56-1-101. Short title.

This title shall be known and may be cited as the “Tennessee Insurance Law.”

Acts 1895, ch. 160, § 1; Shan., § 3274; Code 1932, § 6084; T.C.A. (orig. ed.), § 56-101.

Cross-References. Revocation, denial or suspension of professional, driver and other licenses, to enforce child support obligations, title 36, ch. 5, part 7.

Textbooks. Tennessee Jurisprudence, 15 Tenn. Juris., Insurance, §§ 2, 4.

Law Reviews.

Administrative Law — 1964 Tennessee Survey (E. Blythe Stason), 18 Vand. L. Rev. 1047 (1965).

56-1-102. Definitions for this chapter, chapters 2-4, 7, 10 and 11 of this title.

As used in this chapter and chapters 2-4, 7, 10 and 11 of this title, unless the context otherwise requires:

1. “Commissioner” means the commissioner of commerce and insurance;
2. “Company” or “insurance company” includes all corporations, associations, partnerships, or individuals engaged as principals in the business of insurance;
3. “Department” means the department of commerce and insurance;
4. “Domestic” designates those companies incorporated in this state;
5. “Foreign,” when used without limitation, includes all companies formed by authority of any other state or government;
6. “Net assets” means the funds of an insurance company available for the payment of its obligations in this state, including uncollected and deferred premiums not more than three (3) months due on policies actually in force, after deducting from the funds all unpaid losses and claims, and claims for losses, and all other debts and liabilities, inclusive of policy liability and exclusive of capital; and
7. “Unearned premiums,” “reinsurance reserve,” and “net value of policies” or “premium reserve,” severally, mean the liability of an insurance company upon its insurance contracts, other than accrued claims computed by rules of valuation established by §§ 56-1-402 — 56-1-405 [see the Compiler's Notes].

Acts 1895, ch. 160, § 1; Shan., § 3274; Code 1932, § 6084; modified; T.C.A. (orig. ed.), § 56-102.

Compiler's Notes. Sections 56-1-402 and 56-1-403, referred to in this section, were repealed by Acts 2013, ch. 260, § 1, effective July 1, 2013.

56-1-103. Adoption of data disclosure requirements — Requests for data concerning rate adjustments.

1. The commissioner shall adopt data disclosure requirements developed by the National Association of Insurance Commissioners for Property and Casualty Insurors.
2. The commissioner is authorized to request other data that the commissioner deems necessary in considering requests for rate adjustments.

Acts 1987, ch. 438, § 1.

56-1-104. Standardized forms for health care insurance claims.

1. The commissioner, in consultation with the commissioner of health, shall promulgate rules and regulations to effect the development and implementation of standardized forms for all health care insurance claims made in this state. In developing the rules and regulations, the commissioner shall give consideration to requiring the use of Form UB92.
2. The commissioner and the commissioner of health shall develop and implement the standardized forms in consultation with the insurance companies offering for sale health care policies in this state.
3. The commissioner, in consultation with the commissioner of health, shall promulgate the rules and regulations pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
4. All insurance companies offering for sale health care policies in this state shall require all policyholders and third party claimants to utilize the standardized forms when making a claim against any health care insurance policy in effect in this state.
5. As used in this section, “standardized forms” includes, but is not necessarily limited to, electronic storage systems and information.

Acts 1993, ch. 277, § 1.

56-1-105. Exclusion of types of insurance from specific insurance definitions.

1. Notwithstanding any law to the contrary, “accident and health insurance,” “accident and sickness insurance,” “health insurance,” “health benefit plan” or other similar term used in any legislation enacted after May 24, 2000, shall not include, unless specifically provided, the following types of insurance or any combination of these types of insurance: hospital indemnity, accident, dental, specified disease, disability income, long-term care, Champus supplement, or Medicare supplement, except as provided in this section.
2. Nothing contained in this section shall apply to chapters 4 and 12 of this title.
3. Nothing contained in this section shall apply to programs and services provided pursuant to Title XIX of the Social Security Act (42 U.S.C. § 1396 et seq.), and regulations promulgated pursuant to Title XIX of the Social Security Act.

Acts 2000, ch. 808, §§ 1-3.

56-1-106. Requests for information regarding complaints — Time limits — Exceptions — Penalties.

1. 1. Notwithstanding any other provision of law or rule to the contrary, if the department makes a request for information from an entity or individual licensed under this title, or required to be licensed under this title, concerning a complaint filed against the entity or individual, and the request requires a response, the entity or individual must respond to the request within a reasonable time.
   2. 1. As used in this section, “reasonable time” means a period of time not to exceed thirty (30) days from the date the request is received by the entity or individual.
      2. For the purposes of this section, the response by the entity or individual shall constitute a response if it acknowledges the inquiry from the department and sets forth a time frame to address the substantive issues in the inquiry.
2. This section does not apply to or preempt any other law that requires or allows the commissioner to require an individual or entity to respond to a request from the department within a period of time less than thirty (30) days.
3. The commissioner may levy a civil penalty in the amount of one hundred dollars ($100) per day upon any entity or individual that fails to respond within a reasonable time.
4. This section does not rescind or preempt any due process rights of entities regulated pursuant to this title.
5. This section does not apply to entities subject to regulation by the department that participate in the TennCare program under Title XIX of the Social Security Act (42 U.S.C. § 1396 et seq.), or any successor to the TennCare program.

Acts 2004, ch. 496, § 1.

56-1-107. Authority to query the TBI's criminal history records system.

Notwithstanding any other law to the contrary, in conjunction with the issuance of licenses, permits and registrations and the investigation of consumer complaints, the department has the authority to query the Tennessee bureau of investigation's (TBI) Tennessee criminal history records system for the following information:

1. Tennessee criminal history records;
2. Tennessee repository for apprehension of persons (TRAP);
3. State of Tennessee orders of protection files (STOP); and
4. Criminal history records of the federal government and other states to which the TBI may have access. Criminal history records of the federal bureau of investigation may be obtained for the reasons listed in this section only if fingerprints are obtained and submitted through the TBI.

Acts 2004, ch. 557, § 1.

56-1-108. Study of impediments to insurance for use of justifiable force.

1. The commissioner shall conduct a study of Tennessee's insurance laws to determine what impediments, if any, exist under the insurance laws or policies of this state that may be acting as deterrents for insurance companies in this state to underwrite policies of insurance to insure a person who has used force that is justified, including deadly force, in protecting such person's self or property pursuant to §§ 39-11-611 and 39-11-612, commonly referred to as the castle doctrine, or any other law.
2. The commissioner shall report to the general assembly and to the governor the results of the study required by subsection (a) no later than March 1, 2012, with recommendations on whether such insurance should, in the commissioner's opinion, become available to Tennessee residents.

Acts 2011, ch. 429, § 1.

Cross-References. Reporting requirement satisfied by notice to general assembly members of publication of report, § 3-1-114.

56-1-109. License of person in default on student loans.

1. As used in this section, unless the context otherwise requires:
   1. “Guarantee agency” means a guarantor of student loans that has an agreement with the United States secretary of education;
   2. “License” means a license, certification, registration, permit, approval or other similar document issued to an individual evidencing admission to or granting authority to engage in a profession, trade, occupation, business, or industry;
   3. “Licensing authority” means the department or any division, board, commission, committee, agency or other governmental entity under the authority of the department or attached to a division of the department that has been established by statute or regulation to oversee the issuance and regulation of any license; and
   4. “TSAC” means the Tennessee student assistance corporation.
2. 1. Upon receiving a copy of a final order as provided in subsection (c) from TSAC or a guarantee agency, each licensing authority shall suspend, deny or revoke the license of any person who has defaulted on a repayment or service obligation under any federal family education loan program, the federal Higher Education Act of 1965 (20 U.S.C. § 1001 et seq.), a student loan guaranteed or administered by TSAC, or any other state or federal educational loan or service-conditional scholarship program.
   2. Notwithstanding subdivision (b)(1), a licensing authority may elect not to suspend, deny, or revoke the license of a person if the default or delinquency is the result of a medical hardship that prevented the person from working in the person's licensed field and the medical hardship significantly contributed to the default or delinquency.
3. 1. Each licensing authority shall accept any determination of default from TSAC or a guarantee agency, after TSAC or the guarantee agency has afforded a debtor an opportunity to be heard in accordance with subdivision (c)(2); and the licensing authority shall rescind any disciplinary action and restore any license upon receiving notice from TSAC or the guarantee agency that the debtor has agreed to serve the debtor's obligation or is in compliance with an approved repayment plan.
   2. 1. Unless a debtor has made satisfactory arrangements according to the lender, TSAC or the guarantee agency, which may include administrative wage garnishment, voluntary payment arrangements, deferment or forbearance, then the debtor shall be regarded as delinquent or in default. If a debtor is delinquent or in default on a repayment or service obligation under a guaranteed student loan identified in subsection (b), or the debtor has failed to enter into a payment plan, agreed to a service obligation or comply with a payment plan previously approved by TSAC or the guarantee agency, then TSAC or the guarantee agency shall issue to the debtor a notice of intent to file an order with the appropriate licensing authority to seek to suspend, deny or revoke the debtor's license. The notice shall:
         1. Be served upon the debtor personally or by certified mail with return receipt requested; and
         2. State that the debtor's license shall be suspended, denied or revoked ninety (90) days after service unless within that time the debtor:
            1. Pays the entire debt stated in the notice;
            2. Enters into a payment plan or service obligation, or complies with a payment plan previously entered into and approved by TSAC or the guarantee agency;
            3. Requests and qualifies for deferment, forbearance or other satisfactory compliance; or
            4. Requests a hearing before TSAC or the guarantee agency.
      2. The hearing request by the debtor shall be made in writing and must be received by TSAC or the guarantee agency within twenty (20) days of the date the notice is served.
      3. TSAC or the guarantee agency, upon receipt of a request for a hearing from the debtor, shall schedule a hearing to determine whether a determination of delinquency or default which could result in suspension, denial or revocation of the debtor's license is appropriate. The debtor's license may not be suspended, denied or revoked until a determination is reached following the hearing. The issues that may be determined in the hearing are:
         1. The amount of the debt, if any;
         2. Whether the debtor is delinquent or in default;
         3. Whether the debtor:
            1. Has entered into a payment plan or service obligation approved by TSAC or the guarantee agency;
            2. Is willing to enter into a payment plan or service obligation approved by TSAC or the guarantee agency; or
            3. Is willing to comply with a payment plan or service obligation previously entered into and approved by TSAC or the guarantee agency;
         4. Whether the debtor is eligible for deferment, forbearance or other satisfactory compliance; and
         5. Whether the debtor's default or delinquency is the result of a medical hardship that prevented the debtor from working in the debtor's licensed field and the medical hardship significantly contributed to the default or delinquency.
      4. If a debtor, without good cause, fails to respond to the notice of intent, fails to timely request a hearing, or fails to appear at a regularly scheduled hearing, the debtor's defenses, objections, or request for a payment plan or compliance with a payment plan may be determined to be without merit; and TSAC or the guarantee agency shall enter a final decision and order, requesting suspension, denial or revocation of the debtor's license, and further requesting the licensing authority to order the debtor to refrain from engaging in the licensed activity. TSAC or the guarantee agency shall send a copy of the order to the licensing authority and the debtor.
      5. The administrative hearings shall be conducted in accordance with rules and regulations adopted under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
      6. 1. When TSAC or the guarantee agency determines that the debt is paid in full or the debtor has entered into a payment plan, entered into a service obligation, is otherwise in satisfactory compliance or complied with a payment plan previously approved by TSAC or the guarantee agency, TSAC or the guarantee agency shall enter an order requesting that the licensing authority terminate the order suspending, denying or revoking the license. TSAC or the guarantee agency shall send a copy of the order to the licensing authority and the debtor. Notwithstanding any other law, rule or regulation to the contrary, when the license is reinstated, the licensing authority shall not impose a reinstatement fee that exceeds fifty dollars ($50.00).
         2. Entry of an order seeking to terminate suspension, denial or revocation of a license does not limit the ability of TSAC or the guarantee agency to issue a new order which seeks to suspend, deny or revoke the license of the same debtor in the event of another delinquency or default.
      7. TSAC is authorized to promulgate necessary rules and regulations to effectuate the purposes of this subsection (c). All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act.
4. The commissioner is authorized to promulgate rules and regulations to effectuate the purposes of this section. All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act.

Acts 2012, ch. 519, § 1; 2018, ch. 744, §§ 7, 8.

Amendments. The 2018 amendment, effective January 1, 2019, added (b)(2) and (c)(2)(C)(v).

Effective Dates. Acts 2018, ch. 744, § 13. January 1, 2019; provided that for purposes of promulgating rules the act took effect April 18, 2018.

56-1-110. Claims to be brought in chancery court of Davidson county.

1. Claims challenging liability imposed by this title must be brought in the chancery court of Davidson County pursuant to the procedures set out in title 67, chapter 1, part 9.
2. 1. The commissioner may, against any person, agency, or company licensed, registered, or permitted by or operating under a certificate of authority issued by the commissioner, or acting in an unlawful capacity that brings such person, agency, or company under the jurisdiction of the commissioner, assess the actual and reasonable costs of the investigation, prosecution, and hearing of any disciplinary action held in accordance with the contested case provisions of the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, part 3, in which sanctions of any kind are imposed on that person, agency, or company. These costs may include, but are not limited to, those incurred and assessed for the time of the prosecuting attorneys, investigators, expert witnesses, administrative judges, and any other persons involved in the investigation, prosecution, and hearing of the action.
   2. The commissioner may promulgate rules establishing a schedule of costs that may be assessed pursuant to this section. All rules must be promulgated in accordance with the Uniform Administrative Procedures Act.
   3. 1. All costs assessed pursuant to this section become final thirty (30) days after the date of a final order of assessment is served.
      2. If the individual or entity disciplined fails to pay an assessment when it becomes final, the commissioner may apply to the chancery court of Davidson County, which shall have jurisdiction over recovery of the costs, for a judgment and seek execution of the judgment.

Acts 2018, ch. 873, § 2.

Effective Dates. Acts 2018, ch. 873, § 18. May 3, 2018.

Part 2
Organization and Personnel

56-2-101. Applicability to foreign and domestic companies.

This section, §§ 56-2-102 — 56-2-104, 56-2-113 — 56-2-115, 56-2-201, and 56-2-301 shall be applicable to both domestic and foreign insurance companies unless otherwise specifically provided in a particular section or subsection.

Acts 1955, ch. 13, § 1; T.C.A., §§ 56-302, 56-201.

Cross-References. Indemnified employee welfare benefit plans, ch. 40 of title 56.

Textbooks. Tennessee Jurisprudence, 15 Tenn. Juris., Insurance, § 4.

56-2-102. Requisites for commencing business — Foreign insurance companies qualifying as domestic corporations — Foreign credit life reinsurance companies.

1. No domestic insurance company or foreign insurance company shall commence business in this state until it has complied with § 56-2-101, this section, §§ 56-2-103,  56-2-104, 56-2-113 — 56-2-115, 56-2-201, and 56-2-301, and has received from the commissioner a certificate of authority to do business.
2. Any company organized under the laws of any other state or country, and that is admitted to do business in this state for the purpose of writing insurance authorized by this chapter, upon complying with all of the requirements of law relative to the organization of domestic insurance companies and payment of fees by like domestic insurance corporations, and designating its principal place of business at a place in this state, may become a domestic corporation and be entitled to like certificates of its corporate existence and license to transact business in this state, and be subject in all respects to the authority and jurisdiction of this state.
3. A foreign credit life reinsurance company that meets the capital requirements of § 56-2-114(b) and that has at least fifty percent (50%) of its outstanding voting stock owned by persons or entities domiciled in this state, shall be entitled to obtain certificates of its corporate existence and shall be licensed to transact its business in this state, and be subject in all respects to the authority and jurisdiction of this state, if the following conditions are met:
   1. Approval by the commissioner of commerce and insurance in its state of domicile to change its state of domicile to this state;
   2. Submission to the Tennessee commissioner of commerce and insurance of a certificate of good standing from its state of domicile;
   3. Compliance with all of the requirements of law relative to the organization of domestic insurance companies and payment of fees required by domestic insurance companies; and
   4. Designation of a place in this state as its principal place of business.

Acts 1895, ch. 160, § 9; Shan., § 3292; Code 1932, § 6107; C. Supp. 1950, § 6107; Acts 1951, ch. 212, § 1; mod. T.C.A. (orig. ed.), § 56-301; Acts 1955, ch. 13, § 1; 1978, ch. 511, § 1; T.C.A., § 56-202; Acts 1988, ch. 667, § 2.

Cross-References. Foreign fraternal benefit society, qualifications for admission to state, § 56-25-605.

Mutual or assessment fire insurance companies, § 56-20-101.

Unlawful to enter contracts without certificate of authority, § 56-2-105.

Collateral References.

Public officials or their bonds, personal liability of, for permitting insurance company to engage or continue in business without complying with statutory requirements. 131 A.L.R. 275.

56-2-103. Qualifications necessary to do business — Commissioner to accept process — Deposit of securities.

1. No domestic or foreign insurance company shall be qualified and authorized to do business in this state until:
   1. It files or deposits with the commissioner a properly certified copy of its charter or deed of settlement and, if a foreign insurance company, a statement of its financial condition and business on December 31 preceding the date on which it applies for permission to transact business, in the form and detail the commissioner requires, signed and sworn to by its president and secretary, or other proper officers, and pays for the filing of the copy and statement the sum of one hundred dollars ($100). If it is a foreign insurance corporation, it shall also file and deposit with the commissioner a certified statement of the secretary of state to the effect that its name complies with the requirements of title 48, chapter 14 or title 48, chapter 54, as applicable;
   2. It satisfies the commissioner that it is fully and legally organized under the laws of the state or foreign nation of its incorporation, and that it possesses and maintains the amount of capital, if a stock company, or surplus funds, if a mutual, reciprocal or Lloyd's plan insurer, required by § 56-2-114 and the amount of additional surplus required by § 56-2-115, to do the kind or kinds of business it proposes to transact;
   3. It, by duly executed instrument filed in the commissioner's office, constitutes and appoints the commissioner, the commissioner's chief deputy, or their successors, its true and lawful attorneys upon either of whom all lawful process in any action or legal proceeding against it may be served, and in the instrument agrees that any lawful process against it, which may be served upon its attorney, shall be of the same force and validity as if served on the company, and that the authority of the instrument shall continue in force, irrevocably, as long as any liability of the company remains outstanding in this state. Any process issued by any court of record in this state and served upon the commissioner or the commissioner's chief deputy by the proper officer of the county in which the commissioner or the chief deputy may have an office shall be deemed a sufficient process on the company, and it is the duty of the commissioner or the chief deputy, promptly, after service of process by any claimant, to forward, by registered mail, an exact copy of the notice to the company. Service of process from any county in this state upon the commissioner or the chief deputy by the proper officer of the county in which the commissioner or the chief deputy may have an office shall establish proper venue in the county from which the process was issued, if the plaintiff resides in that county, whether the insurance company has an office or agency located in one (1) or more other counties of this state or not;
   4. 1. If it is a foreign stock or mutual life insurance company, it satisfies the commissioner that it has and shall maintain on deposit with the state treasurer, or with the proper officer of some other state, securities in the actual cash value of at least two hundred thousand dollars ($200,000) consisting of bonds of the United States, or any agency or instrumentality of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, bonds of this state, bonds of the state of domicile, or bonds publicly issued by any solvent institution created or existing under the laws of the United States or any state of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, and the company files with the commissioner the certificate of the official with whom the securities are deposited, stating the time and amount, and that the official is satisfied that they are worth two hundred thousand dollars ($200,000) and that the deposit is made with the official by the company for the protection of all policyholders and creditors in the United States;
      2. Notwithstanding subdivision (a)(4)(A), the commissioner may decline to accept as a deposit any specific issue of securities that the commissioner has determined may not provide the necessary protection to policyholders and creditors in the United States;
   5. If it is a foreign insurance company, it files a report of its real estate holdings, if required by the commissioner in the commissioner's discretion, so as to give the information required concerning domestic life insurance companies in § 56-3-305. The commissioner may refuse to admit and authorize a foreign insurance company to do business in this state in the event its land and the building or buildings on the land in which it has its principal office, and its other real property used in the transaction of insurance business, exceeds the maximum percentage of its admitted assets prescribed for domestic life insurance companies in § 56-3-305; and
   6. The commissioner shall not approve any articles of incorporation or issue a certificate of authority to any company until finding that:
      1. The company has submitted a plan of operation; and
      2. The incorporators, directors and proposed officers are of known good character and there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts, reinsurance, or any matter inimical to the business of insurance.
2. The commissioner is authorized to promulgate rules and regulations the commissioner deems reasonable and necessary requiring the furnishing of information relative to election or appointment of new officers and directors by insurance companies licensed to do business in this state. If, after a hearing afforded the officer or director and the insurance company, the commissioner finds that the officer or director is incompetent, untrustworthy, or of known bad character, the commissioner may order the removal of the person as an officer or director of the insurance company. If the insurance company does not comply with the removal order within thirty (30) days after its receipt of the order, the commissioner may suspend the insurance company's certificate of authority to do business in this state until such time as the company is in compliance with the order.

Acts 1895, ch. 160, § 9; 1901, ch. 131, § 1; 1907, ch. 493, § 1; Shan., § 3292; Code 1932, § 6107; Acts 1947, ch. 223, § 1; C. Supp. 1950, § 6107; Acts 1951, ch. 212, § 1; T.C.A. (orig. ed.), §§ 56-302, 56-303, 56-307, 56-308; Acts 1955, ch. 13, § 1; 1957, ch. 5, § 1; 1957, ch. 8, § 1; 1967, ch. 24, § 1; 1967, ch. 31, §§ 3, 4; 1967, ch. 130, § 1; 1967, ch. 352, § 1; 1968, ch. 523, § 1(17.05); impl. am. Acts 1971, ch. 137, § 2; T.C.A., § 56-203; Acts 1984, ch. 617, § 1.

Cross-References. Certified mail instead of registered mail, § 1-3-111.

Commissioner as attorney for receipt of process, § 56-2-503.

Secretary of state as attorney for receipt of process, § 56-2-505.

Textbooks. Gibson's Suits in Chancery (7th ed., Inman), § 133.

Tennessee Jurisprudence, 7 Tenn. Juris., Corporations, § 106; 15 Tenn. Juris., Insurance, §§ 2—5; 24 Tenn. Juris., Venue, § 4.

Law Reviews.

Tennessee Workers' Compensation — Where Is the Proper Venue? (D. Andrew Byrne, Ted C. Raynor), 20 Mem. St. U. L. Rev. 189 (1990).

56-2-104. Contents of statement — Deposits.

