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A captive insurance company is owned by you — transferring risk management from traditional carriers to your hands. Understand the structures, weigh the trade-offs, and find the model that fits your business. We'll walk you through it.
Traditional insurance puts all power in the hands of carriers. You pay, they keep profits. Rates climb. Control vanishes.
You pay premiums to traditional carriers. Whatever they don't spend on claims becomes their profit. You see nothing. That capital is gone forever.
In a captive, unused premium becomes a strategic reserve. Your company grows capital. You access this when needed. Profits stay in your ecosystem.
Traditional insurers set rates with little transparency. Competitors bid against you. One bad loss and your renewal rate skyrockets regardless of fairness.
In a captive, actuarial data is yours. Loss performance is transparent. Rate adjustments align with actual experience. No carrier markup. Pure economics.
Soft markets fade. Hard markets strike. Your business may be fine, but industry trends pull rates up 15-20% annually with no recourse.
Captives smooth volatility. Good years build reserves. Hard markets become manageable. You're not at the mercy of industry rate cycles.
You'll never own the traditional insurance company. The relationships you build have no equity. You're forever a customer with no skin in the game.
A captive is an asset you own. Build value over decades. That equity transfers to successors or new owners. Your investment compounds.
A captive insurance company is an insurance entity created by and for a business or group of businesses to insure their own risks. Rather than transferring all risk to a traditional carrier, captive owners retain a portion of underwriting profit.
Three proven structures — each with different trade-offs for control, cost, and coverage flexibility.
A collective insurance company owned by multiple participants. Shared governance, shared claims experience, shared reserves. Best for businesses seeking lower entry costs and broad diversification.
No property, professional liability, cyber, excess, or D&O coverage available.
A dedicated insurance company within a larger protected structure. Your reserves are yours alone. Dedicated claims management. Full coverage flexibility. PFTN offers proprietary access through our HybridRE program.
Cover virtually any insurable risk — no restrictions.
Wholly owned by a single business. Complete control. Complete responsibility. Full claim experience rating. Premium requirements typically $1M+. Maximum flexibility for large enterprises.
Captives are flexible. Cover traditional lines or build creative strategies. Here are common coverages:
Tennessee has posted six consecutive years of captive growth. With 184 captives and 703 active cells writing $4.2 billion in premiums, the state is one of the fastest-growing captive domiciles in the country.
Tennessee undertook a major rewrite of its captive laws in 2011, with subsequent updates in 2016, 2017, 2019, and 2021. The result is one of the most modern and flexible captive statutes in the United States, expanding permitted captive types and coverage lines.
The Tennessee Department of Commerce & Insurance (TDCI) combines responsible regulation with a customer-focused approach. Dedicated captive professionals provide responsive oversight without burdensome red tape, making Tennessee one of the easiest domiciles to work with.
Tennessee offers a one-year premium tax exemption for captives redomesticating from non-U.S. domiciles. Dormant captives require only $25,000 in capital and surplus and are exempt from premium taxes. Investment flexibility allows captives to invest in approved securities with commissioner approval.
Tennessee's captive premium volume doubled year-over-year, reaching $4.2 billion in 2025 compared to $2.1 billion in 2024. The state licensed 5 new captive companies and 50 new cells in 2025 alone, bringing the total to 184 captives and 703 active cells.
Captives are no longer limited to traditional casualty. These are the lines driving new formations and expanded retentions in 2025-2026.
Hard property markets and catastrophe exposure are pushing real estate and construction firms toward captive solutions. Captives offer stability that the traditional property market can no longer reliably provide.
One of the most common captive lines. Retaining general liability in a captive gives you direct control over claims management, defense strategy, and reserve development — instead of handing it to a carrier.
Nuclear verdicts and social inflation are driving transportation and fleet-heavy businesses toward captives. Retaining first-dollar auto risk reduces exposure to volatile carrier pricing and rewards good drivers.
Captive-funded workers' comp ties safety culture directly to financial performance. Better loss control means lower costs and underwriting profit that stays with your company instead of a carrier.
Excess liability rates have surged due to social inflation and rising verdict sizes. Captives let you retain higher layers strategically, smoothing cost volatility and building reserves in favorable years.
Emerging risk categories that traditional markets struggle to price. Captives give organizations the flexibility to build custom coverage for risks that don't fit neatly into standard commercial policies.
We've been guiding Tennessee businesses through alternative risk transfer for over a decade. Here's what we bring to the table:
We don't just broker captive insurance. We've structured and managed single-cell and group captive programs for 50+ Tennessee businesses. We know what works and what doesn't.
All our captive partnerships carry A.M. Best ratings. Strong financial security. Regulatory oversight. Peace of mind that your insurance structure is solid and recognized.
