Tennessee's Captive Insurance Outlook: Compliance, Governance, and 2026

Editor's Note: As captive insurance programs continue to evolve—with captive owners taking on more complex structures, governance expectations rising, and regulators increasingly focused on compliance fundamentals—the role of the domicile has never been more important.

To provide insight into what regulators are seeing and prioritizing, we caught up with the Tennessee Department of Commerce and Insurance (TDCI), Captive Insurance Section, to discuss current regulatory challenges, how governance expectations are developing as captives grow in sophistication, what trends may shape domicile decision-making in 2026, and what (if any) regulatory updates may be on the horizon for Tennessee.

What regulatory challenges are captives and captive owners facing most often right now?

Regulatory compliance will always be the most prevalent challenge that captive owners and we experience.

As Tennessee's captive insurance regulator, we pride ourselves on striking a balance between encouraging innovation and growth in the captive sector while also enforcing the statutory guardrails that are in place to ensure that captive insurance managers are in compliance with all applicable regulations.

We've seen first-time captive owners experience compliance issues when new captive formations are from first-time captive owners. In Tennessee, we have had minimal issues in the past year, and we hope to continue that trend into 2026.

As captives take on more complex lines of business, how are governance expectations evolving?

We expect all captives domiciled in Tennessee to follow state statute and rules, whether it be for more traditional transactions or more complex ones. As the regulator for captive insurance companies in Tennessee, our role is to follow best practices for the governance of captive insurance while applying the rules and requirements equally to all licensees across a range of different captives.

Looking ahead to 2026, how could global regulatory developments—including new captive rules—influence strategic domicile selection?

We can't speculate about specific changes that have not been made. There have not been many substantial changes to the basic captive regulation foundations by any state, including Tennessee.

Through our legislative process, the TDCI recently removed the requirement for in-person attendance at annual meetings, provided the captive meets the requirements for a waiver.

Unless the changes are a major departure from current regulations, domicile selection shouldn't be affected too greatly.

From what our team sees, it appears that domiciles aren't changing rules as much as they are seeking greater enforcement of existing rules and laws.

How is Tennessee continuing to strengthen its position as a leading captive insurance domicile?

Tennessee has long maintained a strong international reputation as a pro-business state.

A seismic shift occurred in the early 1980s when Nissan moved its largest manufacturing facility (at that time) to Smyrna. That move was a catalyst for business relocation and development that has remained strong to this day.

Companies like Saturn, Nissan, Amazon, Oracle, and Bridgestone Americas (to name a few) call the Volunteer State home. We have also had the benefit of probusiness governors who help foment a business-friendly environment. When that is paired with a state General Assembly working in cooperation to see that vision come to pass, then a great place to live, work, and play, like Tennessee, is created.

From the perspective of the TDCI, we emphasize the quality of captive insurance companies in Tennessee over quantity.

Our knowledgeable, friendly team of 16 dedicated captive professionals has either obtained an Associate of Captive Insurance certification from the International Center for Captive Insurance Education or is in the process of doing so.

At Team TDCI, it's really our team who sets us apart, helping make Tennessee a first-choice domicile.

Are any regulatory or process changes being considered in Tennessee for 2026?

We do not currently have any legislative proposals filed to change any of our rules or regulations in the captive section.

However, we are always looking to make possible improvements to our processes.

As such, we are eager to hear feedback from our stakeholders and industry professionals in order to determine if change is needed.