Tenn. Code Ann. § 56-13-119

Any municipality, metropolitan government, county, authority, utility district, or other public body generally classified as a governmental body or governmental entity, whether organized by private act or public act of the general assembly, or otherwise, or any agency, board, or commission of any municipality, metropolitan government, county, authority, utility district, or other public body generally classified as a governmental body or governmental entity, may expend public funds other than local tax revenues for the purchase of capital stock in a captive insurance company or to provide guaranty capital in a mutual captive insurance company; provided, that at the time of authorization of expenditure of public funds adequate insurance markets in the United States are not available to cover the risks, hazards and liabilities of the public body or that the needed coverage is only available at excessive rates or with unreasonable deductibles.