1. Any domestic company shall satisfy the commissioner that:
   1. It is fully and legally organized under the laws of this state to do the business it proposes to transact;
   2. 1. If it is a stock life insurance company or a mutual life insurance company, it has and will maintain on deposit with the state treasurer, or with such other officer designated by law, at least two hundred thousand dollars ($200,000) in cash or its equivalent; but the commissioner may, in the commissioner's discretion, accept as an equivalent bonds of the United States, or any agency or instrumentality of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, bonds of this state, bonds of the state of domicile, or bonds publicly issued by any solvent institution created or existing under the laws of the United States or any state of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms;
      2. Notwithstanding subdivision (a)(2)(A), the commissioner may decline to accept as a deposit any specific issue of securities that the commissioner has determined may not provide the necessary protection to policyholders and creditors in the United States;
      3. 1. The company shall likewise be required to file with the commissioner the certificate of the official with whom the securities are deposited, stating the time and amount of bonds of the United States, or any agency or instrumentality of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, bonds of this state, bonds of the state of domicile, or bonds publicly issued by any solvent institution created or existing under the laws of the United States or any state, which have been included in the three (3) highest grades by any of the recognized securities rating firms, and that the commissioner is satisfied they are worth two hundred thousand dollars ($200,000), and that the deposit was made with the commissioner by the company for the protection of all policyholders and creditors in the United States;
         2. Notwithstanding subdivision (a)(2)(C)(i), the commissioner may decline to accept as a deposit any specific issue of securities that the commissioner has determined may not provide the necessary protection to policyholders and creditors in the United States;
      4. 1. If the applicant is an insurance company other than a stock or mutual life insurance company, each company shall maintain on deposit at least one hundred thousand dollars ($100,000) in cash or its equivalent for each kind or class of insurance as defined in § 56-2-201; but the commissioner, in the commissioner's discretion, may accept as an equivalent bonds of the United States, or any agency or instrumentality of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, bonds of this state, bonds of the state of domicile, or bonds publicly issued by any solvent institution created or existing under the laws of the United States or any state, which have been included in the three (3) highest grades by any of the recognized securities rating firms;
         2. Notwithstanding subdivision (a)(2)(D)(i), the commissioner may decline to accept as a deposit any specific issue of securities that the commissioner has determined may not provide the necessary protection to policyholders and creditors in the United States. The deposits shall be subject to the same conditions as required in the case of stock or mutual life insurance companies; and
   3. 1. The insurer's principal place of business is or will be located and maintained in this state. This subdivision (a)(3)(A) also applies to domestic health maintenance organizations. This subdivision (a)(3)(A) does not apply to:
         1. Any insurer that was a domestic insurer prior to July 1, 1993, and whose primary executive, administrative and home offices were located outside of the state prior to July 1, 1993; or
         2. Any domestic reciprocal whose primary executive, administrative and home offices, and original books and records, were located and maintained outside the state prior to January 1, 1996;
      2. The commissioner may suspend or revoke, after notice and hearing, the certificate of authority of a domestic company found to be in violation of subdivision (a)(3)(A);
      3. The commissioner, in the commissioner's sole discretion, may waive the requirement in subdivision (a)(3)(A) for any company.
2. 1. The deposit required by this section is not applicable to foreign stock or mutual life insurance companies, or to domestic or foreign insurance companies writing workers' compensation insurance or fidelity and surety bonds. Companies writing that type or form of insurance shall make deposits in accordance with the requirements of existing laws.
   2. The provisions of this section applicable to domestic insurance companies shall apply to all insurance companies and associations except those specifically exempted in this section, whether the companies are stock or mutual, and it is specifically provided that §§ 56-2-101 — 56-2-103, this section, §§ 56-2-113 — 56-2-115, 56-2-201, and 56-2-301 fully apply to all such companies or associations regardless of what law or statute of this state under which the companies or associations may have been organized.
   3. No requirement in this section not in effect on January 1, 1967, shall be considered applicable to any insurance company properly licensed to transact business in this state as of that date, except that any stock casualty company, foreign or domestic, not having at least one hundred thousand dollars ($100,000) in cash or equivalent on deposit for each kind of insurance as defined in § 56-2-201, shall meet the requirement by December 31, 1978. Domestic stock casualty companies not maintaining capital paid up of at least one hundred thousand dollars ($100,000) shall make a deposit equal to their capital paid up by December 31, 1977.
   4. This section shall not apply to, or affect, or be construed as in anywise applying to, or affecting, domestic state and county mutual fire insurance companies, the organization of which was and is authorized by chapters 19-21 of this title.

Acts 1935, ch. 183, §§ 2, 3; 1935 (E.S.), ch. 51, § 1; C. Supp. 1950, §§ 6130.1-6130.3 (Williams, §§ 6130.2, 6130.3, 6130.5); T.C.A. (orig. ed.), §§ 56-202 — 56-204; Acts 1955, ch. 13, § 2; 1967, ch. 31, §§ 1, 2; 1977, ch. 29, § 1; T.C.A., § 56-204; Acts 1980, ch. 503, § 2; 1984, ch. 617, §§ 2-4; 1993, ch. 253, § 19; 1999, ch. 89, § 1; 2012, ch. 680, § 1; 2013, ch. 5, §§ 1, 2; 2015, ch. 155, §§ 1, 2.

Compiler's Notes. Acts 2012, ch. 680, § 5 provided that the commissioner of commerce and insurance is authorized to promulgate emergency rules to implement the act.

Cross-References. Annual reports of fires to be made, § 68-102-114.

Capital and deposits of foreign insurance companies, §§ 56-2-101 — 56-2-103, 56-2-114, 56-2-115, 56-2-405.

56-2-105. Certificate of authority required — Exceptions.

It is unlawful for any company to enter into a contract of insurance as an insurer or to transact insurance business in this state without a certificate of authority from the commissioner; provided, that this section shall not apply to:

1. Contracts procured by agents or brokers under the authority of the Surplus Lines Insurance Act, compiled in chapter 14 of this title;
2. Contracts of reinsurance;
3. Transactions in this state involving policies lawfully solicited, written and delivered outside of this state covering only subjects of insurance not resident, located or expressly to be performed in this state at the time of issuance or covering property in the course of transportation by land, air or water, to, from or through this state and including any preparation or storage incidental thereto, and which transactions are subsequent to the issuance of those policies;
4. Transactions in this state involving group or blanket insurance and group annuities where the master policy of the groups was lawfully issued and delivered in a state in which the company was authorized to transact insurance business;
5. Transactions in this state involving a policy issued prior to April 3, 1968;
6. Any life insurance or annuity company that holds a certificate of exemption from the commissioner as provided in § 56-2-106; or
7. 1. The procuring of contracts of insurance issued to an industrial insured;
   2. For the purposes of subdivision (7)(A), an “industrial insured” is an insured:
      1. Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer;
      2. Whose aggregate annual premiums for insurance on all risks total at least twenty-five thousand dollars ($25,000); and
      3. Who has at least twenty-five (25) full-time employees.

Acts 1968, ch. 536, § 1; 1969, ch. 270, § 19; T.C.A., § 56-205.

Cross-References. Injunction to prevent violation, § 56-2-110.

Penalty for violation, § 56-2-108.

Surplus lines insurance authorized, § 56-14-103.

Attorney General Opinions. Stop-loss insurance to preferred provider organizations, OAG 94-017, 1994 Tenn. AG LEXIS 13 (2/16/94).

56-2-106. Certificate of exemption.

1. The commissioner shall, upon the payment of a filing fee of one hundred dollars ($100), grant a certificate of exemption to any life insurance or annuity company:
   1. That is organized and operated without profit to any private shareholder or individual;
   2. That is organized and operated exclusively for the purpose of aiding educational or scientific institutions that are also organized and operated without profit to any private shareholder or individual;
   3. That serves that purpose by issuing insurance and annuity contracts only to or for the benefit of the educational or scientific institutions or to individuals engaged in the service of the institutions;
   4. That appoints the commissioner, and the commissioner's successors in office, as its attorney to receive the service of process issued against it in this state, which appointment shall be irrevocable, shall bind the company and any successor in interest, and shall remain in effect so long as there is in force in this state any contract or policy made or issued by the company or any obligation arising from the contract or policy;
   5. That is fully and legally organized and qualified to do business and that has been actively doing business under the laws of the state of its incorporation for a period of at least three (3) years prior to its application for a certificate of exemption, and possesses and maintains the amount of capital and surplus that would be required for a company to be qualified in this state to do the kind or kinds of business it transacts; and
   6. Whose directors and officers are of known good character and are not affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations with any person known to have been involved in the improper manipulation of assets, accounts, reinsurance or any matter inimical to the business of insurance.
2. If, after reasonable notice and a hearing, the commissioner finds that any company holding a certificate of exemption no longer meets the requirements of subdivisions (a)(1)-(6), or finds that any company holding a certificate of exemption has been guilty of any unfair method of competition or any unfair or deceptive acts or practices, as defined in § 56-8-104, the commissioner may enter an order suspending or revoking the certificate of exemption, which order may be reviewed by the writs of certiorari and supersedeas as otherwise provided by law.
3. Any company holding a certificate of exemption shall pay the premium tax imposed by § 56-4-205 on all policies of life insurance issued after April 4, 1968, to residents of the state, which policies are not issued pursuant to a plan or program authorized by the governing board of the educational or scientific institution, and the premiums for which are not paid for in whole or in part by the educational or scientific institution.

Acts 1968, ch. 536, § 1; T.C.A., § 56-206.

Cross-References. Writs of certiorari and supersedeas, title 27, ch. 8.

56-2-107. Acts of unauthorized insurers constituting doing business in state.

Any of the following acts in this state, effected by mail or otherwise by an unauthorized insurer, are included among those deemed to constitute transacting insurance business in this state:

1. The issuance or delivery of contracts of insurance to residents of this state;
2. The solicitation of applications for contracts of insurance;
3. The collection of premiums, membership fees, assessments or other considerations for contracts of insurance; or
4. The transaction of matters subsequent to the execution of contracts of insurance and arising out of them.

Acts 1968, ch. 536, § 2; T.C.A., § 56-207.

Cross-References. Applicability of section to persons transacting business of legal insurance, § 56-43-111.

56-2-108. Violation of § 56-2-105 — Penalty.

1. Any company that violates § 56-2-105 is subject to a fine or a civil penalty, or both, of not less than one hundred dollars ($100) nor more than five thousand dollars ($5,000) for each violation.
2. Each day in which a violation occurs constitutes a separate violation.

Acts 1968, ch. 536, § 3; 1973, ch. 244, § 1; T.C.A., § 56-208.

56-2-109. No action to be maintained without certificate of authority.

The failure of a company to obtain a certificate of authority shall not impair the validity of any act or contract of the company, and shall not prevent the company from defending any action at law or suit in equity in any court of this state; but no company transacting insurance business in this state without a certificate of authority shall be permitted to maintain an action at law or suit in equity in any court of this state to enforce any right, claim or demand arising out of the transaction of insurance business until the company has obtained a certificate of authority, nor shall an action at law or suit in equity be maintained in any court of this state by any successor or assignee of the company on any right, claim or demand originally held by the company until a certificate of authority has been obtained by the company or by a company that has acquired all or substantially all of its assets.

Acts 1968, ch. 536, § 4; T.C.A., § 56-209.

56-2-110. Injunction to prevent violation of § 56-2-105.

1. Whenever the commissioner believes, from evidence satisfactory to the commissioner, that any foreign or alien company is violating or is about to violate § 56-2-105, the commissioner may, through the attorney general and reporter, cause a bill to be filed in the chancery court of Davidson County to enjoin and restrain the company from continuing the violation, engaging in the violation or doing any act in furtherance of the violation.
2. The court shall have jurisdiction of the proceeding and shall have the power to make and enter an order or decree awarding the preliminary or final injunctive relief as in its judgment is proper.

Acts 1968, ch. 536, § 5; T.C.A., § 56-210.

56-2-111. Liability for tax on gross premium.

Any company violating § 56-2-105 shall be liable, with respect to any contract of insurance or transaction of insurance business as defined and limited in § 56-2-105, for the payment of all taxes on gross premiums imposed in chapter 4 of this title.

Acts 1968, ch. 536, § 6; T.C.A., § 56-211.

Cross-References. Applicability of section to persons transacting business of legal insurance, § 56-43-111.

56-2-112. Deposits in trust to secure policyholders.

1. The state treasurer, in an official capacity, shall take and hold in trust deposits made by any domestic insurance company for the purpose of complying with the laws of any other state, to enable the company to do business in the other state, and shall also, in a like manner, take and hold any deposits made by a foreign insurance company under any law of the state.
2. The company making the deposits shall be entitled to the income of the deposits, and may, from time to time, with the consent of the state treasurer, when not forbidden by the law under which the deposits are made, change, in whole or in part, the securities that compose the deposit for other competent securities of equal value.
3. 1. Upon the request of any domestic insurance company, the state treasurer may return to the company the whole or any portion of the securities of the company, when the state treasurer is satisfied that the securities so asked to be returned are subject to no liability, and not required to be longer held by any law or purpose of the original deposit.
   2. The state treasurer may return to the trustees or other representatives, authorized for that purpose, of a foreign insurance company, any deposit made by the company, when it appears that the company has ceased to do business in the state, and is under no obligations to policyholders or other persons in the state or in the United States, for whose benefit the deposit was made.

Acts 1895, ch. 160, § 24; Shan., § 3308; Code 1932, § 6128; T.C.A. (orig. ed.), §§ 56-223, 56-212.

Cross-References. Capital and deposits of foreign insurance companies, §§ 56-2-101 — 56-2-103, 56-2-114, 56-2-115.

Deposit with treasurer of state or other officer by company organized on or after January 1, 1967, § 56-2-104.

56-2-113. Period of organization before admission of foreign companies — Exceptions.

1. No foreign insurance company transacting any of the kinds of insurance as defined in § 56-2-201 shall be admitted and authorized to do business in this state until it can satisfy the commissioner that it has been organized and actively engaged in the insurance business in the state of its incorporation for a period of three (3) years prior to the date of its application to be admitted and authorized to do business in this state.
2. Subsection (a) does not apply to a foreign insurance company that is:
   1. The wholly-owned subsidiary of an insurance company or health maintenance organization admitted and authorized to do business in this state;
   2. The continuing corporation resulting from a merger or consolidation of insurance companies at least one (1) of which, prior to the merger or consolidation, met all the requirements for admission and authorization to do business in this state, including the requirement of having been actively engaged in the insurance business in its state of incorporation for three (3) years;
   3. The wholly-owned subsidiary of a holding company that also owns one hundred percent (100%) of the common capital stock, excluding qualifying shares required to be held by directors, of an insurance company or health maintenance organization admitted and authorized to do business in this state; or
   4. A foreign insurance company originally chartered and licensed to transact business in this state, and making application to redomesticate to this state upon furnishing the following from the commissioner of commerce and insurance of its state of domicile:
      1. Letter of approval to redomesticate;
      2. Letter of intent to permit the company to transfer its business and assets to this state; and
      3. A certificate of good standing.
3. “Owned” and “owns,” as used in subsection (b), mean ownership either directly or indirectly through one (1) or more intermediaries.
4. The commissioner, in the commissioner's sole discretion, may waive the requirement in subsection (a) for any company, if the commissioner determines it is in the public interest.

Acts 1955, ch. 13, § 1, T.C.A., § 56-307; Acts 1959, ch. 201, § 1; 1967, ch. 25, § 1; 1972, ch. 585, § 1; 1975, ch. 167, § 1; T.C.A., § 56-213; Acts 1984, ch. 667, § 1; 1987, ch. 68, § 1; 2005, ch. 319, §§ 1, 2; 2010, ch. 780, § 1.

56-2-114. Capital requirements for insurance combinations and reinsurance.

1. An insurer otherwise qualified therefor may be authorized to transact combinations of kinds of insurance while processing and maintaining capital, if a stock company, or surplus funds, if a mutual, reciprocal, or Lloyd's plan insurer, in the amount of one million dollars ($1,000,000).
2. To transact the business of reinsuring credit life and credit accident insurance and health insurance, an insurer must possess and maintain capital in the amount of one hundred fifty thousand dollars ($150,000); provided, that a company so authorized shall not be authorized to conduct any other line of business unless otherwise qualified.

Acts 1895, ch. 160, § 9, par. 2; 1901, ch. 131, § 1; 1907, ch. 493, § 1; Shan., § 3292; Code 1932, § 6107; Acts 1947, ch. 223, § 1; C. Supp. 1950, § 6107; Acts 1951, ch. 212, § 1; T.C.A. (orig. ed.), § 56-304; Acts 1955, ch. 13, § 1; 1967, ch. 31, § 5; T.C.A. (orig. ed.), § 56-214; Acts 1985, ch. 107, § 4; 1986, ch. 535, § 1.

Cross-References. Credit life and health insurance, title 56, ch. 7, part 9.

56-2-115. Additional surplus requirement.

In addition to the paid up capital stock or surplus as required under §§ 56-2-103 and 56-2-114(a), all insurance companies doing business in this state shall possess and maintain bona fide surplus funds in the amount of one million dollars ($1,000,000), except for insurance companies authorized under § 56-2-114(b), which shall possess and maintain bona fide surplus funds equaling in amounts not less than fifty percent (50%) of the capital stock or surplus otherwise required by § 56-2-114(b).

Acts 1895, ch. 160, § 9, par. 2; 1901, ch. 131, § 1; 1907, ch. 493, § 1; Shan., § 3292; Code 1932, § 6107; Acts 1947, ch. 223, § 1; C. Supp. 1950, § 6107; Acts 1951, ch. 212, § 1; T.C.A. (orig. ed.), § 56-305; Acts 1955, ch. 13, § 1; T.C.A. (orig. ed.), § 56-215; Acts 1986, ch. 535, § 2.

56-2-116. Exemption of previously licensed companies — Termination of exemption for foreign insurance companies.

1. No requirement of §§ 56-2-101 — 56-2-103, 56-2-113 — 56-2-115, 56-2-201, and 56-2-301 not in effect on March 1, 1986, shall be considered applicable to any insurance company properly licensed to transact business in this state on that date.
2. Notwithstanding subsection (a), any foreign insurance company filing an annual statement under § 56-1-501, not possessing the minimum capital and surplus required by §§ 56-2-114 and 56-2-115 on and after January 1, 1987, shall cease to write any new business until the minimum capital and surplus required are met.
3. Subsection (b) shall not apply to the procedures and capital requirements of a casualty company for the exclusive purpose of writing bonds only.
4. Any domestic insurer otherwise exempt under subsection (a) that at any time meets the capital and surplus requirements under this chapter shall thereafter be required to maintain the required capital and surplus limits.

Acts 1955, ch. 13, § 6 (T.C.A. (supp.), § 56-322); Acts 1967, ch. 31, § 6; 1977, ch. 127, §§ 1, 2; T.C.A, § 56-217; Acts 1986, ch. 535, §§ 3-5.

56-2-117. [Repealed.]

Acts 1980, ch. 503, § 3; repealed by Acts 2012, ch. 680, § 2, effective July 1, 2012.

Compiler's Notes. Former § 56-2-117 concerned the deposit of securities in a clearing corporation or federal reserve bank.

56-2-118. Address and phone number of policyholder service office outside state.

1. Every policy of life insurance, accident and health insurance, property insurance or casualty insurance issued after January 1, 1989, covering risks in this state by a company not maintaining a policyholder service office in this state, shall be accompanied by the complete address and telephone number, toll-free if available, of the policyholder service office of the company issuing the policy. In the event an insurance company that has a policyholder's service office in this state ceases to maintain the office, the company shall provide its policyholders residing in this state with a written notice containing the complete address and telephone number, toll-free if available, of the servicing agent or the nearest policyholder service office of the company.
2. The commissioner may promulgate rules and regulations in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, to effectuate the purposes of this section.
3. Failure to include the information required by subsection (a) shall be a deceptive act or practice and the procedures and penalties established by chapter 8, part 1 of this title, shall be applicable.

Acts 1988, ch. 721, §§ 1-3.

56-2-119. Insurance company's address to appear on insurance policy.

1. On every policy of insurance covering risks in this state that is issued after July 1, 1991, by an insurance company doing business in this state, there shall be printed the address of the company's home office, regional office or service center.
2. Failure to include the information required by subsection (a) is a deceptive act or practice, and the procedures and penalties established by chapter 8, part 1 of this title are applicable.

Acts 1990, ch. 671, § 1.

56-2-120. Insurers — Financial requirements — Hearings.

1. In addition to the minimum requirements set out in §§ 56-2-114 and 56-2-115, and notwithstanding any other law to the contrary, the commissioner may require, after notice and hearing, additional amounts so that an insurer's capital, surplus funds, or surplus as regards policyholders shall be reasonable in relation to the insurer's outstanding liabilities and premiums, and adequate to its financial needs. For purposes of this part, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and premiums and adequate to its financial needs, the following factors, among others, shall be considered:
   1. The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria;
   2. The extent to which the insurer's business is diversified among the several lines of insurance;
   3. The number and size of risks insured in each line of business;
   4. The extent of the geographical dispersion of the insurer's insured risks;
   5. The nature and extent of the insurer's reinsurance program;
   6. The quality, diversification and liquidity of the insurer's investment portfolio;
   7. The recent past and projected future trend in the size of the insurer's investment portfolio;
   8. The surplus as regards policyholders maintained by other comparable insurers;
   9. The adequacy of the insurer's reserves; and
   10. The quality and liquidity of investments in affiliates. The commissioner may treat the investments as a disallowed asset for purposes of determining the adequacy or surplus as regards policyholders whenever, in the commissioner's judgment, the investment so warrants.
2. Before the commissioner takes any action pursuant to this section, the commissioner shall give written notice to the insurer involved, stating specifically the nature of the alleged deficiency in capital and surplus. Within ten (10) days after receiving notice, the insurer may request a hearing, which shall be held within thirty (30) days of the request. The burden of proof shall be on the commissioner to show the inadequacy of capital and surplus by the preponderance of the evidence. After the hearing, or if the insurer fails to request a hearing, the commissioner, if the commissioner finds a deficiency, may enter an appropriate order under this section as the commissioner deems advisable.
3. When the commissioner takes action in any or all of the ways set out in this section, the party aggrieved may appeal from the action to the chancery court of Davidson County.

Acts 1991, ch. 142, § 1.

56-2-121. Exempt entities.

1. A plan sponsored by a nonprofit corporation organized and created in this state primarily to promote programs for the improvement of the health of rural people in the state, which plan has provided health care benefits to the members of the corporation for a period in excess of ten (10) years, shall be deemed not to be insurance and not subject to this title, to the extent the plan, after July 1, 1993, provides the benefits under a self-funded arrangement; provided, that any stop-loss, excess or similar insurance coverage purchased as part of the plan shall be insurance subject to this title.
2. The provisions of this title to the contrary notwithstanding, a Program for All-Inclusive Care for the Elderly (PACE) project that is sponsored by a religious or charitable organization that is itself or is controlled by a person that is organized under § 501(c)(3) of the Internal Revenue Code  (26 U.S.C. § 501(c)(3)), and that has had its application for the operation of a PACE program approved by the health care financing administration of the United States department of health and human services (HHS), and is operating under such approval, shall not be deemed to be engaged in any business required to be licensed pursuant to this title. This exemption applies only to business conducted pursuant to the approved PACE contract, and not to any other business that such organization conducts that is subject to this title.

Acts 1993, ch. 339, § 1; 1998, ch. 698, § 2.

Compiler's Notes. Acts 1998, ch. 698, § 1 provided that subsection (b) of this section shall be known and may be cited as the “Tennessee All-Inclusive Care for the Elderly Act of 1998.”

56-2-122. Nonprofit health maintenance organization as subsidiary of certain hospital corporations.

A nonprofit health maintenance organization that, with the approval of the commissioner, was created prior to January 1, 1981, by a corporation operated pursuant to chapter 28 or chapter 29 of this title may be treated by the corporation as a subsidiary solely for the purpose of determining the status of the nonprofit health maintenance organization as an admitted asset; provided, that the corporation otherwise has a net worth at least equal to the capital and surplus requirements for an insurance company under §§ 56-2-114(a) and 56-2-115.

Acts 1997, ch. 65, § 1.

56-2-123. Confirmation of verbal authorization for medical care.

If verbal authorization is given to a health care provider, insured, or enrollee for medical care under any individual, franchise, blanket or group health insurance policy, medical service plan or contract, hospital service corporation contract, hospital and medical service corporation contract, fraternal benefit society, health maintenance organization, or managed care organization, the verbal authorization shall be confirmed by written authorization, facsimile transmission, or verbally by means of a confirmation number or other confirmation code.

Acts 1997, ch. 201, § 1.

56-2-124. Hold harmless requirements prohibited.

