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United States
Tennessee Codes Title 56 - Insurance Chapter 2 - Insurance Companies

Tennessee Codes
Title 56 - Insurance
Chapter 2 - Insurance Companies

Part 1 - General Requirements for Doing Business

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

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.]  

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

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

(a)  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.

(b)  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.

(c)  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.]  

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

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

(a)  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)  (A)  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;

          (B)  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:

          (A)  The company has submitted a plan of operation; and

          (B)  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.

(b)  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.]  

56-2-104 - Contents of statement Deposits.

56-2-104. Contents of statement Deposits.

(a)  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)  (A)  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;

          (B)  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)  (A)  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;

          (B)  Notwithstanding subdivision (a)(3)(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;

     (4)  (A)  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;

          (B)  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. The deposits shall be subject to the same conditions as required in the case of stock or mutual life insurance companies; and

     (5)  (A)  The insurer's principal place of business and primary executive, administrative and home offices and all original books and records of the insurer are or will be located and maintained in this state. The removal from the state, or the retention outside the state, of all or a material part of these original books and records, except for reasonable purposes and periods of time approved by the commissioner in writing, is prohibited. This subdivision (a)(5)(A) also applies to domestic health maintenance organizations. This subdivision (a)(5)(A) does not apply to:

                (i)  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;

                (ii)  Any records of a domestic insurer that were located and maintained outside the state prior to July 1, 1993;

                (iii)  Records substantially similar to the general type of records located and maintained outside the state prior to July 1, 1993; or

                (iv)  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;

          (B)  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)(5)(A).

(b)  (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.

(c)  Notwithstanding any other provision in this section, the securities qualified for deposit under this section may be deposited in a clearing corporation, as defined in § 47-8-102, or in book-entry accounts maintained in a federal reserve bank. Any company making deposit by means of those securities shall provide to the commissioner evidence customarily issued by federal reserve banks and clearing corporations establishing that the securities are actually recorded in a book-entry account or actually held in safekeeping by a clearing corporation. Securities deposited in a clearing corporation or in a book-entry account and used to meet the deposit requirements set forth in this section shall be under the control of the commissioner and shall not be withdrawn by the insurance company without the approval of the commissioner.

[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.]  

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

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)  (A)  The procuring of contracts of insurance issued to an industrial insured;

          (B)  For the purposes of subdivision (7)(A), an ?industrial insured? is an insured:

                (i)  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;

                (ii)  Whose aggregate annual premiums for insurance on all risks total at least twenty-five thousand dollars ($25,000); and

                (iii)  Who has at least twenty-five (25) full-time employees.

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

56-2-106 - Certificate of exemption.

56-2-106. Certificate of exemption.

(a)  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.

(b)  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.

(c)  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.]  

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

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.]  

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

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

(a)  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.

(b)  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.

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.

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

(a)  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.

(b)  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.

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.]  

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

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

(a)  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.

(b)  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.

(c)  (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.]  

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

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

(a)  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.

(b)  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:

          (A)  Letter of approval to redomesticate;

          (B)  Letter of intent to permit the company to transfer its business and assets to this state; and

          (C)  A certificate of good standing.

(c)  ?Owned? and ?owns,? as used in subsection (b), mean ownership either directly or indirectly through one (1) or more intermediaries.

[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.]  

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

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

(a)  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).

(b)  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.]  

56-2-115 - Additional surplus requirement.

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.

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

(a)  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.

(b)  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.

(c)  Subsection (b) shall not apply to the procedures and capital requirements of a casualty company for the exclusive purpose of writing bonds only.

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

56-2-117 - Deposit of securities in clearing corporation or federal reserve bank.

56-2-117. Deposit of securities in clearing corporation or federal reserve bank.

(a)  Notwithstanding any other law, securities eligible for deposit under the insurance laws of the state relating to deposit of securities by an insurance company as a condition of commencing or continuing to do an insurance business in this state may be deposited in a clearing corporation as defined in § 47-8-102 or in book-entry accounts maintained in a federal reserve bank.

