In December 2012, the Tennessee Department of Commerce and Insurance revamped its regulations concerning captive insurers by repealing a law regarding letters of credit used by captive insurance companies and replacing it with a more extensive regulatory scheme. The new regulatory scheme requires annual reports of a captive insurance company’s financial condition and examinations by the insurance commissioner every three to five years. The five year cycle for examinations is only available for captive insurers that submit to annual audits conducted by independent certified public accountants authorized by the commissioner. The annual audits consist of an examination of financial statements by the independent CPA according to GAAP, an evaluation of internal controls, and certification as to the adequacy of the captive insurer’s loss reserves. Tenn. Comp. R. & Regs. tit. 0780, Ch. 01-41 (effective February 28, 2013).
This post written by Abigail Kortz.
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