No health insurer, prepaid group health plan, health maintenance organization, preferred provider organization or similar entity licensed under this part that provides or administers health insurance shall require, by contract or otherwise, any title 63 or title 68 licensee to indemnify or hold harmless the licensee under this title for tort or patent or copyright infringement liability that the  licensee under this title incurs, experiences, or causes by act or omission, or by act or omission of the title 63 or title 68 provider to the extent the act or omission was pursuant to a directive of the licensee under this title.

Acts 1997, ch. 376, § 1.

56-2-125. Establishment and maintenance of an all payer claims database — Establishment of Tennessee health information committee.

1. As used in this section, unless the context otherwise  requires:
   1. “All payer claims database” means a database comprised of health insurance issuer and group health plan claims information that excludes the data elements in 45 CFR 164.514(e)(2);
   2. “Commissioner” means the commissioner of commerce and insurance;
   3. “Department” means the department of commerce and insurance;
   4. “Group health plan” means an employee welfare benefit plan, as defined in § 3(1) of the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1002(1)), to the extent that the plan provides medical care to employees or their dependents, as defined under the terms of the plan, or an administrator of the plan. For purposes of this section, “group health plan” shall not mean any plan that is offered through a health insurance issuer;
   5. “Health insurance coverage” means health insurance coverage as defined in § 56-7-2902, as well as medicare supplemental health insurance; and
   6. “Health insurance issuer” means an entity subject to the insurance laws of this state, or subject to the jurisdiction of the commissioner, that contracts or offers to contract to provide health insurance coverage, including, but not limited to, an insurance company, a health maintenance organization and a nonprofit hospital and medical service corporation. “Health insurance issuer” also means a pharmacy benefits manager, a third party administrator and an entity described in § 56-2-121.
2. 1. The commissioner shall establish and maintain an all payer claims database to enable the commissioner of finance and administration to carry out the following duties:
      1. Improving the accessibility, adequacy and affordability of patient health care and health care coverage;
      2. Identifying health and health care needs and informing health and health care policy;
      3. Determining the capacity and distribution of existing health care resources;
      4. Evaluating the effectiveness of intervention programs on improving patient outcomes;
      5. Reviewing costs among various treatment settings, providers and approaches; and
      6. Providing publicly available information on health care providers' quality of care.
   2. Nothing in this section shall preclude a health insurance issuer from providing information on health care providers' quality of care in accordance with § 56-32-130(e).
3. [Deleted by 2018 amendment.]
4. 1. As required by HIPAA, the all payer claims database shall not publicly disclose any individually identifiable health information as defined in 45 CFR 160.103. Use of the all payer claims database shall be subject to restrictions required by HIPAA and other applicable privacy laws and policies. The all payer claims database shall be accessed only by staff or a designated entity authorized in writing by the commissioner of finance and administration to perform the analyses contemplated by this section. The commissioner shall develop procedures and safeguards to protect the integrity and confidentiality of any data contained in the all payer claims database.
   2. 1. 1. The all payer claims database, summaries, source, or draft information used to construct or populate the all payer claims database, patient level claims data, reports derived from the all payer claims database, and other information submitted under this section, whether in electronic or paper form, shall not be considered a public record and shall not be open for inspection by members of the public under § 10-7-503(a)(1). The information contained in the all payer claims database shall be considered confidential and not subject to subpoena.
         2. The commissioner may promulgate rules to authorize the public release of reports derived from the information. Any release of reports shall not result in such information losing its confidentiality or cause it to be admissible, except in administrative proceedings authorized under the rules adopted by the commissioner.
      2. The commissioner shall, through memoranda of understanding, allow the use of the all payer claims database by the department of finance and administration, the department of health, the department of mental health and substance abuse services, the department of intellectual and developmental disabilities, and other departments of state government for the purposes listed in subdivision (b)(1).
      3. Except for officials of the state or those officials' designees as permitted by subdivision (d)(1), nothing in this section shall be construed as permitting access to or discovery of the source or draft information used to construct or populate the all payer claims database.
5. The all payer claims database shall contain unique health care provider identifiers that may be used in public reports; provided, however, that no information that could reveal the identity of any patient from the all payer claims database shall be made available to the public. To ensure that individual patients are not identified, the following data shall not be included in any transmission by a group health plan or health insurance issuer to the state or designated entity for the all payer claims database or in any source or draft information used to construct or populate the all payer claims database:
   1. Patient names;
   2. Patient street addresses;
   3. All elements of patient birth dates, except year of birth;
   4. Patient telephone numbers;
   5. Patient facsimile numbers;
   6. Patient electronic mail addresses;
   7. Patient social security numbers;
   8. Medical record numbers;
   9. Health plan beneficiary numbers;
   10. Patient account numbers;
   11. Patient certificate/license numbers;
   12. Vehicle identifiers and serial numbers including license plate numbers;
   13. Device identifiers and serial numbers;
   14. Web universal resource locators (URLs);
   15. Internet protocol (IP) address numbers;
   16. Biometric identifiers including fingerprints, voiceprints, and genetic code;
   17. Full-face photographic images and any comparable images; or
   18. Any other unique patient identifying number, characteristic or code, except encrypted index numbers assigned prior to the transmission by group health plans or health insurance issuers to the state or designated entity for the purpose of linking procedures by patient; provided, that a patient's identity cannot be known from the encrypted index number.
6. 1. 1. No later than January 1, 2010, and every month thereafter, all group health plans and health insurance issuers shall provide electronic health insurance claims data for state residents to the commissioner or a designated entity authorized by the commissioner, in accordance with standards and procedures recommended by the Tennessee health information committee pursuant to subdivision (c)(2) and adopted by the commissioner by rule.
      2. All group health plans and health insurance issuers shall provide additional information as the Tennessee health information committee recommends and the commissioner subsequently establishes by rule for the purpose of creating and maintaining an all payer claims database.
      3. The Tennessee health information committee and the commissioner shall strive for standards and procedures that are the least burdensome for data submitters.
   2. The collection, storage and release of health and health care data and statistical information that is subject to the federal requirements of HIPAA shall be governed by the rules adopted in 45 CFR parts 160 and 164.
   3. All group health plans and health insurance issuers that collect the health employer data and information set (HEDIS) shall annually submit the HEDIS information to the commissioner in a form and in a manner prescribed by the National Committee for Quality Assurance (NCQA).
   4. If any group health plan or health insurance issuer fails to submit required data to the commissioner on a timely basis, the commissioner may impose a civil penalty of up to one hundred dollars ($100) for each day of delay.
7. The commissioner, in the commissioner's discretion, may allow some group health plans and health insurance issuers to submit data on a quarterly basis. The commissioner may also establish by rule exceptions to the reporting requirements of this section for entities based upon an entity's size or amount of claims or other relevant factors deemed appropriate.
8. 1. The commissioner may, subject to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, promulgate rules and regulations for purposes of implementing this section. The commissioner is authorized to promulgate the initial rules as emergency rules pursuant to the Uniform Administrative Procedures Act prior to January 1, 2010, for the purpose of creating the all payer claims database.
   2. The commissioner of finance and administration may, subject to the Uniform Administrative Procedures Act, promulgate rules and regulations concerning the operation of the all payer claims database and the distribution and use of information maintained or created thereby. The commissioner of finance and administration is authorized to promulgate the initial rules as emergency rules pursuant to the Uniform Administrative Procedures Act prior to January 1, 2010, for the purpose of creating the all payer claims database.

Acts 2009, ch. 611, § 3; 2010, ch. 1100, §§ 90-92; 2011, ch. 15, § 3; 2012, ch. 575, §§ 1, 2; 2015, ch. 65, §§ 3, 4; 2018, ch. 968, §§ 2, 3.

Compiler's Notes. Acts 2010, ch. 1100, § 153 provided that the commissioner of mental health and developmental disabilities, the commissioner of mental health, the commissioner of intellectual and developmental disabilities, and the commissioner of finance and administration are authorized to promulgate rules and regulations to effectuate the purposes of the act. All such rules and regulations shall be promulgated in accordance with the provisions of the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.

Acts 2018, ch. 968, § 4 provided that, notwithstanding  § 4-29-112, the Tennessee health information committee, created by this section, terminated May 16, 2018.

Amendments. The 2018 amendment deleted (c) which read: “(c)(1) There is established a Tennessee health information committee, referred to as the ‘committee’ in this section. The commissioner of finance and administration shall give all consideration to policies and recommendations formed by the committee, including those formed by the committee on any issues in response to a request of the commissioner of finance and administration in the commissioner's discretion. Any recommendations developed by the committee shall, to the largest extent possible, be consistent with those of nationally recognized standard setting and accrediting bodies.“(2)(A)(i) The public release of any report utilizing data derived from the all payer claims database on quality, effectiveness, or cost of care of health care providers or provider shall require a two-thirds (2/3) affirmative vote of the committee members present.“(ii) Health insurance issuers that contribute data to the all payer claims database and providers who are subjects of reports on quality, effectiveness or cost of care that utilize data derived from the all payer claims database shall be given access to the reports sixty (60) days prior to the public release of the reports for the review and submission of comments prior to the public release.“(B) Any other committee action shall require a simple majority affirmative vote of the committee members present.“(C) Neither the committee nor the commissioner is authorized to make public release of individual patient level claims data.“(3) The committee shall develop for the commissioner of finance and administration:“(A) A description of the data sets, based on national standards, if and when available, that will be included in the all payer claims database; and“(B) A method for submission of data.“(4) The committee shall develop for the commissioner of finance and administration security measures for ensuring compliance with:“(A) The federal requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (42 U.S.C. § 1320d et seq.), and implementing federal regulations; and“(B) Other state and federal privacy laws.“(5) The committee shall regularly evaluate the integrity and accuracy of the all payer claims database.“(6) The committee shall develop policies to make reports from the all payer claims database available as a resource for insurers, employers, providers and purchasers of health care, to continuously review health care utilization, expenditures and performance in this state. Such uses shall be subject to restrictions required by HIPAA and other applicable privacy laws and policies as well as to reasonable charges recommended by the committee and set by rule.“(7) The committee shall be chaired by the commissioner of finance and administration or designee and attached to the department of finance and administration for administrative purposes. The committee members shall serve without compensation and travel expenses.“(8)(A) The committee shall include:“(i) The commissioner or the commissioner’s designee;“(ii) The commissioner of health or the commissioner of health’s designee;“(iii) The commissioner of mental health and substance abuse services or the commissioner of mental health and substance abuse services' designee;“(iv) The commissioner of finance and administration or the commissioner of finance and administration’s designee;“(v) The director of the state division of health planning or equivalent;“(vi) The director of the office of e-health initiatives or equivalent;“(vii) The deputy commissioner of the bureau of TennCare or the deputy commissioner of the bureau of TennCare’s designee; and“(viii) The commissioner of intellectual and developmental disabilities or the commissioner of intellectual and developmental disabilities' designee.“(B) The committee shall include the following members to be appointed by the commissioner of finance and administration:“(i) Two (2) physician members, who may be appointed from lists of qualified persons submitted by interested medical organizations, including, but not limited to, the Tennessee Medical Association;“(ii) Two (2) members to represent hospitals, who may be appointed from lists of qualified persons submitted by interested hospital groups, including, but not limited to, the Tennessee Hospital Association and the Hospital Alliance of Tennessee;“(iii) One (1) pharmacist member, who may be appointed from lists of qualified persons submitted by interested pharmacist groups, including, but not limited to, the Tennessee Pharmacists Association;“(iv) Two (2) members to represent the health insurance industry;“(v) One (1) member to represent a hospital and medical service corporation;“(vi) One (1) member to represent a coalition of businesses who purchase health services;“(vii) One (1) member to represent a self-insured employer;“(viii) One (1) member to represent health care consumers; and“(ix) One (1) member to represent ambulatory surgical treatment centers.“(9) The commissioner shall consult with the interested groups listed in subdivision (c)(7) to determine qualified persons to fill the positions.“(10) The committee may appoint one (1) or more subcommittees to provide advice and recommendations related to the operations and use of the all payer claims database, including, but not limited to, advisory committees on:“(A) Research;“(B) Technology;“(C) Participation by health insurance issuers in the all payer claims database; and“(D) Such other matters as the committee may approve in its discretion.“(11) The members of the Tennessee health information committee appointed by the commissioner of finance and administration as provided in subdivision (b)(7)(B) shall serve one-year terms and shall be eligible for reappointment to subsequent terms; provided, however, that five (5) of the initial members shall serve an initial term of two (2) years. Vacancies shall be filled for any unexpired terms, and members shall serve until their successors are appointed. The initial term of such members shall be deemed to commence on July 1, 2009.”; and, in (d)(1), substituted “develop” for “collaborate with the Tennessee health information committee in developing” following “The commissioner”; redesignated former (2)(A) and (2)(A)(i) as present (2)(A)(i), and therein deleted “unless public release of reports is authorized by the Tennessee health information committee” following “database”, substituted “The information” for “Further, such information”, and deleted “; and”; in (2)(A)(ii), substituted “The commission may promulgate rules to authorize the public release of reports” for “Reports” and deleted “shall only be released pursuant to rules adopted by the commissioner subsequent to consultation with the Tennessee health information committee” at the end of the first sentence; in (2)(B), deleted “and after consultation with the Tennessee health information committee” following “understanding”; and, in (2)(C), substituted “in” for “within” following “nothing”.

Effective Dates. Acts 2018, ch. 968, § 5. May 16, 2018.

Cross-References. Confidentiality of public records, § 10-7-504.

Attorney General Opinions. T.C.A. § 56-2-125 is unconstitutional following the United States Supreme Court’s recent decision of Gobeille v. Liberty Mutual Ins. Co., 136 S. Ct. 936 (2016).  Consequently, the Department of Commerce and Insurance and the Department of Finance and Administration are allowed to stop the enforcement of T.C.A. § 56-2-125. OAG 16-42, 2016 Tenn. AG LEXIS 42 (12/7/2016).

56-2-126. Service contracts not to be construed as business of insurance.

1. The marketing, sale, offering for sale, issuance, making, proposing to make and administration of a service contract shall not be construed to be the business of insurance and shall be exempt from regulation as insurance pursuant to this title.
2. 1. For purposes of this section, “service contract” means a contract or agreement for a separately stated consideration for a specific duration to perform the service, repair, replacement or maintenance of property or indemnification for service, repair, replacement or maintenance, for the operational or structural failure due to a defect in materials, workmanship, or normal wear and tear, with or without additional provisions for incidental payment of indemnity under limited circumstances, including, but not limited to, towing, rental, road hazard and emergency road service. “Service contract” includes motor vehicle extended service contracts and agreements. Service contracts may provide for the service, repair, replacement, or maintenance of property for damage resulting from power surges and accidental damage from handling.
   2. 1. For the purposes of this section, “service contract” also means a contract or agreement that provides one (1) or more of the following:
         1. The repair or replacement of tires or wheels on a motor vehicle damaged as a result of coming into contact with road hazards;
         2. The removal of dents, dings, or creases on a motor vehicle that can be repaired using the process of paintless dent removal without affecting the existing paint finish and without replacing vehicle body panels, sanding, bonding, or painting;
         3. The repair of chips or cracks in, or the replacement of, motor vehicle windshields as a result of damage caused by road hazards; or
         4. The replacement of a motor vehicle key or key-fob in the event that the key or key-fob becomes inoperable or is lost or stolen.
      2. For purposes of subdivision (b)(2)(A), “road hazard” means a hazard that is encountered while driving a motor vehicle, which may include potholes, rocks, wood debris, metal parts, glass, plastic, curbs, or composite scraps.
3. A contract excluded from the definition of a “pre-need funeral contract” pursuant to § 62-5-403(9)(C) is not a contract of insurance within the meaning of this title.

Acts 2011, ch. 71, § 1; 2017, ch. 90, § 1; 2018, ch. 623, § 1.

Compiler's Notes. Acts 2018, ch. 623, § 3 provided that the act, which amended this section, shall apply to contracts entered into or renewed on or after April 2, 2018.

Amendments. The 2017 amendment added (b)(2).

The 2018 amendment added (c).

Effective Dates. Acts 2017, ch. 90, § 2. April 4, 2017.

Acts 2018, ch. 623, § 3. April 2, 2018.

Part 2
Kinds of Insurance

56-3-101. Investments of insurance companies organized after May 11, 1895.

1. Every life insurance company doing business in this state, chartered by the laws of this state, shall be required for the better protection of the policyholders, to keep at all times the sum of one hundred thousand dollars ($100,000) invested in bonds, securities, or mortgages on real estate for double the amount loaned, to be certified as safe and worth this amount by the commissioner.
2. Insurance companies other than life, chartered by the laws of this state, shall not be allowed to transact business in this state unless possessed of at least fifty thousand dollars ($50,000) paid up, actual cash capital, or, in lieu of cash capital, a stock guaranty capital or surplus, above all liabilities, including reinsurance reserve, of not less than fifty thousand dollars ($50,000).
3. This section shall not apply to companies organized under the laws of this state prior to May 11, 1895, and actually engaged in the transaction of insurance business.

Acts 1895, ch. 160, § 13; Shan., § 3296; Code 1932, § 6112; T.C.A. (orig. ed.), §§ 56-214, 56-303.

Cross-References. Captive insurance companies, title 56, ch. 13.

Deposit with treasurer of state or other officer by company organized on or after January 1, 1967, § 56-2-104.

Investment in bonds and obligations of the Tennessee Valley Authority, § 35-3-119.

Textbooks. Tennessee Jurisprudence, 7 Tenn. Juris., Corporations, § 118; 21 Tenn. Juris., Process, § 8.

56-3-102. [Repealed.]

Acts 1907, ch. 454, § 2; 1925, ch. 66, § 1; Shan., § 3348a34; Code 1932, § 6209; T.C.A. (orig. ed.), § 56-215; impl. am. Acts 1971, ch. 137, § 2; T.C.A. (orig. ed.), § 56-304; repealed by Acts 2018, ch. 873, § 9, effective May 3, 2018.

Compiler's Notes. Former §  56-3-102 concerned contingency reserves.

56-3-103. Officers must not be pecuniarily interested in investment or disposition of funds of domestic company.

1. No director or other officer of any domestic insurance company organized under the laws of this state, and no member of a committee having any authority in the investment or disposition of its funds, shall accept, or be the beneficiary of, either directly or remotely, any fee, brokerage, commission, gift, or other consideration for or on account of any loan, deposit, purchase, sale, payment, or exchange made by or in behalf of the company, or be pecuniarily interested in the purchase, sale, or loan, either as borrower, principal, coprincipal, agent, or beneficiary, except that if a policyholder, the person shall be entitled to all the benefits accruing under the terms of the contract; provided, that this section shall not forbid the collection by attorneys of reasonable fees for the examination of titles and investigations of loans and investments. This section shall not bar a person who is an agent of an insurance company, in the normal course of business, from serving on the board or on a committee of an insurance company because the person receives commissions on insurance sales.
2. This section shall not bar or limit the ability of a director, officer, or committee member of an insurance company from:
   1. Holding or owning stock or other ownership interest, if the stock or ownership interest has been disclosed to the insurance company, in a company or entity:
      1. The shares of which are publicly traded on a national stock exchange or on an over-the-counter basis;
      2. That is regulated by the federal reserve board, the federal deposit insurance corporation, the office of the comptroller of the currency, or the office of thrift supervision; or
      3. That does business with the insurance company in the ordinary course of business and on terms no less favorable to the insurance company than are available to ordinary customers of the entity;
   2. Receiving dividends or other distributions in the ordinary course of business from the stock or ownership interest; or
   3. Serving as a director, officer, committee member, employee or agency of any entity listed in this subsection (b) and receiving fees or other compensation in the ordinary course of business for the service.

Acts 1917, ch. 124, § 1; Shan., § 3369a148; Code 1932, § 6441; T.C.A. (orig. ed.), §§ 56-221, 56-310; Acts 1995, ch. 219, § 1; 1995, ch. 221, § 7; 2005, ch. 101, § 1.

Compiler's Notes. Acts 1995, ch. 221, § 7, effective May 12, 1995, made an amendment identical to that made by Acts 1995, ch. 219, § 3.

56-3-104. Investments of domestic company in which officers pecuniarily interested not to be allowed as an admitted asset.

No funds of a company invested in violation of § 56-3-103 shall be allowed by the commissioner as an admitted asset of the company.

Acts 1917, ch. 124, § 2; Shan., § 3369a149; Code 1932, § 6442; T.C.A. (orig. ed.), §§ 56-222, 56-311.

56-3-105. Regulation of compensation of officers, agents and employees of life insurance companies and fraternal benefit societies.

1. A domestic stock or mutual life insurance company or fraternal benefit society shall not:
   1. Pay any salary, compensation or emolument to any director or trustee regardless of amount, or to any officer, employee or other person, firm or corporation amounting in any one (1) year to more than the amount set forth in the appropriate schedule of the annual statement filed with the commissioner pursuant to § 56-1-501, unless the payment has first been authorized by a vote of the board of directors of the company or society;
   2. Pay any other compensation or emolument to any officer, director or trustee of the company or society who is paid a salary for services of more than one hundred dollars ($100) per month; or
   3. Enter into an agreement for a term longer than twelve (12) months from the date of the agreement with any officer, director, trustee or salaried employee of the company or society providing for the payment of any salary, compensation or emolument for any services rendered or to be rendered.
2. This section shall not prohibit the life insurance company or society from entering into an agreement with:
   1. Any officer or employee of the company or society for the payment of deferred compensation beyond the period of twelve (12) months from the date of the agreement;
   2. Any officer or employee of the company or society for a stock option plan, stock purchase plan, stock bonus plan, or other incentive compensation plan, if, before the plan is entered into or becomes effective, it is first approved by the commissioner;
   3. Any agent, general agent or district manager of the company or society providing for the payment of commissions on the regular commission basis; or
   4. Any agent of the company or society providing for the payment of renewal commissions.
3. No domestic or foreign life insurance company or society doing business in this state shall calculate or pay, directly or indirectly, the compensation of any officer, director or trustee of the company or society as a percentage of the premiums collected or the insurance written by the company or society unless it first obtains the approval of the commissioner.

Acts 1907, ch. 440, § 1; Shan., § 3348a25; Code 1932, § 6196; Acts 1959, ch. 84, § 1; 1961, ch. 34, § 1; 1967, ch. 30, § 1; 1969, ch. 161, § 1; impl. am. Acts 1971, ch. 137, § 2; 1977, ch. 11, § 1; T.C.A., §§ 56-231, 56-321; Acts 1981, ch. 269, § 1.

Textbooks. Tennessee Jurisprudence, 7 Tenn. Juris., Corporations, § 118; 21 Tenn. Juris., Process, § 8.

Law Reviews.

Venue — Localizing Transitory Actions in Tennessee Civil Proceedings, 35 Tenn. L. Rev. 520.

Collateral References.

Salaries of officers of insurance companies, public control of. 50 A.L.R. 481.

56-3-106. Pensions to officers, directors, or trustees, or to members of their families prohibited to domestic stock or mutual life insurance companies or fraternal benefit societies — Employees' retirement plans permitted.

1. No domestic stock or mutual life insurance company or fraternal benefit society shall grant any pension to any officer, director or trustee of the company or society, or to any member of the person's family after the person's death, or to any other person whomsoever except that the company or society may provide for an employees' retirement plan for its employees, which plan may or may not require contributions from the employees.
2. Before the company or society enters into the employees' retirement plan, it shall first submit that plan to the commissioner for approval pursuant to the requirements of this section, and the plan shall not become effective until it has been so approved. After the effective date of the plan, the commissioner may, upon a finding that the plan no longer meets the requirements of this section, order the company or society to discontinue contributions to the plan for a specified time with renewal of the contributions to be subject to the commissioner's subsequent approval.
3. The commissioner shall approve, or continue the approval of, an employees' retirement plan that meets the following requirements:
   1. No benefit payment can be made to any employee under the plan until the entire reserve required for the benefit payment to the employee has been accumulated and set aside; and
   2. If the plan is established for any classification of the employees of the company or society, such as home office employees, detached office employees, field representatives, agents, etc., it provides for participation and benefits on a nondiscriminatory basis for all employees in each classification who may elect to participate in the plan.
4. As used in this section, “employees” includes all persons employed by the company or society in any capacity, but does not include any director or trustee of the company or society who serves in that capacity only.

