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$350,000. For captive insurance companies, the Tennessee
Department of Commerce and Insurance, Division of Insurance
(Department of Insurance), requires the ratio of net written
premiums to policyholders' surplus (i.e., the net worth of an
insurance company) to be no greater than 3 to 1. Captive
insurance company rates may not be excessive, inadequate, or
unfairly discriminatory. The Tennessee captive insurance statute
does not require pure captive companies to use the NAIC format.
Tennessee insurance company regulatory provisions require
less startup capital for "pure captive" insurers than for
companies licensed to sell insurance to the general public,
impose lower premium taxes in comparison to commercial companies,
and provide an exemption from participation in State involuntary
risk plans, such as assigned risk pools and guaranty funds. The
business functions and operations of captive insurance companies
in Tennessee are subject to examination by the Department of
Insurance at least once in a 5-year period, or when the
Commissioner deems it prudent to conduct an examination.
Business functions include underwriting, marketing, investing,
claims adjusting, loss reserving, and financial reporting.
Prior to the mid-1970's, the availability and price of
coverage for medical malpractice risks were not significant
concerns for an organization the size of HCA. During the mid-
1970's, however, increases in the size and frequency of medical
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Last modified: May 25, 2011