(b)  Any company making deposits by means of the securities shall provide to the commissioner evidence customarily issued by federal reserve banks and clearing corporations establishing that the securities are actually recorded in a book-entry account or actually held in safekeeping by a clearing corporation.

(c)  Securities deposited in a clearing corporation or in a book-entry account and used to meet the deposit requirements under the insurance laws of this state shall be under the control of the commissioner and shall not be withdrawn by the insurance company without the approval of the commissioner.

[Acts 1980, ch. 503, § 3.]  

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

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

(a)  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.

(b)  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.

(c)  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.

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

(a)  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.

(b)  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.

56-2-120. Insurers Financial requirements Hearings.

(a)  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.

(b)  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.

(c)  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.

56-2-121. Exempt entities.

(a)  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.

(b)  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 , codified in 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.]  

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

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.

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.

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.

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

(a)  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), codified in 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.

(b)  (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:

          (A)  Improving the accessibility, adequacy and affordability of patient health care and health care coverage;

          (B)  Identifying health and health care needs and informing health and health care policy;

          (C)  Determining the capacity and distribution of existing health care resources;

          (D)  Evaluating the effectiveness of intervention programs on improving patient outcomes;

          (E)  Reviewing costs among various treatment settings, providers and approaches; and

          (F)  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).

(c)  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.

     (1)  (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.

     (2)  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.

     (3)  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), compiled in 42 U.S.C. § 1320d et seq., and implementing federal regulations; and

          (B)  Other state and federal privacy laws.

     (4)  The committee shall regularly evaluate the integrity and accuracy of the all payer claims database.

     (5)  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.

     (6)  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.

     (7)  (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 developmental disabilities or the commissioner of mental health and developmental disabilities? 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; and

                (vii)  The deputy commissioner of the bureau of TennCare or the deputy commissioner of the bureau of TennCare?s designee.

          (B)  The committee shall include the following members to be appointed by the commissioner of finance and administration:

                (i)  Two (2) physician members. The Tennessee Medical Association is authorized to submit to the commissioner a list of nominees from which the physicians may be selected;

                (ii)  Two (2) members to represent hospitals. The Tennessee Hospital Association and the Hospital Alliance of Tennessee are authorized to submit to the commissioner a list of nominees from which the representatives may be selected;

                (iii)  One (1) pharmacist member. The Tennessee Pharmacists Association is authorized to submit to the commissioner a list of nominees from which the pharmacist may be selected;

                (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.

     (8)  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.

     (9)  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.

     (10)  The committee shall terminate on June 30, 2011, pursuant to § 4-29-232(b). The committee may be continued, reestablished or restructured in accordance with title 4, chapter 29.

(d)  (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 collaborate with the Tennessee health information committee in developing procedures and safeguards to protect the integrity and confidentiality of any data contained in the all payer claims database.

     (2)  (A)  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, unless public release of reports is authorized by the Tennessee health information committee, and other information submitted under this section, whether in electronic or paper form:

                (i)  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). Further, such information contained in the all payer claims database shall be considered confidential and not subject to subpoena; and

                (ii)  Reports derived from the information shall only be released pursuant to rules adopted by the commissioner subsequent to consultation with the Tennessee health information committee. 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.

          (B)  The commissioner shall, through memoranda of understanding and after consultation with the Tennessee health information committee, 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 developmental disabilities and other departments of state government for the purposes listed in subdivision (b)(1).

          (C)  Except for officials of the state or those officials' designees as permitted by subdivision (d)(1), nothing within 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.

(e)  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.

(f)  (1)  (A)  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.

          (B)  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.

          (C)  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.

(g)  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.

(h)  (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, compiled in title 4, chapter 5, 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.]  

Part 2 - Kinds of Insurance

56-2-201 - Definitions of kinds of insurance.

56-2-201. Definitions of kinds of insurance.