Captives need discipline. We partner with world-class loss control consultants to help your organization reduce claims frequency, improve safety culture, and build actuarial advantage.
No hidden underwriting. No carrier markup. You see exactly how premiums flow into reserves, how claims are paid, and how equity builds over time.
We represent you to underwriters, regulators, and program managers. If questions arise, we're your advocate. Your success is our success.
Based in Knoxville, serving Tennessee. We know local business. We're accessible. You're not dealing with an 800 number—you're dealing with us, directly.
Everything you need to know about captive insurance — structures, costs, coverage, and how to get started.
Captive insurance is a privately owned insurance company created by and for a business or group of businesses to insure their own risks. Rather than transferring all risk to a traditional carrier, captive owners retain a portion of underwriting profit.
Costs vary by captive type. Group captives typically require $250K-$1M in annual premiums. Cell captives range from $500K-$2M. Single parent captives generally require $1M+ in premiums. Capital requirements can be as low as $25K for cell structures.
It depends on the captive structure. Group captives are typically limited to three lines: general liability, workers' compensation, and auto. That's it — no property, no professional liability, no cyber, no excess coverage. Single-cell and pure captives, on the other hand, can cover virtually any insurable risk — including property & catastrophe, general liability, auto, workers' comp, excess/umbrella, cyber liability, professional liability, directors & officers, employment practices, equipment breakdown, supply chain risk, and more. This coverage flexibility is one of the biggest reasons businesses move beyond the group model.
Establishment typically takes 4-6 months. Cell captives are faster, often 2-3 months. The timeline depends on regulatory approval, documentation requirements, and your program's complexity.
Any profitable business with sufficient premium volume ($250K-$1M annually) is a potential candidate. The ideal captive participant has stable operations, good loss history, and commitment to risk management.
Captives are regulated by state insurance departments. Requirements include capital and surplus minimums, annual filings, reinsurance requirements, and compliance with solvency and reserve standards. Tennessee's TDCI is known for responsive, customer-focused oversight with one of the most modern captive statutes in the country.
Tennessee has posted six consecutive years of captive growth, with 184 captives and 703 active cells writing $4.2 billion in premiums as of 2025. The state offers modern legislation (updated in 2011, 2016, 2017, 2019, and 2021), premium tax exemptions for redomestications, low dormant capital requirements ($25K), and investment flexibility. Tennessee's regulatory team is known for being responsive and business-friendly.
The differences are significant. In a group captive, multiple businesses pool their risk and share outcomes — your results are tied to the group. Coverage is typically restricted to just general liability, workers' comp, and auto. Group captives are usually domiciled offshore (Cayman Islands, Bermuda).
In a cell (segregated cell) captive, each participant has a legally segregated account — your assets can't be used for another cell's liabilities. You get dedicated reserves, independent governance, and full coverage flexibility: property & CAT, GL, auto, workers' comp, excess/umbrella, cyber, professional liability, D&O, and more. Cell captives can be domiciled domestically — Tennessee is one of the fastest-growing domiciles — with entry points starting at $250K, comparable to group captive levels but with none of the coverage restrictions.
Group captives pool risk across multiple participants, which limits coverage to the lines everyone shares in common — typically just general liability, workers' compensation, and auto. Adding specialized lines like property, cyber, professional liability, or excess/umbrella would require unanimous agreement and create adverse selection issues within the group.
This is a core limitation of the group model. With a single-cell or pure captive structure, you have your own segregated entity with independent underwriting authority. That means you can insure property & catastrophe, cyber liability, professional liability, directors & officers, excess/umbrella, employment practices, supply chain risk — essentially any insurable exposure your business faces. You're not constrained by the group's lowest common denominator. PFTN offers proprietary access to cell captive structures through our HybridRE program.
Captive underwriting expense ratios average around 9%, compared to 31% for traditional insurers. That means for every dollar of premium, captives keep significantly more in reserves and profit. Combined with an average combined ratio of 83% (vs. ~100% for traditional carriers), captive owners typically earn around 44% profit on premium over a five-year average.
Property & catastrophe coverage leads the way, driven by rising natural disaster losses and hardening reinsurance markets. General liability and auto liability remain strong growth areas, fueled by nuclear verdicts and social inflation. Workers' compensation, excess/umbrella liability, and supply chain & climate risk are also gaining significant traction. These lines are generally available through cell and pure captive structures — group captives are typically limited to GL, workers' comp, and auto.
Industry insights. Captive strategy. Practical guidance to optimize your alternative risk program.
The strongest captive is the one whose board meeting reads like an internal audit. The March 5, 2026 ED Tennessee opinion in CIC Services v. IRS formalized the governance posture that separates a real insurance company from a tax-motivated structure.
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