Acts 1907, ch. 440, § 2; Shan., § 3348a26; Acts 1931, ch. 78, § 1; Code 1932, § 6197; 1933, ch. 150, § 1; 1939, ch. 72, § 1; C. Supp. 1950, § 6197; T.C.A. (orig. ed.), § 56-231; Acts 1969, ch. 161, § 2; impl. am. Acts 1971, ch. 137, § 2; 1978, ch. 559, § 1; T.C.A. (orig. ed.), § 56-322.

Textbooks. Tennessee Jurisprudence, 6 Tenn. Juris., Constitutional Law, § 58; 15 Tenn. Juris., Insurance, §§ 82, 87.

56-3-107. Disbursements by life insurance companies to be upon vouchers or affidavits.

1. No life insurance company doing business in this state shall make any payment out of its funds amounting to one hundred dollars ($100) or more unless the payment is evidenced by a voucher signed by or on behalf of the person receiving the money and correctly describing the consideration for the payment. If the payment is for both services and other purposes, the voucher shall set forth an itemized statement of the specific services rendered and of all other expenditures. If the expenditure is in connection with any matter pending before any legislative or public body or before any department or officer of any state or government, the voucher shall correctly describe, in addition, the nature of the matter and the interest of the company.
2. When the voucher cannot be obtained, the expenditure shall be evidenced by an affidavit describing the character and object of the expenditure and stating the reason for not obtaining the voucher.

Acts 1907, ch. 439, § 1; Shan., § 3348a24; Code 1932, § 6195; T.C.A. (orig. ed.), §§ 56-224, 56-328.

Collateral References.

Insurer's liability for consequential or punitive damages for wrongful delay or refusal to make payments due under contracts. 47 A.L.R.3d 314.

56-3-108. Dividends — Unauthorized payment — Penalty.

1. It is not lawful for the directors, trustees, or managers of any insurance company incorporated by the laws of this state to make any dividend except from the surplus profits.
2. Any dividend made contrary to this chapter shall subject the company making the dividend to a forfeiture of its charter, and each stockholder receiving it to a liability to the creditors of the company to the extent of double the amount of the dividend declared.

Acts 1895, ch. 160, § 25; Shan., § 3309; Code 1932, § 6129; T.C.A. (orig. ed.), §§ 56-234, 56-329.

Law Reviews.

Legal Problems in the Organization and Operation of Group Health Plans (Horace P. Hansen), 5 Vand. L. Rev. 14 (1951-1952).

56-3-109. Dividends — Illegal division — Directors' liability to creditors.

Moneys received as premiums upon risks undetermined and outstanding, at the time of declaring any dividend, shall not be considered as profits, earned and divided as such; and if any loss should happen impairing the capital stock, no dividend shall be declared until the capital stock is made good; and if a dividend is declared, contrary to this prohibition, the directors consenting to the dividend shall be liable to make good to the creditors of the company, if their claims cannot otherwise be satisfied, the amount of dividends thus illegally divided.

Acts 1875, ch. 142, § 10; Shan., § 2266; Code 1932, § 3978; T.C.A. (orig. ed.), §§ 56-235, 56-330.

56-3-110. Unclaimed dividends — Publication.

Every insurance company doing business in this state shall, on January 1 of each year, and for thirty (30) days thereafter, cause to be published, in one (1) newspaper printed in the city of Nashville, a full and accurate statement, verified by the oath of the presiding officer, of the dividends and profits declared and payable upon stocks, bonds, or other evidences of indebtedness that remain unclaimed by the person entitled to the dividends and profits.

Code 1858, § 1830; Shan., § 3346; Code 1932, § 6171; T.C.A. (orig. ed.), §§ 56-236, 56-331.

Compiler's Notes. This section may be affected by § 66-29-107, pursuant to § 66-29-132, concerning disposition of undistributed dividends and distributions.

56-3-111. Certain insurance companies to report settlement or judgment in health care liability claims.

1. Insurance companies providing insurance coverage against civil liability for the death or personal injury of any person as the result of negligence or health care liability in the rendering of professional services by a licensed physician, either doctor of osteopathic medicine or doctor of medicine, or by a licensed dentist shall report to the state board of medical examiners or state board of osteopathic examination or the state board of dentistry any settlement of a claim or judgment, sealed, confidential or otherwise, of five thousand dollars ($5,000) or more that arises out of a claim of negligence or health care liability on the part of an insured physician or dentist as distinguished from administrative matters. The report shall be made within thirty (30) days of the settlement or judgment and shall contain only the following information:
   1. The name and address of the licensed physician or dentist;
   2. The name and address of the plaintiff;
   3. The name of the patient, if different from the plaintiff;
   4. The name and location of the court in which a claim was filed, if any;
   5. The amount of any judgment or settlement; and
   6. The identity of the insurance company and the person filling out the report.
2. The reports shall be confidential, shall not be subject to public inspection, shall not be subject to subpoena or used as evidence in any legal proceeding, civil or criminal; provided, however, that the reported judgments and settlements contained in the reports, except those that are ordered sealed or to remain confidential by a court of competent jurisdiction, may be used to fulfill the requirements of the Health Care Consumer Right to Know Act of 1998, compiled in title 63, chapter 32, but may not be used to initiate or prosecute any administrative proceeding before the board for licensing health care facilities.
3. No insurance company, official, or other person authorized by an insurance company to issue the reports shall be liable for filing reports in accordance with this section, so long as the report is not disclosed to anyone other than authorized personnel of the state board of medical examiners, state board of osteopathic examination or the state board of dentistry, or the reported judgments and settlements contained in the reports, except those that are ordered sealed or to remain confidential by a court of competent jurisdiction are used to fulfill the requirements of the Health Care Consumer Right to Know Act of 1998.

Acts 1979, ch. 166, § 1; T.C.A., § 56-340; Acts 1996, ch. 713, § 1; 2004, ch. 902, § 3; 2012, ch. 798, § 18.

Cross-References. Confidentiality of public records, § 10-7-504.

56-3-112. [Repealed.]

Acts 1980, ch. 503, § 1; 1995, ch. 363, § 9; repealed by Acts 2012, ch. 680, § 3, effective July 1, 2012.

Compiler's Notes. Former § 56-3-112 concerned the deposit of securities in a clearing corporation or federal reserve bank.

56-3-113. Valuation of bonds.

1. All bonds permitted by this chapter or other evidences of debt having a fixed term and rate of interest held by an insurer may, if amply secured and not in default as to principal or interest, be valued as follows:
   1. If purchased at par, at the par value;
   2. If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made, or in lieu of that method, according to the accepted method of valuation approved by the department; and
   3. The purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage or express charges paid in the acquisition of the securities.
2. The department shall have full discretion in determining the method of calculating values according to the rules set forth in this section, but the method or valuation shall not be inconsistent with any applicable valuation or method used by insurers in general, or the method then currently formulated or approved by the National Association of Insurance Commissioners or its successor organization.

Acts 1991, ch. 142, § 2.

56-3-114. Valuation of securities.

1. Securities, other than those referred to in § 56-3-113, held by an insurer shall be valued, in the discretion of the department, at their market value, at their appraised value, or at prices determined by it as representing their fair market value. Nothing in this section applies to loans secured by mortgages upon improved real property or upon leasehold estates in improved real property, which shall continue to be valued on the basis of amortization to maturity.
2. Preferred or guaranteed stocks or shares, while paying full dividends, may be carried at a fixed value in lieu of market value, at the discretion of the department and in accordance with the method of valuation it approves.
3. Stock of a subsidiary corporation of an insurer shall not be valued at an amount in excess of the net value of the stock as based upon those assets only of the subsidiary that would be eligible under this chapter for investment of the funds of the insurer directly.
4. No valuations under this section shall be inconsistent with any applicable valuation or method then currently formulated or approved by the National Association of Insurance Commissioners or its successor organization.
5. Before the commissioner takes any action pursuant to this section, the commissioner shall give written notice to the insurer involved, stating specifically the nature of the alleged violation, and fixing a time and place, at least ten (10) days thereafter, when a hearing on the matter shall be held. The burden of proof shall be on the commissioner to show the lack of statutory criteria by the preponderance of the evidence. After the hearing, or upon failure of the accused to appear at the hearing, the commissioner, if the commissioner finds a violation, may enter an appropriate order under this section as the commissioner deems advisable.
6. When the commissioner takes action in any or all of the ways set out in this section, the party aggrieved may appeal from the action to the chancery court of Davidson County.

Acts 1991, ch. 142, § 2.

56-3-115. Bonds or other evidences of debt of a domestic insurance company — Reinsurance liability — Limitations.

Notwithstanding § 56-1-405, where bonds or other evidences of debt having a fixed term and rate of interest, or shares of capital stock of a federal home loan bank, owned by a domestic insurance company are held by or on behalf of another person in connection with a reinsurance liability of, or an indebtedness incurred to a federal home loan bank by the domestic insurance company, the amount allowed as a credit against the liability or indebtedness shall be determined in the manner provided for in § 56-3-113 or § 56-3-303(a)(4), as applicable, and the commissioner may allow the excess, if any, of the amount of the bonds or other evidences of debt or shares of capital stock over the amount of the liability or indebtedness to constitute an admissible asset of the domestic insurance company, but only if and to the extent that the bonds or other evidences of debt or shares of capital stock would constitute admissible assets except for being so held in connection with a reinsurance liability or indebtedness to a federal home loan bank; provided, that the total amount of the excess that a domestic insurance company may take into account as an admissible asset shall not exceed thirty percent (30%) of the company's capital and surplus as determined on December 31 of the year preceding the date of the determination.

Acts 1999, ch. 394, § 2; 2006, ch. 534, § 1.

Compiler's Notes. Former § 56-3-115, concerning property and casualty insurers, was transferred to § 56-3-116 in 1999.

56-3-116. Property and casualty insurers — Risk limitations — Applicability.

1. No insurance company engaged in the business of property and casualty insurance shall retain a maximum net amount on any single risk in excess of ten percent (10%) of the company's capital, or surplus funds, if the insurer is a mutual, reciprocal or Lloyd's plan insurer.
2. This section does not apply to any company organized pursuant to chapter 13 of this title except for risk retention groups as defined in 15 U.S.C. §  3901 et seq. and 42 U.S.C. § 9671.

Acts 1991, ch. 142, § 2; 1999, ch. 394, § 1; T.C.A. § 56-3-115; Acts 2014, ch. 559, § 9.

Compiler's Notes. Former § 56-3-116, concerning foreign and alien insurers, was transferred to § 56-3-117 in 1999.

56-3-117. Foreign and alien insurers — Investments.

1. The investments of foreign and alien insurers shall be as permitted by the laws of their domicile but shall be of a quality substantially as high as those required under § 56-2-120 or §§ 56-3-113 — 56-3-116 and this section for similar funds of like domestic insurers.
2. For the purpose of this section, the domicile of an alien insurer, other than insurers formed under the laws of Canada, shall be that state designated by the insurer in writing filed with the commissioner at the time of admission to this state and may be any one (1) of the following states in which:
   1. The insurer was first authorized to transact insurance;
   2. The insurer's principal place of business is located in the United States; or
   3. The larger deposits of trusteed assets of the insurer for the protection of its policyholders and creditors in the United States is held.
3. If the insurer makes no such designation, its domicile shall be deemed to be that state in which is located its principal place of business in the United States.
4. In the case of the insurer formed under the laws of Canada or a province of Canada, its domicile shall be deemed to be that province in which its head office is situated.
5. Before the commissioner takes any action pursuant to this section, the commissioner shall give written notice to the insurer involved, stating specifically the nature of the alleged violation, and fixing a time and place, at least ten (10) days thereafter, when a hearing on the matter shall be held. The burden of proof shall be on the commissioner to show the lack of statutory criteria by the preponderance of the evidence. After the hearing, or upon failure of the accused to appear at the hearing, the commissioner, if the commissioner finds a violation, may enter an appropriate order under this section as the commissioner deems advisable.
6. When the commissioner takes action in any or all of the ways set out in this section, the party aggrieved may appeal from the action to the chancery court of Davidson County.

Acts 1991, ch. 142, § 2; 1999, ch. 394, § 1; T.C.A. § 56-3-116.

Compiler's Notes. Former § 56-3-117, concerning promulgation of rules and regulations, was transferred to § 56-3-118 in 1999.

56-3-118. Commissioner — Promulgation of rules and regulations.

1. The commissioner is authorized to promulgate rules and regulations to prescribe minimum standards for the establishment of liabilities and reserves resulting from insurance contracts issued by an insurer, including, but not limited to, unearned premium reserves and liabilities for claims and losses unpaid and incurred but not reported claims. The rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
2. The rules promulgated under this section shall contain provisions stating that before the commissioner takes any action pursuant to the rules and regulations, the commissioner shall give written notice to the insurer involved, stating specifically the nature of any alleged violation, and fixing a time and place, at least ten (10) days thereafter, when a hearing on the matter shall be held. The burden of proof shall be on the commissioner to show the lack of minimum standards under the rules promulgated under this section by the preponderance of the evidence. After the hearing, or upon failure of the accused to appear at the hearing, the commissioner, if the commissioner finds a violation, may enter an appropriate order under this section as the commissioner deems advisable.
3. When the commissioner takes action in any or all of the ways set out in this section, the party aggrieved may appeal from the action to the chancery court of Davidson County.

Acts 1991, ch. 142, § 2; 1999, ch. 394, § 1; T.C.A. § 56-3-117.

Part 2
Claims Office Requirements

56-4-101. Schedule and applicability of fees.

1. The commissioner shall collect and pay into the state treasury the following nonrefundable fees:
   1. For receiving and reviewing each new application for admission from every foreign or domestic insurance company, including application for eligibility of surplus lines insurers, captive insurance companies, protected cells of captive insurance companies, and incorporated protected cells of captive insurance companies, six hundred seventy-five dollars ($675);
   2. For issuing each new certificate of authority to a company, foreign or domestic, including letter of notification of eligibility of surplus lines insurers, upon application for admission or eligibility, as the case may be, four hundred forty dollars ($440);
   3. For annual review for determination of continuing eligibility of surplus lines insurers, two hundred seventy dollars ($270);
   4. For each company's annual statement, five hundred fifteen dollars ($515);
   5. For amendments to the company's certificate of authority, ninety dollars ($90.00);
   6. For each seal of office, with certificate, seven dollars ($7.00);
   7. For copies of any paper on file or deposit with the commissioner or the commissioner's office, fifty cents (50¢) per page;
   8. For receiving and reviewing each change of business plan or change in ownership for a captive insurance company, four hundred dollars ($400); and
   9. For receiving and reviewing each change of ownership for a protected cell of a captive insurance company or an incorporated protected cell of a captive insurance company, one hundred twenty-five dollars ($125).
2. This section shall apply to all insurance companies, including state and county mutual fire insurance companies, title insurance companies, associations, fraternal benefit societies, captive insurance companies and surplus lines insurers maintaining eligibility status, notwithstanding any law or statute under which companies, associations and societies may have been organized.

Acts 1895, ch. 160, § 27; Shan., § 3311; Code 1932, § 6131; Acts 1967, ch. 24, § 2; 1971, ch. 272, § 1; 1972, ch. 481, § 1; 1975, ch. 68, § 21; 1979, ch. 298, § 1; T.C.A. (orig. ed.), § 56-401; Acts 1983, ch. 262, § 1; 1985, ch. 215, § 1; 2001, ch. 333, § 2; 2015, ch. 156, §§ 17, 18.

Compiler's Notes. Acts 2001, ch. 333, § 9 provided that the purpose of the act is to afford the insurance division of the department of commerce and insurance the ability to obtain sufficient staff and resources to adequately implement the provisions of title 56 and title 55, chapter 18, part 1 as related to the regulation of the business of insurance. Notwithstanding any law to the contrary, the increase in revenues generated by passage of the act shall be utilized by the department of commerce and insurance to defray the expenses of improvements to the department's insurance division incurred in the regulation of the business of insurance, including the expenses associated with any improvements to the division deemed necessary from time to time by the commissioner of the department of commerce and insurance. The improvements contemplated by the act shall be in addition to the base level funding appropriated to the insurance division in the fiscal year ending June 30, 2001. The commissioner of commerce and insurance is directed to identify the increase in revenues generated by the act and the expenditures associated with this increase, and annually inform the commissioner of the department of finance and administration of the amount of any unexpended revenues. The commissioner of finance and administration at the close of each fiscal year shall reserve any excess revenues raised by the act and unspent by the department of commerce and insurance, until expended for purposes consistent with this act. The funds shall not revert to the general fund on any June 30, and excess revenues shall not revert on any June 30, but shall remain available only for the benefit of the department of commerce and insurance's insurance division.

Cross-References. Foreign fraternal benefit society, fee for license or renewal, §§ 56-25-603, 56-25-605.

Mutual or assessment fire insurance companies, fees of commissioner, § 56-20-115.

Necessary expenses of department paid from fees prior to deposit into state treasury, § 56-1-209.

Reciprocity of treatment, § 56-4-218.

State mutual fire insurance agents, certificate of authority, fee, § 56-21-130.

State mutual fire insurance company, annual report, filing fee, § 56-21-111.

56-4-102. Disposition of fees.

1. The fees for the valuation of life insurance policies, which are provided in § 56-4-101, shall be collected for the use and benefit of the state and shall be held by the commissioner as expendable receipts, and the expense of operation of the department, including the salaries and traveling expenses of the actuaries employed pursuant to § 56-1-207, shall be paid out of the fees collected. At the end of each fiscal year, any remaining funds after the payment of the expense of operation of the department shall be remitted to the state treasurer and become a part of the general fund.
2. The fees for receiving and reviewing each new application for admission and the annual fee for review of continuing eligibility of surplus lines insurers shall be collected for use and benefit of the state and shall be held by the commissioner as expendable receipts, and all salaries and traveling expenses of the personnel employed in the processing and review for admission or eligibility shall be paid out of such fees collected. At the end of each fiscal year, any remaining funds after payment of salaries and expenses of the personnel shall be remitted to the state treasurer and become a part of the general fund.

Acts 1943, ch. 97, § 3; mod. C. Supp. 1950, § 6459.42 (Williams, § 6459.45); impl. am. Acts 1971, ch. 137, § 2; T.C.A. (orig. ed.), § 56-402; Acts 1983, ch. 262, § 2.

56-4-103. Fraternal insurance companies to pay per diem fee and expense of annual valuation of policies.

Any fraternal insurance societies or companies not subject to valuation fees as provided in § 56-4-101 shall pay a per diem fee and the expense of the actuary on each annual valuation in the same manner that insurance companies are required to pay fees and expenses to the examiner assigned by the commissioner, and the per diem fees and expenses shall not exceed the maximum compensation provided for the actuaries in § 56-1-207.

Acts 1943, ch. 97, § 4; C. Supp. 1950, § 6459.43 (Williams, § 6459.46); impl. am. Acts 1971, ch. 137, § 2; T.C.A. (orig. ed.), § 56-403.

56-4-104. Receipt of illegal fees — Issuance of fraudulent certificate — Penalty.

If the commissioner exacts or receives, either directly or indirectly, any sum of money from any insurance company doing business in this state other than the fees allowed by law, or willfully issues a fraudulent or false certificate of soundness to the company; or, directly or indirectly, receives any money or other valuable thing for doing or not doing any official act as commissioner, other than the fees allowed by law, the commissioner commits a Class E felony.

Acts 1873, ch. 58, § 17; Shan., § 3345; Code 1932, § 6170; T.C.A. (orig. ed.), § 56-404; Acts 1989, ch. 591, §§ 1,6.

Compiler's Notes. The felony in this section has been designated as a Class E felony by authority of § 40-35-110, which provides that an offense designated a felony without specification as to category is a Class E felony. See also § 39-11-113.

Cross-References. Penalty for Class E felony, § 40-35-111.

56-4-105. Refund of erroneously paid amounts.

1. With respect to any revenues or receipts collected by the department, any other law to the contrary notwithstanding, the amounts determined to have been erroneously paid may be refunded by the procedure developed by the commissioner of finance and administration and approved by the comptroller of the treasury.
2. The procedure shall provide that no refund shall be made unless within three (3) years from December 31 of the year in which the erroneous payment was made, the refund is either requested by the claimant or made by the state on its own motion.

Acts 1984, ch. 633, § 1.

Cross-References. Refund of erroneously paid taxes, § 56-4-219.

56-4-106. Annual regulatory fee for credit life, accident, and health insurance.

With regard to each insurer qualified to transact only the business of reinsuring credit life and credit accident and credit health insurance, the commissioner shall collect a nonrefundable annual regulatory fee of three thousand dollars ($3,000). One half (½) of the regulatory fee shall be collected on April 1, which, notwithstanding § 56-1-501, shall also be the date on or before which the insurer's annual statement shall be filed, and the balance shall be collected on September 1 of each year, except that the initial regulatory fee collected shall be reduced pro rata to reflect the number of months during the year in which the certificate of authority has been in effect. The regulatory fees paid into the department under this section shall be held by the commissioner as expendable receipts for the purpose of administering chapter 7, part 9 of this title.

Acts 1988, ch. 667, § 3.

Part 2
Taxes

56-5-101. Application of part.

This part applies to all kinds of insurance written on risks in this state by any insurer authorized to do business in this state, except:

1. Life insurance;
2. Annuities;
3. Disability insurance;
4. Ocean marine insurance;
5. Reinsurance;
6. Aircraft liability and aircraft hull insurance;
7. Title insurance;
8. Credit life insurance; and
9. Credit accident and health insurance.

Acts 1983, ch. 66, § 2; 2006, ch. 689, § 1; T.C.A. § 56-5-301.

Code Commission Notes.

This section was renumbered from § 56-5-301 to § 56-5-101 by authority of the Code Commission in 2016.

Compiler's Notes. The Code Commission transferred numerous sections in this title to this part, effective upon the 2016 replacement of this volume. See the following parallel reference table for the old and new locations.

Old Sections  New Sections

56-5-301      56-5-101

56-5-302      56-5-102

56-5-303      56-5-103

56-5-304      56-5-104

56-5-305      56-5-105

56-5-306      56-5-106

56-5-307      56-5-107

56-5-308      56-5-108

56-5-309      56-5-109

56-5-310      56-5-110

56-5-311      56-5-111

56-5-312      56-5-112

56-5-313      56-5-113

56-5-314      56-5-114

56-5-315      56-5-115

56-5-316      56-5-116

56-5-317      56-5-117

56-5-318      56-5-118

56-5-319      56-5-119

56-5-320      56-5-120

56-5-321      56-5-121

56-5-322      56-5-122

56-5-323      56-5-123

Cross-References. Cancellation of commercial risk insurance, title 56, ch. 7, part 18.

56-5-102. Part definitions.

