, or maybe a fee attached to that as well. By way of the third-party
Citations
Sources
- Captive Insurance Section, Tennessee Department of Commerce and Insurancehttps://www.tn.gov/commerce/insurance/captive-insurance.html
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