The state of Tennessee has established a captive insurer to help it insure unique and difficult risks and reduce its overall insurance costs, the Tennessee Department of Finance said Monday.
Formation of Tennessee Captive Insurance Co. follows legislation passed by the Tennessee General Assembly last year that allows the state treasurer to establish a captive with the approval of the state claims board.
The state prisoner will initially only issue property and cyber liability policies, but may add other lines of coverage in the future. The captive is regulated by the Tennessee Department of Commerce and Insurance.
Tennessee self-insures its property and general liability risks, covering all state-owned buildings and contents, including the campuses of higher education institutions in the state, with a total property value of $31.4 billion as of July.
The use of a captive will help the state lower its insurance costs and better evaluate and control state risks, the Tennessee Department of Treasury said in a statement.
Tennessee ranked as the eighth largest U.S. prison facility, with 153 prisoners licensed in 2021, based on the most recent Business insurance ranking.