As used in this part, unless the context otherwise requires:

1. “Advisory organization” means any person or organization, other than a rate service organization, that assists insurers as authorized by § 56-5-111;
2. “Advisory prospective loss costs” means historical aggregate losses and loss adjustment expenses projected through development to their ultimate value and through trending to a future point in time. “Advisory prospective loss costs” does not include provisions for profit or for expenses other than loss adjustment expenses;
3. “Commercial risk insurance” means insurance within the scope of this part that is not personal risk insurance;
4. “Commissioner” means the commissioner of commerce and insurance;
5. “Joint underwriting” means a voluntary arrangement established on an ad hoc basis to provide insurance coverage for a commercial risk pursuant to which two (2) or more insurers separately contract with the insured at a price and under policy terms agreed upon between the insurers;
6. “Multiplier” means a workers' compensation insurance company's determination of the profits and expenses, other than loss expense and loss adjustment expense, all other applicable rating factors, including, but not limited to, schedule rating, experience rating and small deductible credits, and deviation from advisory prospective loss costs associated with writing workers' compensation insurance, which shall be expressed as a single multiplicative factor to be applied equally and uniformly to the advisory prospective loss costs approved by the commissioner in making rates for all classification of risks utilized by the company;
7. “Personal risk insurance” means property and casualty insurance that provides:
   1. Insurance on one (1) to four (4) family dwelling units, including mobile homes;
   2. Individual insurance on household goods in dwellings, mobile homes, apartments, or other residential facilities;
   3. Insurance on every kind of farm property or farm risk, including farm premises, buildings, machinery, equipment, motor vehicles, livestock, and other personal property used in farming operations;
   4. Insurance on private passenger nonfleet motor-driven vehicles, not used for hire, which are used for personal, farm or family needs. The motor-driven vehicles include pickups, station wagons, vans, and vehicles with fewer than four (4) wheels;
   5. Insurance on pleasure watercraft that are used for personal, farm or family needs; and
   6. Insurance sold in connection with and incidental to rental agreements for a period not to exceed ninety (90) days;
8. “Pool” means a voluntary arrangement other than a residual market mechanism, established on an ongoing basis, pursuant to which two (2) or more insurers participate in the sharing of risks on a predetermined basis. The pool may operate through an association, syndicate or other pooling agreement;
9. “Rate” includes advisory prospective loss costs;
10. “Rate service organization” means any person or organization that assists insurers in ratemaking or filing as authorized by § 56-5-110;
11. “Rate service organization” and “advisory organization” do not include joint underwriting organizations, actuarial, legal or other consultants, a single insurer, any employees of an insurer, or insurers under common control or management or their employees or managers;
12. “Residual market mechanism” means an arrangement, either voluntary or mandated by law, involving participation by insurers in the equitable apportionment among them of insurance that may be afforded applicants who are unable to obtain insurance through ordinary methods;
13. “Supplementary rate information” includes any manual or plan of rates, classification, rating schedule, minimum premium, policy fee, rating rule, loss adjustment expense, including defense costs incurred for any reason under the policy, and any other similar information needed to determine the applicable rate in effect or to be in effect; and
14. “Supporting information” means:
    1. The experience and judgment of the filer and the experience or data of other insurers or organizations relied upon by the filer;
    2. The interpretation of any statistical data relied upon by the filer;
    3. A description of methods used in making the rates; and
    4. Other similar information relied upon by the filer.

Acts 1983, ch. 66, § 3; 1996, ch. 944, § 34; 1997, ch. 533, § 8; 2000, ch. 651, § 2; 2001, ch. 192, §§ 4, 14; 2015, ch. 188, § 1; T.C.A. § 56-5-302.

Code Commission Notes.

This section was renumbered from § 56-5-302 to § 56-5-102 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of the act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1996, ch. 944, § 43(a), as amended by Acts 2001, ch. 192, § 2(a), provided that §§ 31-42 of the act are repealed, effective July 1, 2007, and that the affected sections of titles 50 and 56 shall be revived and reenacted in their prior versions on that date. Acts 2007, ch. 359, §§ 1 and 2 provided that the provisions of Acts 1996, ch. 944, § 43(a) and Acts 2001, ch. 192, § 2(a) are deleted effective June 5, 2007.

Sections 56-5-310 and 56-5-311 referenced in this section were renumbered as 56-5-110 and 56-5-111, respectively, by the authority of the code commission in 2016.

Textbooks. Tennessee Jurisprudence, 18 Tenn. Juris., Mandamus, § 11.

56-5-103. Standards.

1. General.  Rates:
   1. Shall not be excessive, inadequate or unfairly discriminatory; or
   2. In the case of an advisory prospective loss costs filing, shall reasonably reflect projected losses and loss adjustment expenses.
2. Excessiveness.  A rate is excessive if it is likely to produce a profit that is unreasonably high for the insurance provided or if the expense provision included in the rate is unreasonably high in relation to the services rendered.
3. Inadequacy.  A rate is not inadequate unless the rate is clearly insufficient to sustain projected losses and expenses in the class of business to which it applies and the use of the rate has or, if continued, will have the effect of substantially lessening competition or the tendency to create a monopoly.
4. Unfair Discrimination.  Unfair discrimination exists if, after allowing for practical limitations, price differentials fail to reflect equitably the differences in expected losses and expenses. A rate is not unfairly discriminatory because different premiums result for policyholders with like loss exposures with different expenses, or like expenses but different loss exposures, so long as the rate reflects the differences with reasonable accuracy.

Acts 1983, ch. 66, § 4; 1996, ch. 944, § 35; T.C.A. § 56-5-303.

Code Commission Notes.

This section was renumbered from § 56-5-303 to § 56-5-103 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of that act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1996, ch. 944, § 43(a), as amended by Acts 2001, ch. 192, § 2(a), provided that §§ 31-42 of the act are repealed, effective July 1, 2007, and that the affected sections of titles 50 and 56 shall be revived and reenacted in their prior versions on that date. Acts 2007, ch. 359, §§ 1 and 2 provided that the provisions of Acts 1996, ch. 944, § 43(a) and Acts 2001, ch. 192, § 2(a) are deleted effective June 5, 2007.

Textbooks. Tennessee Jurisprudence, 15 Tenn. Juris., Insurance, § 44.

56-5-104. Criteria for compliance.

In determining whether rates comply with the standards set forth in § 56-5-103, the following criteria shall apply:

1. Basic Factors in Rates.  Due consideration shall be given to:
   1. Past and prospective loss and expense experience within and outside this state;
   2. Catastrophe hazards;
   3. Any residual market loss redistributions and other similar obligations;
   4. A reasonable provision for profit and contingencies;
   5. Trends within and outside this state;
   6. Loadings for leveling premium rates over a reasonable period of time or for dividends or savings to be allowed or returned by insurers to their policyholders, members or subscribers; and
   7. All other relevant factors, including the judgment of the filer;
2. Classification.  Risks may be classified in any reasonable way for the establishment of rates except that no risks may be grouped by classifications based in whole or in part on race, color, creed, or national origin of the risk. Rates may be modified for individual risks in accordance with rating plans or schedules that provide for recognition of probable variations in hazards, expenses or both; and
3. Expenses.  The systems of expense provisions included in rates for use by an insurer or group of insurers may differ from those of other insurers or group of insurers to reflect the operating methods of the insurer, or group with respect to any kind of insurance, or with respect to any subdivision or combination of kinds of insurance.

Acts 1983, ch. 66, § 5; T.C.A. § 56-5-304.

Code Commission Notes.

This section was renumbered from § 56-5-304 to § 56-5-104 by authority of the Code Commission in 2016.

Compiler's Notes. Section 56-5-303 referenced in the introductory language of this section was renumbered as 56-5-103 by the authority of the code commission  in 2016.

56-5-105. Filing by personal risk insurers.

1. Every insurer of personal risk insurance shall file with the commissioner all rates, supplementary rate information, supporting information, policy forms, and endorsements at least thirty (30) days before the proposed effective date.
2. The commissioner may give written notice, within thirty (30) days of the receipt of the filing, that the commissioner needs additional time, not to exceed thirty (30) days from the date of the notice, to consider the filing.
3. Upon written application by the insurer, the commissioner may authorize rates to be effective before the expiration of the waiting period or an extension of the waiting period.
4. 1. A filing shall be deemed to meet the requirements of this part and to become effective unless disapproved by the commissioner before the expiration of the waiting period or an extension of the waiting period.
   2. Whenever a filing made pursuant to this section is not accompanied by sufficient supporting information, the commissioner shall inform the insurer as to what information is required to complete the filing.
   3. The filing shall not be deemed to be made until the information is furnished.

Acts 1983, ch. 66, § 6; T.C.A. § 56-5-305.

Code Commission Notes.

This section was renumbered from § 56-5-305 to § 56-5-105 by authority of the Code Commission in 2016.

Attorney General Opinions. Other fees and charges, OAG 94-033 (3/15/94).

56-5-106. Filing by commercial risk insurers.

1. 1. Except as provided in subsections (b), (c), and (d), every insurer of commercial risk insurance shall file with the commissioner all rates, supplementary rate information, policy forms and endorsements, not later than fifteen (15) days after the effective date; provided, that the rates, supplementary rate information, policy forms and endorsements need not be filed for inland marine risks that by general custom of the business are not written according to manual rules of rating plans. Upon request of the commissioner, supporting information shall also be filed.
   2. The commissioner may, after a hearing providing not less than twenty (20) days' written notice to the insurer, disapprove any policy form or endorsement already in effect if it does not comply with the law or with rules adopted pursuant to this part or if it contains any provision that is unfair, deceptive or misleading. The disapproval order shall specify the reasons for the commissioner's findings and the date, not less than thirty (30) days after issuance of the order, when the disapproval is effective, and it shall thereafter be unlawful for the insurer to use the form or endorsement in this state.
2. 1. The following insurance coverages are exempt from filing requirements with respect to rates, supplementary rate information, policy forms, and endorsements, where applicable under this chapter, whether the insurance coverage is endorsed to or sold as a stand-alone policy:
      1. Boiler and machinery;
      2. Environmental impairment or pollution liability;
      3. Kidnap and ransom;
      4. Political risk or expropriation;
      5. Employment practices liability;
      6. Media liability; and
      7. Product liability, product recall, and completed operations.
   2. The exemption from filing requirements in this subsection (b) does not affect any other requirements of this title, including those applicable to cancellation of commercial insurance policies.
   3. The insurer shall deliver to the insured and the producer of record a copy of a policy issued pursuant to this subsection (b). The policy may be delivered to the applicant or policyholder electronically and must contain a disclaimer in language the same as or substantially similar to the following:

      The rate provided for in this policy and all forms utilized are exempt from the filing requirements of Tenn. Code Ann. § 56-5-106.

3. With respect to workers' compensation insurance, a rate service organization designated by one (1) or more insurers shall develop and file for approval with the commissioner in accordance with this section, a filing on behalf of authorized insurers containing advisory prospective loss costs and supporting actuarial and statistical data for workers' compensation insurance, including loss adjustment expenses. An advisory prospective loss costs filing shall become effective only when approved pursuant to § 50-6-402.
4. Each workers' compensation insurer, or group of insurers under common ownership, shall individually file with the commissioner the multiplier and supporting information not later than fifteen (15) days after the effective date, and at least annually thereafter on March 1. Multipliers shall apply to the most recently approved, currently effective advisory prospective loss cost.
5. All multipliers filed pursuant to subsection (d) shall be actuarially justified and shall be certified by a member in good standing of the Casualty Actuarial Society.

Acts 1983, ch. 66, § 7; 1996, ch. 944, § 36; 1997, ch. 533, § 10; 1998, ch. 1024, § 17; 2001, ch. 192, §§ 3, 5, 15; 2015, ch. 188, § 2; T.C.A. § 56-5-306; Acts 2018, ch. 996, §§ 1, 2.

Code Commission Notes.

This section was renumbered from § 56-5-306 to § 56-5-106 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of that act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1996, ch. 944, § 43(a), as amended by Acts 2001, ch. 192, § 2(a), provided that §§ 31-42 of the act are repealed, effective July 1, 2007, and that the affected sections of titles 50 and 56 shall be revived and reenacted in their prior versions on that date. Acts 2007, ch. 359, §§ 1 and 2 provided that the provisions of Acts 1996, ch. 944, § 43(a) and Acts 2001, ch. 192, § 2(a) are deleted effective June 5, 2007.

Amendments. The 2018 amendment substituted “subsections (b), (c), and (d)” for “subsections (b) and (c)” in the first sentence of (a)(1); added present (b) and redesignated former (b) through (d) as present (c) through (e).

Effective Dates. Acts 2018, ch. 996, § 6. May 21, 2018.

Attorney General Opinions. Other fees and charges, OAG 94-033 (3/15/94).

56-5-107. Inspection of filings — Surcharges — Residual market mechanisms — Alternative filings.

1. Filings Open to Inspection.  All rates, supplementary rate information, policy forms, endorsements, and any supporting information filed under this part shall, as soon as filed, be open to public inspection at any reasonable time, except any information that is a trade secret under the Uniform Trade Secrets Act, compiled in title 47, chapter 25, part 17, as determined by the commissioner in the commissioner's sole discretion. The insurer or filer shall have the burden of asserting to the commissioner that the information is a trade secret. Insurers may file certain information with the commissioner for a determination as to whether it would be held to be a trade secret under this subsection (a). Such information shall not be made public during the pendency of the review. Should it be determined that such information is not trade secret information, then the commissioner shall return such information to the insurer or filer. Copies of public information may be obtained by any person on request and upon payment of a reasonable charge.
2. Consent to Rate.  Notwithstanding any other provisions of this part, upon written application of an insured, stating specific reasons why a risk requires higher than standard rates on file by an insurer, a rate in excess of that provided by a filing otherwise applicable may be used on a specific risk. An endorsement shall be attached to the policy, giving the reasons and the percentage of surcharge. A copy of the endorsement shall be kept by the insurer and its agent. The copies shall be made available to the commissioner upon request for review to determine that the rates are not excessive, inadequate or unfairly discriminatory.
3. Residual Market Mechanism.  No filing, whether personal or commercial risk, shall be used for a residual market mechanism until it has become effective pursuant to § 56-5-105.
4. Rate Service Organization Filings.
   1. 1. The filings required by §§ 56-5-105 and 56-5-106, except § 56-5-106(d), including advisory prospective loss costs, other than rates for policies issued pursuant to any residual market mechanism for workers' compensation insurance established under § 56-5-114, may be made by a rate service organization designated by an insurer.
      2. The filings required by § 56-5-106 for rates for policies issued pursuant to any residual market mechanism established under § 56-5-114 for workers' compensation insurance shall be made by a rate service organization designated by the commissioner.
   2. An insurer may make a filing, for lines other than workers' compensation, in compliance with §§ 56-5-105 and 56-5-106 and by giving written notice to the commissioner that the insurer is following rates as filed by a rate service organization in a particular line with any exceptions clearly set forth as are necessary to fully inform the commissioner.
5. Reference Filings.  An insurer may file by reference to rates, supplementary rate information, supporting information, and policy forms and endorsements filed by and effective for another insurer or a rate service organization.
6. Number of Rate Filings.  A company shall not be limited in the number of rate filings which a company may file in any one (1) calendar year; however, should a company make more than one (1) rate filing in one (1) calendar year for a single type of insurance coverage, the company shall pay to the commissioner for each additional rate filing the fee of two hundred fifty dollars ($250) as well as all costs incurred by the commissioner for an actuarial review of the rate filing. The fee provided for by this subsection (f) and cost requirements shall not apply to advisory prospective loss cost filings by the commissioner's designated rate service organization.

Acts 1983, ch. 66, § 8; 1996, ch. 944, § 37; 2003, ch. 215, § 3; 2010, ch. 837, § 1; T.C.A. § 56-5-307; Acts 2018, ch. 996, § 3.

Code Commission Notes.

This section was renumbered from § 56-5-307 to § 56-5-107 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of that act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1996, ch. 944, § 43(a), as amended by Acts 2001, ch. 192, § 2(a), provided that §§ 31-42 of the act are repealed, effective July 1, 2007, and that the affected sections of titles 50 and 56 shall be revived and reenacted in their prior versions on that date. Acts 2007, ch. 359, §§ 1 and 2 provided that the provisions of Acts 1996, ch. 944, § 43(a) and Acts 2001, ch. 192, § 2(a) are deleted effective June 5, 2007.

Sections 56-5-305, 56-5-306 and 56-5-314 referenced in subdivisions (c) and (d) were renumbered as 56-5-105, 56-5-106 and 56-5-314, respectively, by the authority of the code commission in 2016.

Amendments. The 2018 amendment substituted “except § 56-5-106(d)” for “except § 56-5-106(c)” in (d)(1)(A).

Effective Dates. Acts 2018, ch. 996, § 6. May 21, 2018.

56-5-108. Basis and procedure for disapproval — Interim rates.

1. Basis for Disapproval.  The commissioner shall disapprove a rate if:
   1. The commissioner finds that the rate is excessive, inadequate or unfairly discriminatory; or
   2. In the case of an advisory prospective loss costs filing, the commissioner finds the filing does not reasonably reflect projected losses, including loss adjustment expenses. For an advisory prospective loss costs filing the commissioner may also modify the filing as permitted by § 50-6-402(b).
2. Disapproval Procedure.
   1. If the commissioner disapproves or modifies a filing, the commissioner shall issue a written order specifying in what respect that the rate proposed in the filing is excessive, inadequate or unfairly discriminatory or otherwise fails to meet the requirements of this part. The person making the filing shall be given a hearing upon written request made within thirty (30) days after the disapproval or modification order.
   2. If the commissioner disapproves rates already in effect, the commissioner shall issue the order only after a hearing held on not less than twenty (20) days' written notice to the insurer or rate service organization that made the filing. The order shall be issued within fifteen (15) days after the close of the hearing and shall specify in what respects the rates fail to meet the requirements of this part. The order shall also state when, within a reasonable period of time, but not less than forty-five (45) days, the further use of the rate in contracts of insurance made thereafter shall be prohibited. The order may include a provision for premium adjustment for policies issued, renewed or nonrenewed after the effective date of the order. In disputes concerning a multiplier, the insurer shall have the burden of persuasion that the commissioner's disapproval, modification, or failure to approve was inappropriate.
3. Interim Rates.  Whenever an insurer has no legally effective rates as a result of the commissioner's disapproval of rates or other act, the commissioner shall on request of the insurer specify interim rates for the insurer that are high enough to protect the interests of all parties, and may order that a specified portion of the premiums be placed in an escrow account approved by the commissioner. When new rates become legally effective, the commissioner shall order the escrowed funds or any overcharge in the interim rates to be distributed appropriately, except that refunds to policyholders that are de minimis  shall not be required.

Acts 1983, ch. 66, § 9; 1996, ch. 944, § 38; 1997, ch. 533, § 11; 1998, ch. 1024, § 16; T.C.A. § 56-5-308.

Code Commission Notes.

This section was renumbered from § 56-5-308 to § 56-5-108 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of that act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1996, ch. 944, § 43(a), as amended by Acts 2001, ch. 192, § 2(a), provided that §§ 31-42 of the act are repealed, effective July 1, 2007, and that the affected sections of titles 50 and 56 shall be revived and reenacted in their prior versions on that date. Acts 2007, ch. 359, §§ 1 and 2 provided that the provisions of Acts 1996, ch. 944, § 43(a) and Acts 2001, ch. 192, § 2(a) are deleted effective June 5, 2007.

56-5-109. Information for insureds — Review for aggrieved persons — Civil penalty — Rule-making authority.

1. Information to Be Furnished Insureds.  Every insurer or rate service organization shall, within a reasonable time after receipt of a written request and upon payment of a reasonable charge, furnish to any insured affected by a rate published by it, all pertinent information as to the rate.
2. Aggrieved Persons.  Every insurer and rate service organization shall provide within this state reasonable means whereby any person aggrieved by the application of its rating system may be heard on written request to review the manner in which the rating system has been applied in connection with the insurance afforded. If the insurer fails to grant or reject the request within thirty (30) days, the applicant may proceed in the same manner as if the application had been rejected. Any party affected by the action of the insurer on the request may, within thirty (30) days after written notice of the action, appeal to the commissioner who, after a hearing held upon not less than ten (10) days' written notice to the appellant and to the insurer, may affirm, modify, or reverse the action.
3. After notice and hearing in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, the commissioner may impose a civil penalty of up to ten thousand dollars ($10,000) per occurrence, upon a finding that a workers' compensation insurer, without any lawful basis, has assessed an employer premium:
   1. For individuals who are not employees; or
   2. On the basis of improper classification of employees.
4. The commissioner shall have the authority to promulgate rules, including emergency rules, to effectuate this section. The rules may provide the commissioner with the authority to assess the charges of the administrative procedures division of the office of the secretary of state for any administrative hearing conducted under this section.

Acts 1983, ch. 66, § 10; 2006, ch. 536, § 1; 2009, ch. 566, § 12; T.C.A. § 56-5-309.

Code Commission Notes.

This section was renumbered from § 56-5-309 to § 56-5-109 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 2009, ch. 566, § 12 provided that the Tennessee code commission is directed to change all references to public necessity rules, wherever such references appear in this code, to emergency rules, as sections are amended and volumes are replaced.

56-5-110. Licensing of rate service organizations — Activities and services.

1. License Required.  No rate service organization shall provide any service relating to the rates of any insurance subject to this part, and no insurer shall utilize the services of the organization for those purposes unless the organization has obtained a license under subsection (d).
2. Authorized Activities.  Any licensed rate service organization may:
   1. Collect, compile, and furnish loss or expense statistics;
   2. Recommend, make or file rates or supplementary rate information;
   3. Advise about rate questions and provide supporting information for rates;
   4. Develop, recommend or file policy provisions or forms, coverages, classifications, and statistical plans;
   5. Make inspections, surveys and audits;
   6. Conduct research and on-the-site inspections in order to prepare classifications of public fire defenses;
   7. Provide actuarial, statistical and administrative services to insurers and insurer-supported organizations;
   8. Conduct and report on the content of research projects; and
   9. Furnish any other services related to those enumerated in this subsection (b).
3. Availability of Services.  No rate service organization shall refuse to supply any services for which it is licensed in this state to any insurer authorized to do business in this state and offering to pay the fair and usual compensation for the services, nor shall a rate service organization require the purchase of any specific services as a condition to obtaining the services sought; provided, that the furnishing of the requested services does not place an unreasonable burden on the rate service organization.
4. Licensing.
   1. Application.  A rate service organization applying for a license shall include with its application:
      1. A copy of its constitution, articles of association or incorporation, bylaws, and any other rules or regulations governing the conduct of its business;
      2. A list of its members and subscribers;
      3. A service and acknowledgment of service of process as provided for insurance companies under § 56-2-501; and
      4. A statement showing its technical qualifications.
   2. Granting of a License.  If the commissioner finds that the applicant is qualified, the commissioner shall issue a license specifying the kinds of insurance or subdivisions of kinds of insurance for which the applicant is authorized to act as a rate service organization. Every application shall be granted or denied in whole or in part by the commissioner within sixty (60) days after the date of its filing. Licenses issued pursuant to this section shall remain in effect until suspended or revoked by the commissioner. The fee for the license shall be one hundred dollars ($100).

Acts 1983, ch. 66, § 11; T.C.A. § 56-5-310.

Code Commission Notes.

This section was renumbered from § 56-5-310 to § 56-5-110 by authority of the Code Commission in 2016.

56-5-111. Registration of advisory organizations — Activities and services.

1. Registration Required.  No advisory organization shall provide any service relating to the rates of any insurer subject to this part, and no insurer shall utilize the services of the organization for those purposes unless the organization has registered under subsection (d).
2. Authorized Activities.  A registered advisory organization may perform any of the authorized activities enumerated in § 56-5-110(b) except no advisory organization may make any filings on behalf of insurers.
3. Availability of Services.  No advisory organization shall refuse to supply any authorized services for which it is registered in this state to any insurer authorized to do business in this state and offering to pay the fair and usual compensation for the services, nor shall an advisory organization require the purchase of any specific services as a condition to obtaining the services sought; provided, that the furnishing of the requested services does not place an unreasonable burden on the advisory organization.
4. Form of Registration.
   1. Registration.  An advisory organization shall submit, at the time of registration:
      1. A copy of its constitution, articles of association or incorporation, bylaws, and any other rules or regulations governing the conduct of its business;
      2. A list of its members and subscribers;
      3. A service and acknowledgment of service of process as provided for insurance companies under § 56-2-501;
      4. An agreement that the commissioner may examine each advisory organization in accordance with  § 56-5-115; and
      5. A fee for registration in the amount of one hundred dollars ($100).
   2. Prohibited Activities.  If after a hearing the commissioner finds that any activity or practice of any advisory organization is unfair, unreasonable or otherwise inconsistent with this part, the commissioner shall specify the finding in an order requiring the discontinuance of the activity or practice.