Kinds of insurance are defined as follows:

     (1)  ?Accident and health insurance? means insurance against bodily injury, disablement or death, by accident or accidental means, or the expense of bodily injury, disablement or death, against disablement or expense resulting from sickness, and every insurance pertaining thereto; providing for the mental and emotional welfare of an individual and members of the individual's family by defraying the cost of legal services; or providing aggregate or excess stop-loss coverage in connection with employee welfare benefit plans, managed care organizations participating in commercial plans or the TennCare program, or both, health maintenance organizations, long-term care facilities and physician-hospital organizations as defined in § 56-32-102;

     (2)  ?Casualty insurance? includes vehicle insurance, disability insurance, and in addition is:

          (A)  ?Boiler insurance,? which is insurance against any liability and loss or damage to property resulting from accidents to or explosion of boilers, pipes, pressure containers, machinery, or apparatus, and to make inspection of and issue certificates of inspection upon boilers, machinery and apparatus of any kind, whether or not insured;

          (B)  ?Burglary and theft insurance,? which is insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation or wrongful conversion, disposal or concealment, or from any attempt of burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation or wrongful conversion, disposal or concealment; also insurance against loss of or damage to moneys, coins, bullion, securities, notes, drafts, acceptances or any other valuable papers or documents, resulting from any cause, except while in the custody or possession of and being transported by any carrier for hire or in the mail;

          (C)  ?Collision insurance,? which is insurance against loss of or damage to any property of the insured resulting from collision of any other object with the property, but not including collision to or by elevators, or to or by vessels, craft, piers or other instrumentalities of ocean or inland navigation;

          (D)  ?Credit insurance,? which is insurance against loss or damage resulting from failure of debtors to pay their obligations to the insured;

          (E)  ?Elevator insurance,? which is insurance against loss or damage to any property of the insured resulting from the ownership, maintenance or use of elevators, except loss or damage by fire, and to make inspection of and issue certificates of inspection on elevators;

          (F)  ?Glass insurance,? which is insurance against loss of or damage to glass and its appurtenances resulting from any cause;

          (G)  ?Liability insurance,? which is insurance against legal liability for the death, injury, or disability of any person, or for damage to property; and insurance of medical, hospital, surgical and funeral benefits to persons injured, regardless of legal liability of the insured, when issued as an incidental coverage with or supplemental to liability insurance;

          (H)  ?Livestock insurance,? which is insurance against loss of or damage to any domesticated or wild animal resulting from any cause;

          (I)  ?Malpractice insurance,? which is insurance against legal liability of the insured, and against loss, damage or expense incident to a claim of legal liability, and including any obligation of the insured to pay medical, hospital, surgical and funeral benefits to injured persons, regardless of legal liability of the insured, arising out of the death or injury of any person, or arising out of injury to the economic interest of any person as the result of negligence in rendering expert, fiduciary or professional service;

          (J)  ?Personal property floater,? which is insurance of individuals, by an all-risk type of policy commonly known as the ?personal property floater,? against any and all kinds of loss of or damage to, or loss of use of, any personal property other than merchandise;

          (K)  ?Water insurance,? which is insurance against loss of or damage to any property caused by the breakage or leakage of sprinklers, water pipes and other apparatus, or by water entering through leaks or openings in buildings, other than flood waters;

          (L)  ?Workers' compensation and employer's liability insurance,? which is insurance of the obligations accepted by, imposed upon, or assumed by employers under law for death, disablement, or injury of employees; and

          (M)  Insurance against any other kind of loss, damage, or liability properly the subject of insurance and not within any other kind or kinds of insurance as defined in this section, if the insurance is not disapproved by the commissioner as being contrary to law or public policy;

     (3)  ?Credit insurance? includes:

          (A)  ?Credit accident and health insurance,? which means that form of insurance under which a borrower of money or a purchaser of goods is indemnified in connection with a specific loan or credit transaction against loss of time resulting from accident or sickness; and

