The Tennessee Department of Commerce and Insurance recently issued a bulletin providing guidance to the Tennessee captive insurance industry on credit for reinsurance obtained by Tennessee captives from unauthorized reinsurers. Pursuant to Tennessee Insurance Code Section 56-13-112, the Department makes an initial determination whether to allow a Tennessee captive insurance company to take credit for reinsurance at the time the company is formed. In deciding whether to grant a captive insurance company credit for reinsurance purchased from an unauthorized reinsurer, both at formation and for new arrangements, the Department stated in the bulletin that it will give the greatest weight to the following criteria:
However, the bulletin makes clear that the Department retains the discretion to grant credit for reinsurance to any unauthorized reinsurance on a case-by-case basis.
(Copy of the Bulletin http://www.tn.gov/assets/entities/commerce/attachments/Bulletin_15-02_Credit_for_reinsurance_ceded_to_Unauthorized_Reinsurers_by_Tennessee_Captive_Insurance_Companies.pdf).
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