Acts 1983, ch. 66, § 12; T.C.A. § 56-5-311.

Code Commission Notes.

This section was renumbered from § 56-5-311 to § 56-5-111 by authority of the Code Commission in 2016.

Compiler's Notes. Sections 56-5-310 and 56-5-315 referenced in this section were renumbered as 56-5-110 and 56-5-115, respectively, by the authority of the code commission in 2016.

56-5-112. Plans for reporting loss and expense experience.

1. Insurers shall file with the commissioner, and the commissioner shall review, reasonable rules and plans for recording and reporting of loss and expense experience in appropriate form and detail. The commissioner may designate one (1) or more rate service organizations or advisory organizations to assist in gathering the experience and making compilations. No insurer shall be required to record or report its experience on a classification basis inconsistent with its own rating system; provided, that for workers' compensation insurance, all insurers shall use the classification system and statistical plan of the rate service organization designated by the commissioner.
2. The commissioner and every insurer, rate service organization and advisory organization may exchange information and experience data with insurance regulatory officials, insurers, rate service organizations and advisory organizations in this and other states and may consult with them with respect to ratemaking and the application of rating systems.

Acts 1983, ch. 66, § 13; T.C.A. § 56-5-312.

Code Commission Notes.

This section was renumbered from § 56-5-312 to § 56-5-112 by authority of the Code Commission in 2016.

56-5-113. Agreements between insurers or with other organizations — Application for deductible plan — Rating plans submitted by captive insurance companies providing workers' compensation coverage.

1. Except as provided in this chapter, no insurer may agree with any other insurer or with a rate service organization or an advisory organization to adhere to or use any rate or supplementary rate information. The fact that any insurer adheres to or uses the material is not sufficient in itself to support a finding that an agreement to adhere or use exists but may be used for the purpose of supplementing other evidence as to the existence of the agreement. Two (2) or more insurers having common ownership or operating in this state under common management or control may act in concert between or among themselves in the same manner as if they constitute a single insurer.
2. Any workers' compensation insurer may make written application to the commissioner for approval on its behalf of a deductible plan where the insurer can be reimbursed by the policyholder, effective for a period of not less than one (1) year, to be applied to the rates or premiums, or both, produced by the rating system. The application shall specify the basis for the modification and a copy of the application shall also be sent simultaneously to the rate service organization. The commissioner shall approve the modification for the insurer if the commissioner finds it to be justified. The commissioner shall not approve the modification if the commissioner finds that the resulting premiums would be excessive, inadequate or unfairly discriminatory.
3. Notwithstanding any other provision in this chapter, the commissioner may approve any rating plan submitted by a captive insurance company that is formed under chapter 13 of this title and is authorized to provide workers' compensation coverage, so long as the captive insurance company demonstrates to the commissioner's satisfaction that the proposed rating plan does not endanger the solvency of the company and adequately protects the insureds.

Acts 1983, ch. 66, § 14; 1991, ch. 511, § 1; 1996, ch. 944, § 39; 1997, ch. 533, § 12; 2015, ch. 156, § 1; T.C.A. § 56-5-313.

Code Commission Notes.

This section was renumbered from § 56-5-313 to § 56-5-113 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of that act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1996, ch. 944, § 43(a), as amended by Acts 2001, ch. 192, § 2(a), provided that §§ 31-42 of the act are repealed, effective July 1, 2007, and that the affected sections of titles 50 and 56 shall be revived and reenacted in their prior versions on that date. Acts 2007, ch. 359, §§ 1 and 2 provided that the provisions of Acts 1996, ch. 944, § 43(a) and Acts 2001, ch. 192, § 2(a) are deleted effective June 5, 2007.

Acts 1997, ch. 533, § 52 provided that the amendment by that act shall apply to events occurring on and after January 1, 1997.

56-5-114. Joint underwriting, pools, residual market mechanisms, and workers' compensation assigned risk plans.

1. Authorization.  Notwithstanding § 56-5-113(a), insurers participating in joint underwriting, pools or residual market mechanisms may, in connection with the activity, act in cooperation with each other in the making of rates, supplementary rate information, policy forms, underwriting rules, surveys, inspections and investigations, the furnishing of loss and expense statistics or other information, and in the conduct of research. Joint underwriting, pools and residual market mechanisms shall not be deemed rate service or advisory organizations.
2. Regulation.
   1. Except to the extent modified by this section, insurers participating in joint underwriting, pool or residual market mechanisms are subject to this part.
   2. Every pool shall file with the commissioner:
      1. A copy of its constitution, articles of association or incorporation, bylaws, and any other rules or regulations governing its activities;
      2. A list of its members;
      3. The name and address of a resident of this state upon whom notices or orders of the commissioner or process may be served; and
      4. Any changes in the filings under subdivisions (b)(2)(A)-(C).
   3. Any residual market mechanism, plan or agreement to implement the mechanism, and any amendments to the mechanism, plan or agreement, shall be submitted in writing to the commissioner for approval, together with such information as the commissioner may reasonably require.
   4. If, after a hearing, the commissioner finds that any activity or practice of insurers participating in joint underwriting, pool or residual market mechanisms is unfair, unreasonable or otherwise inconsistent with this part, the commissioner shall issue a written order specifying in what respects the activity or practice is unfair, unreasonable or otherwise inconsistent with this part and require the discontinuance of the activity or practice.
3. 1. The commissioner shall implement a plan as soon as possible for the equitable apportionment among insurers of applicants for workers' compensation insurance who are in good faith entitled to such insurance, but who are unable to procure it through ordinary methods. The plan shall provide reasonable rules governing the equitable distribution of risks by direct assignment, reinsurance, or otherwise, and their assignment to insurers, and shall provide a method whereby applicants for insurance, insured, and insurers may have a hearing on grievances and the right of appeal to the commissioner.
   2. Notwithstanding § 56-5-113(a), every insurer, except those entities under § 50-6-405(a)(2) and (c) that qualify under § 50-6-401 or § 50-6-405, and those entities under title 50, chapter 6, part 6, undertaking to transact in this state the business of either workers' compensation or employer's liability insurance, or both, and every rating organization that files rates or prospective loss costs for such insurance shall participate in the plan. No insurer shall thereafter issue a policy of workers' compensation or employer's liability insurance or undertake to transact that business in this state unless the insurer participates in the plan.
   3. 1. No later than July 1 of each year, the commissioner shall determine whether the membership of the assigned risk pool, created pursuant to this subsection (c), for the prior calendar year exceeds fifteen percent (15%) of the membership of the eligible employer market, as based on premium, excluding self-insured employers and self-insured groups. For any period in which it is determined the membership of the assigned risk pool exceeds fifteen percent (15%) of the membership of the eligible employer market, the commissioner shall issue a report to the advisory council on workers' compensation setting forth the percentage of the eligible employer market insured through the assigned risk pool and the reasons contributing to increased membership of the pool. The report shall include recommendations as to whether:
         1. The competitive state workers' compensation insurance fund, established by title 50, chapter 6, part 6, should be activated;
         2. A plan of direct assignment on a randomized basis of all assigned risk plan policies to insurers offering workers' compensation insurance subject to subdivision (c)(4) should be implemented;
         3. Other actions should be taken; or
         4. No action should be taken.
      2. The advisory council shall have ninety (90) days to provide written comments to the commissioner regarding the report and recommendations. After receipt of the advisory council's comments and recommendations, the commissioner shall take action deemed appropriate; provided, that the commissioner shall hold a hearing before electing to activate the competitive state workers' compensation insurance fund or to institute a plan of direct assignment.
   4. If a direct assignment plan becomes operational, pursuant to this section, then the commissioner shall structure the randomized assignment so that small insurers do not bear a disproportionate share of risk in the market. A plan of direct assignment shall include provisions to provide that insurers who depopulated the assigned risk pool in the preceding five (5) years receive applicable take out credits to be used in determining the appropriate level of policies to be assigned to the insurers.
   5. If the commissioner elects to make the competitive state workers' compensation fund operational pursuant to subdivision (c)(3), then the fund shall not be required to meet the reserve requirements for a domestic insurance company for the first seven (7) years of operation as otherwise required by §§ 50-6-601 and 50-6-603. The commissioner shall promptly notify the governor, and the speakers of the senate and the house of representatives of the election.
   6. 1. 1. On and after January 1, 1997, the plan developed under this subsection (c) shall assign an insured in this plan to one (1) of three (3) subplans. Those subplans are:
            1. The small employer plan, for insureds not eligible for experience rating;
            2. The special risk plan, for insureds that are employers whose experience modifications are one and ten hundredths (1.10) or less; and
            3. The safety incentive plan, for all other risks.
         2. The commissioner is authorized to establish increasing levels of premium surcharges for employers with experience modification factors in excess of one and ten hundredths (1.10). The surcharges may not exceed fifty percent (50%) for employers with modification factors in excess of two and zero hundredths (2.00).
      2. The advisory prospective loss cost for subdivisions (c)(6)(A)(i)(a ) and (b ) may not exceed that approved by the commissioner for the voluntary market. The commissioner shall annually establish the multiplier to be applied to the advisory prospective loss cost for the assigned risk plan. In establishing the multiplier, the commissioner shall consider the estimated cost of providing required services pursuant to this subsection (c) and the level of the multipliers in the voluntary market.
   7. 1. The commissioner shall not approve a plan pursuant to this subsection (c) that does not provide for the making available of a list of the employers insured under this subsection (c) on request to interested persons for a reasonable fee or to the department. A reasonable fee shall only include the cost of production and mailing the list.
      2. As part of the application for insurance coverage, an employer shall elect whether to be excluded from the list provided for by this subsection (c). Every application for the assigned risk plan shall include the following language:

         THE INSURED ELECTS TO BE EXCLUDED FROM THE LIST OF EMPLOYERS IN THE ASSIGNED RISK PLAN:

         YES  NO

Acts 1983, ch. 66, § 15; 1993, ch. 452, §§ 1, 2; 1995, ch. 448, § 2; 1996, ch. 944, §§ 29, 30; 1997, ch. 533, §§ 13, 14; 2000, ch. 852, §§ 1, 2; 2001, ch. 192, §§ 6, 7; 2002, ch. 695, § 5; T.C.A. § 56-5-314.

Code Commission Notes.

This section was renumbered from § 56-5-314 to § 56-5-114 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of that act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1997, ch. 533, § 52 provided that the amendment to subdivision (c)(6)(B) by that act shall apply to events occurring on and after January 1, 1997.

Section 56-5-313 referenced in (a) and (c) was renumbered as 56-5-113 by the authority of the code commission in 2016.

56-5-115. Examination of insurance entities by commissioner.

1. The commissioner may examine any insurer, advisory organization, rate service organization, pool or residual market mechanism to ascertain compliance with this part.
2. Every insurer, advisory organization, rate service organization, pool and residual market mechanism shall maintain records of the type and kind reasonably adapted to its method of operation. The records shall contain the experience, data, statistics and other information collected or used by it in its activities. These records shall be available for examination or inspection by the commissioner at any time upon reasonable notice.
3. The cost of an examination made pursuant to this section shall be paid by the examined party in the same manner as provided by § 56-1-413.
4. The commissioner may accept the report of an examination made by the insurance supervisory official of another state in lieu of an examination under this section.

Acts 1983, ch. 66, § 16; T.C.A. § 56-5-315.

Code Commission Notes.

This section was renumbered from § 56-5-315 to § 56-5-115 by authority of the Code Commission in 2016.

56-5-116. Payment of dividends, savings, and premium deposits unaffected.

Nothing in this part shall be construed to prohibit or regulate the payment of dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers. A plan for the payment of dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers shall not be deemed a rating plan.

Acts 1983, ch. 66, § 17; T.C.A. § 56-5-316.

Code Commission Notes.

This section was renumbered from § 56-5-316 to § 56-5-116 by authority of the Code Commission in 2016.

56-5-117. Violations — Penalties — Suspension of licenses.

1. If the commissioner finds that any person or organization has violated this part, the commissioner may impose a penalty of not more than five hundred dollars ($500) for each violation, to be recovered for the use of the state in a civil action brought in the name of the state by the commissioner in a court of competent jurisdiction. Technical violations arising from systems or computer errors of the same type shall be treated as a single violation. In the event of an overcharge, if the insurer makes restitution, including payment of interest, no penalty shall be imposed.
2. The commissioner may, in lieu of subsection (a), impose a civil penalty after notice and hearing in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, if the commissioner finds that any person or organization has violated this part. This civil penalty shall not exceed five hundred dollars ($500) for each violation as provided for in subsection (a).
3. The commissioner has the discretion to abate the part of the penalty in this section that the facts of the particular case warrant and to bring suit for a lesser amount that may be determined, or to accept the lesser amount in settlement of the state's claim for penalties. Any abatement or settlement of the penalties by the commissioner shall be with the consent and approval of the attorney general and reporter.
4. The commissioner may suspend the license of any rate service organization or insurer for failure to comply with an order of the commissioner within the time limited by the order, or any extension of the time that the commissioner may grant. The commissioner may determine when a suspension of license becomes effective and it shall remain in effect for the period fixed by the commissioner, unless the commissioner modifies or rescinds the suspension, or until the order upon which the suspension is based is modified, rescinded, or reversed.
5. No license shall be suspended except upon a written order of the commissioner, stating the commissioner's findings, made after a hearing held upon not less than ten (10) days' written notice to the person or organization, specifying the alleged violation.

Acts 1983, ch. 66, § 18; T.C.A. § 56-5-317.

Code Commission Notes.

This section was renumbered from § 56-5-317 to § 56-5-117 by authority of the Code Commission in 2016.

56-5-118. Review of commissioner's orders.

Review of any order issued by the commissioner shall be in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. Where the order of the commissioner results in an increase or decrease in rates, any insurer affected by the increase or decrease may, with leave of court, pending final disposition of the proceedings in the chancery court, continue to charge rates that were obtained prior to the order of decrease, or may charge rates resulting from the order of increase on condition that the difference in the premiums be deposited in a special account by the insurer or paid to the holders of policies issued after the order of the commissioner, as the court may determine.

Acts 1983, ch. 66, § 19; T.C.A. § 56-5-318.

Code Commission Notes.

This section was renumbered from § 56-5-318 to § 56-5-118 by authority of the Code Commission in 2016.

56-5-119. System intended to provide stable insurance market.

It is the intent of the general assembly that the advisory prospective loss costs system for workers' compensation insurance be implemented with the goal of providing long-term stability in the workers' compensation insurance market.

Acts 1996, ch. 944, § 31; T.C.A. § 56-5-319.

Code Commission Notes.

This section was renumbered from § 56-5-319 to § 56-5-119 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of that act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1996, ch. 944, § 43(a), as amended by Acts 2001, ch. 192, § 2(a), provided that §§ 31-42 of the act are repealed, effective July 1, 2007, and that the affected sections of titles 50 and 56 shall be revived and reenacted in their prior versions on that date. Acts 2007, ch. 359, §§ 1 and 2 provided that the provisions of Acts 1996, ch. 944, § 43(a) and Acts 2001, ch. 192, § 2(a) are deleted effective June 5, 2007.

56-5-120. Designated rate service organizations — Uniform statistical plan — Workers' compensation insurers — Membership — Policy forms — Uniform classification scheme — Uniform experience rating plan.

1. The commissioner may designate a rate service organization to assist in gathering, compiling and reporting relevant workers' compensation insurance statistical information. If the commissioner makes the designation, every workers' compensation insurer shall record and report its workers' compensation insurance experience to the designated rate service organization as set forth in the uniform statistical plan approved by the commissioner and if requested shall file a copy of the report with the commissioner.
2. Each workers' compensation insurer shall be a member of the workers' compensation insurance rate service organization. Each workers' compensation insurer shall adhere to the policy forms and rating rules filed by the designated rate service organization.
3. Every workers' compensation insurer shall adhere to a uniform classification system and uniform experience and retrospective rating plans that have been filed with the commissioner by the designated rate service organization and approved by the commissioner.
4. Subject to the approval of the commissioner, the rate service organization shall develop and file rules reasonably related to the recording and reporting of data pursuant to the uniform statistical plan, uniform experience rating plan and the uniform classification system.
5. For workers' compensation insurance provided in the voluntary market, no schedule rating plan shall limit its application to any risk based on premium size or eligibility for experience rating; provided, that the application for the plan to any individual risk shall not result in the premium for the risk being less than the classification minimum premium established for workers' compensation insurance.

Acts 1996, ch. 944, § 40; 1997, ch. 533, §§ 15, 16; 1998, ch. 1024, § 19; T.C.A. § 56-5-320.

Code Commission Notes.

This section was renumbered from § 56-5-320 to § 56-5-120 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of that act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1996, ch. 944, § 43(a), as amended by Acts 2001, ch. 192, § 2(a), provided that §§ 31-42 of the act are repealed, effective July 1, 2007, and that the affected sections of titles 50 and 56 shall be revived and reenacted in their prior versions on that date. Acts 2007, ch. 359, §§ 1 and 2 provided that the provisions of Acts 1996, ch. 944, § 43(a) and Acts 2001, ch. 192, § 2(a) are deleted effective June 5, 2007.

Acts 1997, ch. 533, § 52 provided that the amendments by that act shall apply to events occurring on and after January 1, 1997.

56-5-121. Interchange of data for rating plans — Cooperative activities.

1. Reasonable rules and plans may be promulgated by the commissioner for the interchange of data necessary for the application of rating plans.
2. In order to further conform administration of rate regulatory laws, the commissioner and every insurer and the advisory organization designated by the commissioner may exchange information and experience data with insurance supervisory officials, insurers and advisory organizations in other states and may consult with them with respect to rate making and the application of rating systems.
3. Cooperation among advisory organizations, or among advisory organizations and insurers in rate making or in other matters within the scope of this chapter is authorized, but the filings resulting from the cooperation are subject to this chapter. The commissioner, with the assistance of the attorney general and reporter, may review the cooperative activities and practices. If after a hearing the activity or practice is found to violate this chapter, the commissioner may issue a written order specifying that the activity or practice violates this chapter and requiring the discontinuance of the activity.

Acts 1996, ch. 944, § 41; T.C.A. § 56-5-321.

Code Commission Notes.

This section was renumbered from § 56-5-321 to § 56-5-121 by authority of the Code Commission in 2016.

Compiler's Notes. Acts 1996, ch. 944, § 42 provided that nothing in §§ 28-41 of that act shall apply to pooling agreements described in § 50-6-405(c).

Acts 1996, ch. 944, § 43(a), as amended by Acts 2001, ch. 192, § 2(a), provided that §§ 31-42 of the act are repealed, effective July 1, 2007, and that the affected sections of titles 50 and 56 shall be revived and reenacted in their prior versions on that date. Acts 2007, ch. 359, §§ 1 and 2 provided that the provisions of Acts 1996, ch. 944, § 43(a) and Acts 2001, ch. 192, § 2(a) are deleted effective June 5, 2007.

56-5-122. Exempt commercial risk policyholders.

1. For purposes of this section:
   1. “Exempt commercial risk policyholder” means an insured that either employs the services of an insurance producer licensed in property or casualty lines of authority or procures commercial risk insurance with the services of a full-time risk manager, and:
      1. Is a city, county, or metropolitan government with a population of at least fifty thousand (50,000), according to the 2010 federal census or any subsequent census;
      2. Is this state;
      3. Is a not-for-profit organization or a public entity with an annual budget of at least twenty-five million dollars ($25,000,000) in the preceding fiscal year; or
      4. Is a commercial risk policyholder that annually certifies to the department on a form designated by the department that the policyholder:
         1. Possesses a net worth of more than ten million dollars ($10,000,000) at the time the policy of insurance is issued;
         2. Generated net revenue or sales of more than fifteen million dollars ($15,000,000) in the preceding fiscal year;
         3. Employs more than twenty-five (25) employees per individual company or fifty (50) employees per holding company at the time the policy of insurance is issued; and
         4. Paid annual aggregate insurance premiums of at least two hundred thousand dollars ($200,000) in the preceding fiscal year of commercial risk insurance as defined in § 56-5-102, excluding any premiums paid for accident and health insurance and workers’ compensation and employer's liability insurance as defined in § 56-2-201; and
   2. “Risk manager” means a person who:
      1. Holds an Accredited Advisor in Insurance (AAI) or Associate in Risk Management (ARM) designation for property and casualty lines of authority;
      2. Holds a risk management in insurance degree from an accredited college or university for property and casualty lines of authority; or
      3. Is qualified by experience, as determined by the commissioner.
2. Section 56-5-106(a) does not apply to a commercial risk policy issued to an exempt commercial risk policyholder by an insurer of commercial risk insurance.
3. An insurer of commercial risk insurance is subject to the penalties provided in § 56-2-305 if the:
   1. Insurer does not comply with § 56-5-106(a) relative to a commercial risk insurance policy issued to a commercial risk policyholder; and
   2. Policyholder has not filed a certification as required by subdivision (a)(1)(D).
4. The certification form filed by a commercial risk policyholder pursuant to subdivision (a)(1)(D) shall be confidential and not subject to title 10, chapter 7, part 5.
5. Any application or policy issued to an exempt commercial risk policyholder must contain a disclaimer in language the same as or substantially similar to the following:

   The rate provided for in this policy and all forms utilized are exempt from the filing requirements of Tenn. Code Ann. § 56-5-106.

Acts 2012, ch. 878, § 1; T.C.A. § 56-5-322; Acts 2018, ch. 996, §§ 4, 5.

Code Commission Notes.

This section was renumbered from § 56-5-322 to § 56-5-122 by authority of the Code Commission in 2016.

Compiler's Notes. Former § 56-5-122 (Acts 1997, ch. 533, § 9), concerning approval of deviations from advisory loss costs in excess of twenty percent, was repealed by Acts 2001, ch. 192, § 13, effective July 1, 2001.

For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Section 56-5-302 and 56-5-306 referenced in this section were renumbered as 56-5-102 and 56-5-106, respectively, by the authority of the code commission  in 2016.

Amendments. The 2018 amendment substituted “of at least two hundred thousand dollars ($200,000)” for “of more than two hundred fifty thousand dollars ($250,000)”  in (a)(1)(D)(iv), and, in (e), substituted “must” for “shall” in the first sentence and deleted the former last sentence which read: “The forms which make up this policy contract are exempt from the filing requirements of Tenn. Code Ann. § 56-5-306.”

Effective Dates. Acts 2018, ch. 996, § 6. May 21, 2018.

Cross-References. Confidentiality of public records, § 10-7-504.

56-5-123. Commercial lines insurer’s obligation to furnish loss run history to insured.

1. Within ten (10) business days of receipt of a written request from an insured or an insured's designee, a commercial lines insurer shall furnish directly to the person designated in the request, a copy of the insured's loss run history for up to the previous three (3) years, or complete loss run history with the insurer if the history is less than three (3) years. A written request includes communications made by email or fax. For the purposes of this section, “receipt” means receipt by an individual or entity designated by an insurer to receive loss run history requests.
2. If the insurer fails to provide the requested information within the time allowed in this section, the failure shall be a violation of the Tennessee Unfair Trade Practices and Unfair Claims Settlement Act of 2009, compiled in chapter 8, part 1 of this title, and any requestor may seek enforcement and any remedies allowed pursuant to that chapter. The commissioner may take action in accordance with § 56-2-305 for the violation of subsection (a).
3. Notwithstanding this part to the contrary, no insurer shall charge any fees to prepare and furnish one (1) three-year loss run history. However, if the insurer provides the loss run history via electronic means, then the insurer may charge a reasonable fee to provide a hard copy of the same report.