          (B)  ?Credit life insurance,? which means that form of insurance under which the life of a borrower of money or a purchaser of goods is insured in connection with a specified loan or credit transaction;

     (4)  ?Life insurance? means insurance on human lives and insurance appertaining to human lives or connected with human lives. For the purposes of this title, the transacting of life insurance includes the granting of annuities, both with and without a life or mortality contingency or element, and endowment benefits, additional benefits in the event of death by accident or accidental means, additional benefits in the event of the total and permanent disability of the insured, and optional modes of settlement of proceeds;

     (5)  (A)  ?Property insurance? means insurance against loss of or damage to real or personal property of every kind and interest in the real or personal property, from any or all hazards or causes, and against loss consequential upon the loss or damage;

          (B)  ?Property insurance? includes, but is not limited to:

                (i)  Insurance against loss or damage to property and loss of use and occupancy by fire, lightning, storm, flood, frost, freezing, snow, hail, ice, weather or climatic conditions, including excess or deficiency of moisture, rain or rising of the waters of the ocean or its tributaries, drought, insects, vermin, forces of nature, smoke, smudge, riot, riot attending strike, strikes, sabotage, civil commotion, vandalism or malicious mischief or caused by wrongful conversion, disposal or concealment of a motor vehicle or aircraft, whether or not handled under a conditional sales contract or subject to chattel mortgage, civil war, rebellion, insurrection, invasion, bombardment, military or usurped power, or by any order of civil authorities meant to prevent the spread of conflagration or epidemic or catastrophe, explosion with no fire ensuing, except explosion by steam boilers or flywheels, but there may be insured explosion of pressure vessels, not including steam boilers of more than fifteen pounds (15 lbs.) pressure, in buildings designed and used solely for residential purposes by not more than four (4) families, explosion of any kind originating outside the insured building, or outside the building containing the property insured, and explosion of pressure vessels that do not contain steam or that are not operated with steam coils or steam jackets;

                (ii)  Insurance against loss or damage by insects or disease to farm crops or products, and loss of rental value of land used in producing the crops or products;

                (iii)  Insurance against accidental injury to sprinklers, pumps, water pipes, elevator tanks and cylinders, steam pipes and radiators, plumbing and its fixtures, ventilating, refrigerating, heating, lighting or cooking apparatus, or their connections, or conduits or containers of any gas, fluid, or other substance, and against loss or damage to property of the insured caused by the breakage or leakage thereof, or by water, hail, rain, sleet or snow seeping or entering through water pipes, leaks or openings in buildings;

                (iv)  Insurance against loss or damage caused by railroad equipment, motor vehicles, airplanes, seaplanes, dirigibles or other aircraft;

                (v)  Insurance against loss of or damage to vessels, crafts, aircrafts, cars, automobiles and vehicles of every kind, as well as all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidence of debt, valuable papers, bottomry and respondentia interests therein, in respect to, appertaining to or in connection with, any and all risks or perils of navigation, transit, or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the being assembled, packed, crated, baled, compressed or similarly prepared for shipment or during any delays, storage, transshipment incident thereto, including marine builder's risks and all personal property floater risks, and persons or property in connection with or appertaining to a marine, inland marine, transit or transportation insurance, including liability for loss of or damage to either, arising out of or in connection with the construction, repair, operation, maintenance or use of the subject matter of the insurance, but not including life insurance or surety bonds, and precious stones, jewels, jewelry, gold, silver and other precious metals, whether used in business or trade, or otherwise, and whether in course of transportation or otherwise, and bridges, tunnels and other instrumentalities of transportation, and communication, excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage, unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and/or civil commotion, are the only hazards to be covered, and piers, wharves, docks and ships, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and/or civil commotion, and other aids to navigation and transportation, including dry docks and marine railways, against all risks;

                (vi)  ?Marine protection and indemnity insurance,? which means insurance against, or against legal liability of the insured for, loss, damage or expense arising out of, or incident to, the ownership, operation, chartering, maintenance, use, repair or construction of any vessel, craft or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person; and