Acts 2003, ch. 359, § 14; 2005, ch. 165, § 1; 2014, ch. 521, § 1; T.C.A. § 56-5-323.

Code Commission Notes.

This section was renumbered from § 56-5-323 to § 56-5-123 by authority of the Code Commission in 2016.

Part 2
Restrictions on Use of Credit Scores

Code Commission Notes.

This part, title 56, chapter 5, part 2 was renumbered from title 56, chapter 5, part 4 by authority of the Code Commission in 2016.

56-6-101. Short title — Purpose and scope.

1. This part shall be known and may be cited as the “Tennessee Insurance Producer Licensing Act of 2002.”
2. This part governs the qualifications and procedures for the licensing of insurance producers. It simplifies and organizes some statutory language to improve efficiency, permits the use of new technology and reduces costs associated with issuing and renewing insurance licenses.
3. This part does not apply to surplus lines agents licensed pursuant to the Surplus Lines Insurance Act, compiled in chapter 14 of this title, except as provided in §§ 56-6-108 and 56-6-118(b).

Acts 2002, ch. 798, § 2.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Acts 2002, ch. 798 provided that this part shall take effect immediately for rulemaking purposes. This Act was approved on May 29, 2002.

Textbooks. Tennessee Jurisprudence, 15 Tenn. Juris., Insurance, § 8.

Collateral References.

Liability of insurance agent or broker on ground of inadequacy of liability insurance coverage procured. 72 A.L.R.3d 704.

Liability of insurance agent or broker on ground of inadequacy of life, health, and accident insurance coverage procured. 72 A.L.R.3d 735.

When is termination of insurance agency contract wrongful, so as to make insurer liable to agent. 5 A.L.R.4th 1080.

56-6-102. Part definitions.

As used in this part, unless the context otherwise requires:

1. “Business entity” means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity;
2. “Commissioner” means the commissioner of commerce and insurance;
3. “Crop insurance” means insurance providing protection against damage to crops from unfavorable weather conditions, fire or lightning, flood, hail, insect infestation, disease, or other yield-reducing conditions or perils provided by the private insurance market, or that is subsidized by the Federal Crop Insurance Corporation, including multi-peril crop insurance;
4. “Department” means the department of commerce and insurance;
5. “Home state” means any state or territory of the United States and the District of Columbia in which an insurance producer maintains a principal place of residence or principal place of business and is licensed to act as an insurance producer;
6. “Insurance” means any of the lines of authority in § 56-2-201;
7. “Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance;
8. “Insurer” means any insurance company authorized to transact insurance business in this state;
9. “License” means a document issued by this state's commissioner authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent or inherent, in the holder to represent or commit an insurance carrier;
10. “Limited line credit insurance” includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection (gap) insurance, and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the commissioner determines should be designated a form of limited line credit insurance;
11. “Limited line credit insurance producer” means a person who sells, solicits or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group or individual policy;
12. “Limited lines insurance” means those lines of insurance defined in § 56-6-110 or any other line of insurance that the commissioner deems necessary to recognize for the purposes of complying with § 56-6-108(e);
13. “Limited lines producer” means a person authorized by the commissioner to sell, solicit or negotiate limited lines insurance;
14. “NAIC” means the National Association of Insurance Commissioners;
15. “Negotiate” means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract; provided, that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers;
16. “Person” means an individual or a business entity;
17. “Sell” means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company;
18. “Solicit” means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company;
19. “Surplus lines producer” means a person authorized by the commissioner to sell, solicit or negotiate surplus lines insurance pursuant to the Surplus Lines Insurance Act, compiled in chapter 14 of this title. The person shall have the same authority given to a surplus lines agent licensed under the Surplus Lines Insurance Act;
20. “Terminate” means the cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance;
21. “Uniform application” means the current version of the NAIC uniform application for resident and nonresident producer licensing; and
22. “Uniform business entity application” means the current version of the NAIC uniform business entity application for resident and nonresident business entities.

Acts 2002, ch. 798, § 3; 2019, ch. 354, § 1.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Amendments. The 2019 amendment added the definition for “crop insurance”.

Effective Dates. Acts 2019, ch. 354, § 3. May 10, 2019.

56-6-103. License required.

A person shall not sell, solicit or negotiate insurance in this state for any class or classes of insurance unless the person is licensed for that line of authority in accordance with this part.

Acts 2002, ch. 798, § 4.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-104. Exceptions to licensing.

1. Nothing in this part shall be construed to require an insurer to obtain an insurance producer license. In this section, the term “insurer” does not include an insurer's officers, directors, employees, subsidiaries or affiliates.
2. A license as an insurance producer shall not be required of the following:
   1. An officer, director or employee of an insurer or of an insurance producer; provided, that the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state and:
      1. The officer, director or employee's activities are executive, administrative, managerial, clerical or a combination of these, and are only indirectly related to the sale, solicitation or negotiation of insurance;
      2. The officer, director or employee's function relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or
      3. The officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance;
   2. A person who secures and furnishes information for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance; or for the purpose of enrolling individuals under plans, issuing certificates under plans or otherwise assisting in administering plans, or performs administrative services related to mass marketed property and casualty insurance, where no commission is paid to the person for the service;
   3. An employer or association or its officers, directors, employees, or the trustees of an employee trust plan, to the extent that the employers, officers, employees, director or trustees are engaged in the administration or operation of a program of employee benefits for the employer's or association's own employees or the employees of its subsidiaries or affiliates, which program involves the use of insurance issued by an insurer, as long as the employers, associations, officers, directors, employees or trustees are not in any manner compensated, directly or indirectly, by the company issuing the contracts;
   4. Employees of insurers or organizations employed by insurers who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation or negotiation of insurance;
   5. A person whose activities in this state are limited to advertising without the intent to solicit insurance in this state through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the state; provided, that the person does not sell, solicit or negotiate insurance that would insure risks residing, located or to be performed in this state;
   6. A person who is not a resident of this state who sells, solicits or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under that contract; provided, that the person is otherwise licensed as an insurance producer to sell, solicit or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state;
   7. A salaried full-time employee who counsels or advises an employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer; provided, that the employee does not sell or solicit insurance or receive a commission;
   8. Any regular salaried officer, employee or member of a fraternal benefit society that provides benefits in case of death or disability, resulting solely from accident, and that does not obligate the officer, employee or member to pay natural death or sick benefits, the officers, employees or members procuring other members and receiving no compensation for the procurement other than awards or merchandise nominal in value;
   9. An officer, director, or employee of a vehicle rental company engaged in the sale, solicitation, or negotiation of optional insurance sold in connection with and incidental to a motor vehicle rental agreement for a period not to exceed ninety (90) days;
      1. The insurance that may be offered pursuant to this subdivision (b)(9) is limited to:
         1. Personal accident coverage that provides protection for renters and other rental vehicle occupants for accidental death or dismemberment, and for medical expenses resulting from an accident that occurs during the rental period;
         2. Liability coverage that provides protection to renters and to other authorized drivers of the rental motor vehicle for liability arising from the operation of the motor vehicle during the rental period. The liability protection, when purchased by a renter, shall be deemed to be primary over any other coverages that may be available to the renter or other authorized driver of the rental vehicle to the extent of the protection provided;
         3. Personal effects coverage that provides protection to renters and other motor vehicle occupants for loss of, or damage to, personal effects in the rental motor vehicle during the rental period; and
         4. Roadside assistance coverage;
      2. As used in subdivision (b)(9)(A), “motor vehicle” or “rental vehicle” means a private passenger motor vehicle, including passenger vans, mini vans, and sport utility vehicles, and a cargo motor vehicle, including cargo vans, pickup trucks, and trucks with a gross vehicle weight of less than twenty-six thousand pounds (26,000 lbs.);
      3. Each person engaged in the sale of optional insurance products pursuant to this subdivision (b)(9) shall give each renter who purchases the coverage brochures or other written materials that:
         1. Summarize, clearly and correctly, the material terms and conditions of coverage offered to renters;
         2. Identify the insurer;
         3. Describe the process for filing a claim in the event the renter elects to purchase coverage;
         4. State that the purchase of the coverage is not required in order to rent a vehicle;
         5. Disclose that the coverage offered by the rental agreement may provide a duplication of coverage already provided by a renter's personal automobile policy or by another source of coverage; and
         6. Itemize the cost for the coverage separately;
      4. The commissioner may seek the sanctions provided in former § 56-6-112(e) [repealed] against a vehicle rental company upon a finding that an officer, director, or employee of a vehicle rental company has violated § 56-6-112(a)(2), (4), (5), (7), (8), or (10) in connection with the sale, solicitation, or negotiation of optional insurance sold in connection with and incidental to a motor vehicle rental agreement for a period not to exceed ninety (90) days;
   10. An officer, director, employee, or authorized representative of a business entity engaged in the sale, solicitation, or negotiation of portable electronics insurance licensed pursuant to and acting in compliance with part 11 of this chapter; or
   11. An officer, director, employee or authorized representative of a business entity engaged in the sale, solicitation or negotiation of self-service storage insurance licensed pursuant to and acting in compliance with part 12 of this chapter.

Acts 2002, ch. 798, § 5; 2005, ch. 58, § 2; 2011, ch. 312, § 10; 2013, ch. 293, § 10.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Former § 56-6-112(e), referred to in this section, was deleted by Acts 2008, Ch. 1192, § 5, effective July 1, 2008.

Acts 2011, ch. 312, § 11 provided that the commissioner is authorized to promulgate rules and regulations to effectuate the purposes of the act, which enacted this part.  All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.

Acts 2013, ch. 293, § 11 provided that the commissioner is authorized to promulgate rules and regulations to effectuate the purposes of the act, which amended subsection (b). All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.

56-6-105. Application for examination.

1. A resident individual applying for an insurance producer license shall pass a written examination unless exempt pursuant to § 56-6-109. The examination shall test the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an insurance producer and the insurance laws and regulations of this state. Each individual wishing to take the state insurance examination shall first complete either an on-site or on-line preparation program approved by the commission. A person seeking an insurance producer license shall also meet the following prelicensing requirements:
   1. All applicants for an insurance producer license, unless otherwise exempted by law, are required to register and complete either an on-line or classroom study program approved by the commissioner;
   2. Applicants for a license shall be at least eighteen (18) years of age or older; and
   3. All other requirements for an insurance license shall be developed and conducted under rules and regulations prescribed by the commissioner.
2. The commissioner may make arrangements, including contracting with an outside testing service, for administering examinations and collecting the nonrefundable examination fee.
3. An individual who fails to appear for the examination as scheduled or fails to pass the examination, shall reapply for an examination and remit all required fees and forms before being rescheduled for another examination.
4. 1. An individual who fails to pass the examination on the first attempt must wait at least ten (10) calendar days before reapplying to take the examination a second time.
   2. An individual who fails to pass the examination on the second attempt, or any subsequent attempt, must wait at least thirty (30) calendar days before reapplying to take the examination another time.

Acts 2002, ch. 798, § 6; 2007, ch. 228, § 1; 2018, ch. 639, § 1.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Amendments. The 2018 amendment added (d).

Effective Dates. Acts 2018, ch. 639, § 2. April 2, 2018.

Cross-References. Examination for title insurance agents, § 56-35-201.

56-6-106. Application for license.

1. An individual residing in this state applying for an insurance producer license shall make application to the commissioner on the uniform application and declare under penalty of refusal, suspension or revocation of the license that the statements made in the application are true, correct and complete to the best of the individual's knowledge and belief. Before approving the application, the commissioner shall find that the individual:
   1. Is at least eighteen (18) years of age;
   2. Has not committed any act that is a ground for denial, suspension or revocation set forth in § 56-6-112;
   3. Has completed a prelicensing course of study for the lines of authority for which the person has applied that consists of a minimum of twenty (20) hours of coursework for life, accident and health, property, casualty, personal lines or title insurance;
   4. Has paid the fees set forth in § 56-6-121; and
   5. Has successfully passed the examinations for the lines of authority for which the person has applied.
2. A business entity may obtain an insurance producer's license; however, only an individual licensed producer or limited lines producer shall sell, solicit or negotiate a contract of insurance in this state. Application shall be made using the uniform business entity application. An individual authorized and acting on behalf of the business entity shall declare under penalty of refusal, suspension or revocation of the license that the statements made in the application are true, correct and complete to the best of the individual's knowledge and belief. Before approving the application, the commissioner shall find that:
   1. The business entity has paid the applicable fees set forth in § 56-6-121; and
   2. The business entity has designated a principal or officer who also holds a current producer license responsible for the business entity's compliance with the insurance laws, rules and regulations of this state.
3. The commissioner may require any documents reasonably necessary to verify the information contained in an application.

Acts 2002, ch. 798, § 7; 2007, ch. 228, § 2; 2014, ch. 650, § 1.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-107. License.

1. Unless denied licensure pursuant to § 56-6-112, persons who have met the requirements of §§ 56-6-105 and 56-6-106 shall be issued an insurance producer license. A resident insurance producer may receive a license in one (1) or more of the following lines of insurance:
   1. Life — insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income;
   2. Accident and health or sickness — insurance coverage for sickness, bodily injury or accidental death and may include benefits for disability income;
   3. Property — insurance coverage for the direct or consequential loss or damage to property of every kind;
   4. Casualty — insurance coverage against legal liability, including that for death, injury or disability or damage to real or personal property;
   5. Variable life and variable annuity products — insurance coverage provided under variable life insurance contracts and variable annuities;
   6. Personal lines — property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes;
   7. Credit — limited line credit insurance; and
   8. Any other line of insurance permitted under this title or regulations promulgated under this title.
2. 1. For licenses issued or renewed on or after January 1, 2007, the licenses shall remain in effect for twenty-four (24) months from the last day of the licensee's birth month.
   2. Business entity licenses will expire biennially on March 1.
3. At the end of the twenty-four (24) months, the insurance producer license may be renewed, subject to the limitations set forth in § 56-6-112, by paying the applicable fee set forth in § 56-6-121 and submitting the renewal form prescribed by the commissioner. In addition, and subject to the exception found in § 56-6-118, an insurance producer license will not be renewed unless the insurance producer has completed all continuing education requirements, as established by rule; however, the continuing education requirements shall not apply to the following:
   1. An insurance producer who has been continuously licensed since January 1, 1994; and
   2. An insurance producer that is a business entity.
4. An insurance producer who allows the license to lapse may, within twelve (12) months from the due date of the renewal fee, reinstate the same license without the necessity of passing a written examination; however, a penalty in the amount of double the unpaid renewal fee shall be required for any renewal fee received after the due date.
5. A licensed insurance producer who is unable to comply with the license renewal procedures of this section due to military service or some other extenuating circumstance, e.g., a long-term medical disability, may request a waiver of the license renewal procedures. The producer may also request a waiver of any examination requirement or any other sanction imposed for failure to comply with the renewal procedures.
6. The license shall contain the licensee's name, address, insurance producer number, and the date of issuance, the lines of authority, the expiration date and any other information the commissioner deems necessary.
7. A licensed insurance producer shall inform the commissioner by any means acceptable to the commissioner of a change of address within thirty (30) days of the change. Failure to timely inform the commissioner of a change in legal name or address may result in a disciplinary action pursuant to § 56-6-112.
8. In order to assist in the performance of the commissioner's duties, the commissioner may contract with nongovernmental entities, including the NAIC or any affiliates or subsidiaries that the NAIC oversees, to perform any ministerial functions, including the collection of fees, related to producer licensing that the commissioner and the non-governmental entity may deem appropriate.
9. In the commissioner's discretion, the commissioner shall have the authority to waive any continuing education requirements imposed by this section.

Acts 2002, ch. 798, § 8; 2006, ch. 1018, § 3; 2008, ch. 1192, §§ 1, 2, 9.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-108. Nonresident licensing.

1. Unless denied licensure pursuant to § 56-6-112, a nonresident person shall receive an insurance producer license if:
   1. The person is currently licensed as a resident insurance producer and is in good standing in the person's home state;
   2. The person has submitted the proper request for licensure and has paid the applicable fees required by § 56-6-121;
   3. The person has submitted or transmitted to the commissioner the application for licensure that the person submitted to the person's home state, or in lieu of the same, a completed uniform application; and
   4. The person's home state awards insurance producer licenses to residents of this state on the same basis.
2. The commissioner may verify the insurance producer's licensing status through any producer database maintained by the NAIC, its affiliates or subsidiaries.
3. A nonresident insurance producer who moves from one state to another state or a resident insurance producer who moves from this state to another state shall file a change of address and provide certification from the new resident state within thirty (30) days of the change of legal residence. No fee or license application is required.
4. Notwithstanding any other provision of this part, a person licensed as a surplus lines producer in the person's home state shall receive a surplus lines producer license in this state pursuant to subsection (a). Except as provided in subsection (a), nothing in this section otherwise amends or supersedes the Surplus Lines Insurance Act, compiled in chapter 14 of this title.
5. Notwithstanding any other provision of this part, a person licensed as a limited line credit insurance producer or any other type of limited lines insurance producer in the person's home state shall receive a nonresident limited lines producer license, pursuant to subsection (a), as long as the license is granted to residents of this state. The license shall grant the nonresident the same scope of authority as granted a resident insurance producer holding the license in this state.

Acts 2002, ch. 798, § 9.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-109. Exemption from examination.

1. An individual who applies for an insurance producer license in this state who was previously licensed for the same lines of authority in another state shall not be required to complete any prelicensing education or examination. This exemption is only available if the person is currently licensed in that state or if the application is received within ninety (90) days of the cancellation of the applicant's previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state's producer database records, maintained by the NAIC, its affiliates or subsidiaries, indicate that the producer is or was licensed in good standing for the line of authority requested.
2. A person licensed as an insurance producer in another state who moves to this state shall make application within ninety (90) days of establishing legal residence to become a resident licensee pursuant to § 56-6-106. No prelicensing education or examination shall be required of that person to obtain any line of authority previously held in the prior state except where the commissioner determines otherwise by regulation.

Acts 2002, ch. 798, § 10.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-110. Limited lines producers.

An individual who has met the requirements of § 56-6-106 shall be entitled to a limited lines producer license without examination in one (1) or more of the following limited lines:

1. Travel insurance;
2. Credit life, credit accident and health insurance, or involuntary unemployment credit insurance;
3. Mortgage guaranty insurance;
4. Personal property insurance sold to a debtor under a master group policy issued to a creditor;
5. Crop insurance;
6. Title insurance; provided, that the limited lines producer is an attorney, duly licensed in this state, who acts as a title insurance agent as an ancillary part of the attorney's practice of law;
7. Any other lines that the commissioner finds by rule are essential for the transaction of business in this state and do not require the professional competency demanded by an insurance producer's license;
8. Portable electronics insurance; or
9. Self-service storage insurance.

Acts 2002, ch. 798, § 11; 2005, ch. 58, § 1; 2006, ch. 689, § 2; 2011, ch. 312, § 9; 2013, ch. 293, § 9; 2015, ch. 460, § 1; 2019, ch. 354, § 2.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Acts 2011, ch. 312, § 11 provided that the commissioner is authorized to promulgate rules and regulations to effectuate the purposes of the act, which enacted this part.  All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.

Acts 2013, ch. 293, § 11 provided that the commissioner is authorized to promulgate rules and regulations to effectuate the purposes of the act, which amended this section. All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.

Amendments. The 2019 amendment substituted “Crop insurance” for “Crop hail insurance” in (5).

Effective Dates. Acts 2019, ch. 354, § 3. May 10, 2019.

56-6-111. Temporary licensing.

1. The commissioner may issue a temporary insurance producer license for a period not to exceed one hundred eighty (180) days without requiring an examination if the commissioner deems that the temporary license is necessary for the servicing of an insurance business in the following cases:
   1. To the surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the producer or for the recovery or return of the producer to the business or to provide for the training and licensing of new personnel to operate the producer's business;
   2. To a member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license;
   3. To the designee of a licensed insurance producer entering active service in the armed forces of the United States; or
   4. In any other circumstance where the commissioner deems that the public interest will best be served by the issuance of this license.
2. The commissioner may by order limit the authority of any temporary licensee in any way deemed necessary to protect insureds and the public. The commissioner may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee and may impose other similar requirements designed to protect insureds and the public. A temporary license issued under this part may also be suspended or revoked pursuant to § 56-6-112. A temporary license may not continue after the owner or the personal representative disposes of the business.

Acts 2002, ch. 798, § 12.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-112. License denial, nonrenewal, suspension or revocation.

1. The commissioner may place on probation, suspend, revoke or refuse to issue or renew a license issued under this part or may levy a civil penalty in accordance with this section or take any combination of those actions, for any one (1) or more of the following causes:
   1. Providing incorrect, misleading, incomplete or materially untrue information in the license application;
   2. Violating any law, rule, regulation, subpoena or order of the commissioner or of another state's commissioner;
   3. Obtaining or attempting to obtain a license through misrepresentation or fraud;
   4. Improperly withholding, misappropriating or converting any moneys or properties received in the course of doing insurance business;
   5. Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;
   6. Having been convicted of a felony;
   7. Having admitted or been found to have committed any insurance unfair trade practice or fraud;
   8. Using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere;
   9. Having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory;
   10. Forging another's name to an application for insurance or to any document related to an insurance transaction;
   11. Improperly using notes or any other reference material to complete an examination for an insurance license;
   12. Knowingly directing any person to submit an application for health care benefits through the TennCare program at a time when the person is covered by a group policy or when the policy is being renewed, and then quoting a rate for a group health insurance policy if the insurance producer knows the person would otherwise have been eligible to participate or continue participation in the group policy;
   13. Knowingly accepting insurance business from an individual who is not licensed;
   14. Selling, soliciting or negotiating insurance for a company that is not authorized to transact the business of insurance in this state; and
   15. Violating the unfair trade practices as enumerated in § 56-6-125.
2. Any action by the commissioner to put on probation, suspend, revoke or deny the renewal of a license pursuant to this section shall be governed by the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
3. In the event that the action by the commissioner is to deny an application for a license, the commissioner shall notify the applicant and advise, in writing, the applicant of the denial of the applicant's application within thirty (30) days.
4. The license of a business entity may be suspended or revoked if the commissioner finds, after a hearing, that an individual licensee's violation was known or should have been known by one (1) or more of the partners, officers or managers acting on behalf of the partnership or corporation and the violation was neither reported to the commissioner nor corrective action taken.
5. The commissioner shall retain the authority to enforce this part and impose any penalty or remedy authorized by this part and this title against any person who is under investigation for or charged with a violation of this part or this title, even if the person's license has been surrendered or has lapsed by operation of law.
6. The commissioner may serve a notice or order in any action arising under this part by registered or certified mail to the insurance producer or applicant at the address of record in the files of the department. Notwithstanding any law to the contrary, service in the manner set forth in this subsection (f) shall be deemed to constitute actual service on the insurance producer or applicant.
7. If, after providing notice consistent with the process established by § 4-5-320(c), and providing the opportunity for a contested case hearing held in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, the commissioner finds that any person required to be licensed, permitted, or authorized by the division of insurance pursuant to this chapter has violated any statute, rule or order, the commissioner may, at the commissioner's discretion, order:
   1. The person to cease and desist from engaging in the act or practice giving rise to the violation;
   2. Payment of a monetary penalty of not more than one thousand dollars ($1,000) for each violation, but not to exceed an aggregate penalty of one hundred thousand dollars ($100,000). This subdivision (g)(2) shall not apply where a statute or rule specifically provides for other civil penalties for the violation. For purposes of this subdivision (g)(2), each day of continued violation shall constitute a separate violation; and
   3. The suspension or revocation of the person's license.
8. In determining the amount of penalty to assess under this section, the commissioner shall consider:
   1. Whether the person could reasonably have interpreted such person's actions to be in compliance with the obligations required by a statute, rule or order;
   2. Whether the amount imposed will be a substantial economic deterrent to the violator;
   3. The circumstances leading to the violation;
   4. The severity of the violation and the risk of harm to the public;
   5. The economic benefits gained by the violator as a result of noncompliance;
   6. The interest of the public; and
   7. The person's efforts to cure the violation.

Acts 2002, ch. 798, § 13; 2008, ch. 1192, §§ 4, 5; 2011, ch. 90, §§ 4, 5.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Acts 2011, ch. 90, § 6 provided that the act, which added subsections (g) and (h), shall not be retroactively applied.

Cross-References. Certified mail in lieu of registered mail, § 1-3-111.

56-6-113. Commissions.

1. An insurer or insurance producer shall not pay a commission, service fee, brokerage fee or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this part and is not so licensed.
2. A person shall not accept a commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this part and is not so licensed.
3. Renewal or other deferred commissions may be paid to a person for selling, soliciting or negotiating insurance in this state if the person was required to be licensed under this part at the time of the sale, solicitation or negotiation and was so licensed at that time.
4. An insurer or insurance producer may pay or assign commissions, service fees, brokerages or other valuable consideration to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this state, unless the payment would violate § 56-8-104(5) or (8).
5. An unlicensed person may make a referral to a licensed insurance producer if the person does not discuss the specific insurance policy terms and conditions. Except as prohibited by federal law, the unlicensed person may be compensated for the referral. However, an unlicensed person who is neither employed by nor affiliated with the licensed insurance producer may be compensated only if the compensation is a fixed dollar amount, not to exceed twenty-five dollars ($25.00) or such lesser amount as the commissioner may establish by rule, for each referral. In either event, the referral compensation must not depend on whether the referred customer purchases an insurance product from the licensed insurance producer.

Acts 2002, ch. 798, § 14; 2008, ch. 1192, § 6; 2019, ch. 165, § 1.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Section 56-8-104(4) or (7), formerly referred to in this section, was redesignated as § 56-8-104(5) or (8) by Acts 2008, ch. 1079, § 5, effective January 1, 2008.

Amendments. The 2019 amendment, in (e), substituted “licensed insurance producer” for “licensed producer” throughout, divided the former first sentence into the present first and second sentences by substituting “referral. However, an” for “referral; however, an”, substituted “if the person” for “; provided, that the person” in the first sentence, deleted the former second sentence which read: “An unlicensed person who is either employed by or affiliated with the insurance producer may be compensated only if the compensation is a fixed nominal dollar amount.”, and substituted “must not depend” for “shall not depend” in the last sentence.

Effective Dates. Acts 2019, ch. 165, § 2. April 18,  2019.

56-6-114. Sale of unauthorized insurance.

1. A person shall be personally liable for any premiums paid for, or valid claims made on, all contracts of insurance unlawfully sold within this state by or through the person directly or indirectly, for or on behalf of an insurance company not authorized to do business in this state.
2. A person who sells insurance in this state for an insurance company not authorized to do business in this state commits a fraudulent insurance act as defined by § 56-53-102.

Acts 2002, ch. 798, § 15; 2008, ch. 1192, § 7.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-115. Appointments.

1. An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed agent of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed.
2. An insurance producer who solicits or negotiates an application for insurance shall be regarded, in any controversy arising from the application for insurance or any policy issued in connection with the application between the insured or insured's beneficiary and the insurer, as the agent of the insurer and not the insured or insured's beneficiary. This subsection (b) shall not affect the apparent authority of an agent.
3. To appoint a producer as its agent, the appointing insurer shall file, in a format approved by the commissioner, a notice of appointment within fifteen (15) days from the date the agency contract is executed or the first insurance application is submitted. An insurer may also elect to appoint a producer to all or some insurers within the insurer's holding company system or group by the filing of a single appointment request.
4. Upon receipt of the notice of appointment, the commissioner shall verify within a reasonable time, not to exceed thirty (30) days, that the insurance producer is eligible for appointment. If the insurance producer is determined to be ineligible for appointment, the commissioner shall notify the insurer within five (5) days of the determination.
5. An insurer shall pay an appointment fee, in the amount set in § 56-6-121, for each insurance producer appointed by the insurer. The fees under this section may be paid by the insurer on a quarterly basis.
6. Any insurance producer may place excess or rejected risks with an insurer lawfully doing business within this state, and shall not be required to enter into an agency contract or agreement with the insurer accepting such excess or rejected risks or be appointed by such insurer; provided, that only that portion of the risk in excess of the limits which the insurer will write may be placed as an excess risk, and:
   1. The insurance producer has an agency contract or agreement with an insurer that actually engages in the writing of the insurance; and
   2. The insurer has deemed the risk to be in excess of, or in noncompliance with, its underwriting standards.
7. No insurance producer may place an application for insurance with any residual market mechanism, as defined by § 56-5-102, unless the insurance producer:
   1. Has an agency contract or agreement with an insurer that actually engages in the writing of the insurance; and
   2. Makes a diligent effort to place the application for insurance with the insurer.
8. It is unlawful for any insurer to accept applications from, or pay commissions to, an insurance producer or limited lines producer except in accordance with this section. Any insurer who unlawfully accepts applications from, or pays commissions to, any insurance producer shall be deemed to have accepted and acknowledged the person as its insurance producer or limited lines producer.
9. An individual not duly licensed as an insurance producer or limited lines producer who solicits a policy of insurance on behalf of an insurer shall become liable for all the duties, requirements, liabilities and penalties to which an insurance producer of the insurer is subject.

Acts 2002, ch. 798, § 16.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Section 56-5-302 referenced in subdivision (g) of this section was renumbered as 56-5-102 by the authority of the code commission  in 2016.

56-6-116. Fiduciary duty.

Any money that an insurance producer receives for soliciting, negotiating or selling insurance shall be held in a fiduciary capacity, and shall not be misappropriated, converted or improperly withheld. Any violation of this section shall be considered grounds for the denial, suspension, or revocation of the insurance producer's license and shall subject the insurance producer to the sanctions and penalties set forth under § 56-6-112.

Acts 2002, ch. 798, § 17.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-117. Notification to commissioner of termination.

1. Termination for Cause.  An insurer or authorized representative of the insurer that terminates the appointment, employment, contract or other insurance business relationship with a producer shall notify the commissioner within thirty (30) days following the effective date of the termination, using a format prescribed by the commissioner, if the reason for termination is one of the reasons set forth in § 56-6-112 or the insurer has knowledge the producer was found by a court, government body, or self-regulatory organization authorized by law to have engaged in any of the activities described in § 56-6-112. Upon the written request of the commissioner, the insurer shall provide additional information, documents, records or other data pertaining to the termination or activity of the producer.
2. Termination Without Cause.  An insurer or authorized representative of the insurer that terminates the appointment, employment, or contract with a producer for any reason not set forth in § 56-6-112 shall notify the commissioner within thirty (30) days following the effective date of the termination, using a format prescribed by the commissioner. Upon written request of the commissioner, the insurer shall provide additional information, documents, records or other data pertaining to the termination.
3. Termination of Appointment Fee.  An insurer shall pay a termination of appointment fee, in the amount set forth in § 56-6-121, for each insurance producer appointment terminated by the insurer.
4. Ongoing Notification Requirement.  The insurer or the authorized representative of the insurer shall promptly notify the commissioner in a format acceptable to the commissioner if, upon further review or investigation, the insurer discovers additional information that would have been reportable to the commissioner in accordance with subsection (a) had the insurer known of its existence at the time the insurer initially notified the commissioner.
5. Copy of Notification to be Provided to Producer.
   1. Within fifteen (15) days after making the notification required by subsections (a), (b) and (d), the insurer shall mail a copy of the notification to the producer at the producer's last known address. If the producer is terminated for cause for any of the reasons listed in § 56-6-112, the insurer shall provide a copy of the notification to the producer at the producer's last known address by certified mail, return receipt requested, postage prepaid or by overnight delivery using a nationally recognized carrier.
   2. Within thirty (30) days after the producer has received the original or additional notification, the producer may file written comments concerning the substance of the notification with the commissioner. The producer shall, by the same means, simultaneously send a copy of the comments to the reporting insurer, and the comments shall become a part of the commissioner's file and accompany every copy of a report distributed or disclosed for any reason about the producer as permitted under subsection (g).
6. Immunities.
   1. In the absence of actual malice, an insurer, the authorized representative of the insurer, a producer, the commissioner, or an organization of which the commissioner is a member and that compiles the information and makes it available to other commissioners or regulatory or law enforcement agencies shall not be subject to civil liability, and a civil cause of action of any nature shall not arise against these entities or their respective agents or employees, as a result of any statement or information required by or provided pursuant to this section or any information relating to any statement that may be requested in writing by the commissioner from an insurer or producer; or a statement by a terminating insurer or producer to an insurer or producer limited solely and exclusively to whether a termination for cause under subsection (a) was reported to the commissioner; provided, that the propriety of any termination for cause under subsection (a) is certified in writing by an officer or authorized representative of the insurer or producer terminating the relationship.
   2. In any action brought against a person that may have immunity under subdivision (f)(1) for making any statement required by this section or providing any information relating to any statement that may be requested by the commissioner, the party bringing the action shall plead specifically in any allegation that subdivision (f)(1) does not apply because the person making the statement or providing the information did so with actual malice.
   3. Subdivision (f)(1) or (f)(2) shall not abrogate or modify any existing statutory or common law privileges or immunities.
7. Confidentiality.
   1. 1. All testimony, documents, other information in the control or possession of the department that is obtained by the commissioner in an investigation pursuant to this section shall, except as provided in subdivision (g)(1)(B), be confidential and absolutely privileged and shall not be:
         1. Subject to § 10-7-503(a) or § 56-1-602;
         2. Subject to subpoena;
         3. Subject to discovery; or
         4. Admissible as evidence in any private civil action.
      2. Notwithstanding subdivision (g)(1)(A), the commissioner is authorized to use the testimony, documents, and other information in the control or possession of the department in the furtherance of any regulatory or legal action brought as a part of the commissioner's duties.
   2. Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subdivision (g)(1).
   3. In order to assist in the performance of the commissioner's duties under this part, the commissioner may:
      1. Share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subdivision (g)(1), with other state, federal, and international regulatory agencies, with the NAIC, its affiliates or subsidiaries, and with state, federal, and international law enforcement authorities; provided, that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information;
      2. Receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the NAIC, its affiliates or subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and
      3. Enter into agreements governing sharing and use of information consistent with this subsection (g).
   4. No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subdivision (g)(3).
   5. Nothing in this part shall prohibit the commissioner from releasing final, adjudicated actions including for cause terminations that are open to public inspection pursuant to § 10-7-503(a) to a database or other clearinghouse service maintained by the NAIC, its affiliates or subsidiaries.
8. Penalties for Failing to Report.  An insurer or the authorized representative of the insurer, or a producer that fails to report as required under this section or that is found to have falsely reported with actual malice by a court of competent jurisdiction may, after notice and hearing, have its license or certificate of authority suspended or revoked. In addition to or in lieu of the suspension or revocation of a license or certificate of authority, the commissioner may subject violators of this part to a civil penalty in an amount not less than one hundred dollars ($100) nor more than one thousand dollars ($1,000) for each violation.

Acts 2002, ch. 798, § 18; 2011, ch. 90, § 1.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Acts 2011, ch. 90, § 6 provided that the act, which amended subdivision (g)(1), shall not be retroactively applied

Cross-References. Confidentiality of public records, § 10-7-504.

56-6-118. Reciprocity.

1. The commissioner shall waive any requirements for a nonresident license applicant with a valid license from the applicant's home state, except the requirements imposed by § 56-6-108, if the applicant's home state awards nonresident licenses to residents of this state on the same basis. Notwithstanding any other provision of this part, after a public hearing the commissioner may waive any of the limitations or requirements imposed by § 56-6-108 if the applicant's home state awards nonresident licenses to residents of this state on the same basis. However, nothing contained in this subsection (a) shall prevent the commissioner from denying, suspending or revoking a license issued under this part pursuant to § 56-6-112.
2. A nonresident producer's satisfaction of the producer's home state's continuing education requirements for licensed insurance producers shall constitute satisfaction of this state's continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed upon producers from this state on the same basis.

Acts 2002, ch. 798, § 19; 2008, ch. 1192, § 3.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-119. Reporting of actions.

1. A producer shall report to the commissioner any administrative action taken against the producer in another jurisdiction or by another governmental agency in this state within thirty (30) days of the final disposition of the matter. This report shall include a copy of any order entered or other relevant legal documents.
2. Within thirty (30) days of the initial pretrial hearing date, a producer shall report to the commissioner any criminal prosecution of the producer taken in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing and any other relevant legal documents.

Acts 2002, ch. 798, § 20.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-120. Investigations.

1. The commissioner may make investigations necessary for the proper administration of this part. For the purpose of making the investigations, the commissioner shall have inquisitorial powers and shall be empowered to subpoena witnesses and examine them under oath; provided that:
   1. Any investigatory action be reasonable in scope and relevant to the administration of this part;
   2. In the course of an investigation conducted pursuant to this section, the commissioner shall be given access to all business records of a person licensed or required to be licensed under this part. The department shall endeavor to conduct its investigation in a manner that is least obtrusive to the ongoing business of the person; and
   3. 1. All testimony, documents, other information in the control or possession of the commissioner that is obtained in an investigation pursuant to this section shall, except as provided in subdivision (a)(3)(B), be confidential and absolutely privileged and shall not be:
         1. Subject to § 10-7-503(a) or § 56-1-602;
         2. Subject to subpoena;
         3. Subject to discovery; or
         4. Admissible as evidence in any private civil action;
      2. 1. The commissioner is authorized to use the testimony, documents, and other information in the control or possession of the department in the furtherance of any regulatory or legal action brought as a part of the commissioner's duties;
         2. Subject to subsection (b), a person being investigated pursuant to this section, or counsel for such person, may obtain from the commissioner a copy of each and any inquisitorial order and complaint filed against the person. Further, upon initiation of a formal proceeding against any person, the person shall be entitled to any and all discovery rights available under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, or the Tennessee Rules of Civil Procedure.
2. 1. Upon issuance by the commissioner of an inquisitorial order or upon receipt by the department of a written complaint against a person, the department shall provide the person with a copy of the inquisitorial order or complaint within thirty (30) days of issuance of the order or receipt of the complaint.
   2. Before seeking a statement from a person being investigated, the department shall notify the person that any statement may be used in an investigation or become evidence in a hearing. Failure of the department to comply with subdivision (b)(1) shall render any statement provided to the department prior to its compliance with subdivision (b)(1) inadmissible in any administrative actions against such person. However, failure to comply with subdivision (b)(1) shall not prevent the department from proceeding with any actions arising from such order or complaint. Further, nothing in this section shall prevent the department from taking a statement from a person being investigated prior to giving the notice required by subdivision (b)(1) as long as it is taken within thirty (30) days of the receipt of the complaint or the entry of the inquisitorial order.
3. Upon receiving notice under subdivision (b)(1), the person being investigated may obtain a copy of any written, formal or recorded statements made by such person. The department shall produce such information requested pursuant to this subsection (c) within thirty (30) days of the request.
4. In the course of an investigation conducted pursuant to this section, the commissioner shall have the right to take under oath the testimony of any person involved in the business of insurance. Such person shall be given no less than fourteen (14) days' written notice of the commissioner's intent to take testimony and the place where the testimony will be taken. Upon good cause shown, and in the commissioner's sole discretion, the commissioner may provide additional time to the requester.
5. If the commissioner requests a person to produce records, originals or copies, in conjunction with an investigation conducted pursuant to this section, and the person from whom the documents have been requested believes the request is overbroad and will not lead to the discovery of facts relevant to the commissioner's investigation, that person may seek review of the commissioner's request by application to an administrative judge, including seeking entry of a protective order. The cost of document production pursuant to this section shall be borne by the person from whom the documents are sought; provided, however, that all other costs of investigation shall be borne by the department.
6. No later than thirty (30) days after completion of an investigation, or closure of a complaint file, the commissioner shall provide notice of such completion or closure to the person being investigated or against whom the complaint was filed.
7. In the commissioner's annual report made pursuant to § 56-1-601, the department shall identify the total number of open investigations, the number of investigations opened in the year covered by the report, and the number of investigations closed in the year covered by the report.
8. Any investigation initiated under this part shall be completed within two (2) years of receiving a complaint, or the entry of an inquisitorial order, whichever comes first. The filing of an action under subsection (e) shall toll this limitation until such time as there is a final order issued pursuant to the Uniform Administrative Procedures Act and there is no judicial order staying the effectiveness of the final order. All actions shall be commenced within five (5) years of the date that the commissioner knew or reasonably should have known of the cause of action. Nothing in this subsection (h) shall prevent the department from taking action based upon an order previously entered by another state or the federal government or a felony conviction, regardless of the date of such order or conviction. Any investigation initiated prior to July 1, 2011, shall be completed or closed, or a contested case action shall be filed as of July 1, 2013.
9. Any notices required by the department pursuant to this section may be transmitted electronically.

Acts 2002, ch. 798, § 21; 2011, ch. 90, § 2.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Acts 2011, ch. 90, § 6 provided that the act, which rewrote the section, shall not be retroactively applied.

Cross-References. Confidentiality of public records, § 10-7-504.

56-6-121. Fees.

In addition to any other fees that may be required elsewhere in this title, the following are the nonrefundable fees that will be paid to the commissioner under this part:

1. Except as provided in subdivision (5), fifty dollars ($50.00) for the filing of an application for an insurance producer license or limited lines producer license;
2. Sixty dollars ($60.00) for the renewal of an insurance producer license;
3. Thirty dollars ($30.00) for the renewal of a limited lines producer license;
4. Fifteen dollars ($15.00) for the appointment or termination of appointment of an insurance producer or limited lines producer by an insurer; and
5. Seven hundred fifty dollars ($750) for the filing of an initial application or renewal application as a travel insurance supervising entity pursuant to the Travel Insurance Producer Limited License Act, compiled in part 14 of this chapter.

Acts 2002, ch. 798, § 22; 2006, ch. 1018, §§ 4, 5; 2015, ch. 460, § 2.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-122. Countersignatures.

Notwithstanding any other law to the contrary, there shall be no requirement that an insurance producer who is a resident of this state must countersign a policy of insurance written by an insurance company.

Acts 2002, ch. 798, § 23.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-123. Assumed names.

An insurance producer doing business under any name other than the producer's legal name is required to notify the commissioner prior to using the assumed name.

Acts 2002, ch. 798, § 24.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

56-6-124. Regulations.

1. The commissioner may, in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, promulgate reasonable regulations as are necessary or proper to carry out the purposes of this part.
2. The commissioner shall have the authority to promulgate any emergency rules necessary to implement this part; provided, that permanent rules shall be implemented pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
3. The commissioner shall promulgate continuing education requirements for individuals licensed under this part in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.

Acts 2002, ch. 798, § 25; 2009, ch. 566, § 12.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Acts 2009, ch. 566, § 12 provided that the Tennessee code commission is directed to change all references to public necessity rules, wherever such references appear in this code, to emergency rules, as sections are amended and volumes are replaced.

56-6-125. Unfair trade practices.

1. It is an unfair trade practice for an insurance producer to:
   1. Hold the insurance producer out, directly or indirectly, to the public as a financial planner, investment adviser, consultant, financial counselor, risk manager or any other specialist engaged in the business of giving financial planning, risk management or advice relating to investments, insurance, real estate, tax matters or trust and estate matters when the person is in fact engaged only in the sale of insurance policies. This subdivision (a)(1) does not preclude persons who hold some form of formal recognized financial planning, risk management or consultant certification or designation from using this certification or designation when they are only selling insurance;
   2. Engage in the business of financial planning without disclosing to the client prior to the execution of the agreement provided for in subdivision (a)(3), or solicitation of the sale of a product or service, that:
      1. The person is also an insurance salesperson; and
      2. That a commission for the sale of an insurance product will be received in addition to a fee for financial planning, if such is the case. The disclosure requirement under this subsection (a) may be met by including it in any disclosure required by federal or state securities law; or
   3. Charge fees for the sale, solicitation or negotiation of insurance not authorized by a written agreement with an insurer, and, where applicable, incorporated in the insurer's rate filing. An insurance producer may charge fees for services not connected with the sale, solicitation and negotiation of insurance by the insurance producer if the fees are based upon a qualified written agreement, signed by the party to be charged in advance of the performance of the services under the agreement. A copy of the qualifying agreement must be provided to the party to be charged at the time the agreement is signed by the party. The agreement shall be considered as qualifying if it includes:
      1. The services for which the fee is to be charged;
      2. The amount of the fee to be charged or how it will be determined or calculated; and
      3. A disclosure stating that the client is under no obligation to purchase any insurance product through the insurance producer or consultant. The insurance producer shall retain a copy of the agreement for not less than three (3) years after completion of services, and a copy shall be available to the commissioner upon request.
2. Notwithstanding subsection (a) or this title, an insurance producer may charge fees for services relating to an individual's purchase of an individual major medical policy as defined in § 56-12-204(c)(3)(C) [See Compiler's Note], where the insurer is not paying commission to the insurance producer, if the fees are based upon a qualified written agreement signed by the party to be charged in advance of the performance of the services under the agreement. An agreement under this subsection (b) is qualified if it meets the requirements contained in subdivisions (a)(3)(A)-(C).
3. Except as otherwise provided in subsections (a) and (b), this section does not permit persons to charge an additional fee for services that are associated with the sale, solicitation, negotiation, or servicing of insurance policies.

Acts 2002, ch. 798, § 26; 2008, ch. 1192, § 8; 2017, ch. 7, §§ 1, 2.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Section 56-12-204(c)(3)(C), referred to in subsection (b), was deleted by Acts 2019, ch. 5, § 3.

Amendments. The 2017 amendment rewrote (b), which read: “Notwithstanding subsection (a), nothing in this section shall be construed as permitting persons to charge an additional fee for services that are customarily associated with the sale, solicitation, negotiation or servicing of insurance policies.”; and added (c).

Effective Dates. Acts 2017, ch. 7, § 3. March 22, 2017.

56-6-126. Severability.

If any provisions of this part or the application of a provision to any person or circumstances is held invalid, the remainder of the part, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected.

Acts 2002, ch. 798, § 27.

Compiler's Notes. Former Part 1, §§ 56-6-101 — 56-6-163, concerning licensing of agents and solicitors, was replaced by Acts 2002, ch. 798. Former §§ 56-6-101 — 56-6-129 (Acts 1975, ch. 68, §§ 2-18; 1978, ch. 519, § 1; 1978, ch. 520, §§ 1, 2; 1978, ch. 648, § 1; 1979, ch. 85, § 1; 1979, ch. 196, § 1; 1980, ch. 745, § 1; 1980, ch. 821, § 3; 1980, ch. 857, § 2; 1982, ch. 644, §§ 1-6, 8; 1984, ch. 537, §§ 1, 2; 1985, ch. 193, §§ 1-4; 1987, ch. 211, § 1; T.C.A., §§ 56-801 — 56-829) were repealed by Acts 1988, ch. 1019, § 32(a). Former §§ 56-6-130 — 56-6-159 and 56-6-161 — 56-6-163 (Acts 1988, ch. 1019, §§ 1-29, 31; 1989, ch. 355, § 1; 1989, ch. 481, § 1; 1994, ch. 589, § 1; 1997, ch. 442, § 1; 2000, ch. 651, § 1; 2001, ch. 333, §§ 3, 4) were repealed by Acts 2002, ch. 798, effective January 1, 2003. Section 56-6-160(d) and (e) were also deleted by Acts 2002, ch. 798, effective January 1, 2003; however, § 28 of that act provided that (a), (b), and (c) of that section, shall remain in effect until January 1, 2004, when the replacement of the existing continuing education requirement in new § 56-6-107(c) shall take effect.

Part 2
Agents for Bank Holding Companies