                (vii)  Vehicle insurance;

          (C)  Matters set out in subdivision (5)(B) are not deemed to limit the scope of property insurance as defined in subdivision (5)(A), nor shall the fact that certain coverages coming within the scope of property insurance, as defined in subdivision (5)(A), are also defined as part of another kind of insurance be deemed to limit the scope of the definition of property insurance or the right of a property insurer to provide the coverage;

     (6)  ?Surety insurance? includes:

          (A)  Credit insurance;

          (B)  ?Fidelity insurance,? which is insurance guaranteeing the fidelity of persons holding positions of public or private trust;

          (C)  Guaranteeing the performance of contracts, and guaranteeing and executing bonds, undertakings, and contracts of suretyship;

          (D)  Indemnifying banks, bankers, brokers, financial or moneyed corporations or associations or other persons against loss, resulting from any cause, of bills of exchange, notes, bonds, securities, evidences of debts, deeds, mortgages, warehouse receipts, or other valuable papers, documents, money, precious metals and articles made from precious metals, jewelry, watches, necklaces, bracelets, gems, precious and semiprecious stones, including any loss while the items are being transported in armored motor vehicles, or by messenger, but not including any other risks of transportation or navigation; also against loss or damage to the insured's premises, or to the insured furnishings, fixtures, equipment, safes and vaults in safes, caused by burglary, robbery, theft, vandalism or malicious mischief, or any attempt of burglary, robbery, theft, vandalism or malicious mischief; and

          (E)  Insurance that guarantees the performance of any debt obligation of a public or private corporation; and

     (7)  (A)  ?Vehicle insurance? means insurance against loss of or damage to any land vehicle or aircraft or any draft or riding animal or to property while contained therein or thereon, or being loaded or unloaded therein or therefrom, and against any loss, expense or liability for loss or damage to persons or property resulting from or incident to ownership, maintenance, or use of the vehicle or aircraft or animal;

          (B)  Insurance against accidental death or accidental injury to individuals, including the named insured, while in, entering, alighting from, adjusting, repairing, cranking, or caused by being struck by a vehicle, aircraft, or draft or riding animal, if the insurance is issued as part of insurance on the vehicle, aircraft, or draft or riding animal, shall be deemed to be vehicle insurance.

[Acts 1951, ch. 212, § 1 (Williams, § 6107); T.C.A. (orig. ed.), § 56-306; Acts 1955, ch. 13, § 1; T.C.A. (orig. ed.), § 56-218; Acts 1984, ch. 582, § 1; 1986, ch. 504, § 1; 1988, ch. 948, § 1; 1994, ch. 888, § 1; 1995, ch. 221, § 1; 1996, ch. 780, § 1; 2008, ch. 831, § 14.]  

56-2-202 - Kinds of property insurance authorized.

56-2-202. Kinds of property insurance authorized.

(a)  The company has the power generally to insure against loss by fire, earthquakes, storms, floods, explosions, except the explosions of the kind contemplated in § 56-19-108(5), riots, civil commotions, and any and all other damages on all kinds and species of property.

(b)  This section shall apply to every insurance corporation heretofore or hereafter organized under the laws of this state.

(c)  All policies of insurance heretofore issued by insurance corporations organized under the laws of this state insuring against loss from any cause included in the authorization in subsection (a) are validated, insofar as the corporation was without specific charter power to insure against those losses.

[Acts 1875, ch. 142, § 10; Shan., § 2260; Code 1932, § 3973; Acts 1937, ch. 109, §§ 1-3; mod. C. Supp. 1950, § 3973 (Williams, §§ 3973, 3973.1, 3973.2); T.C.A. (orig. ed.), § 56-219.]  

56-2-203 - Life insurance Annuity or contract loans Trusts accepted and executed.

56-2-203. Life insurance Annuity or contract loans Trusts accepted and executed.

The company has the further right to insure the lives of persons, and engage in the general business of life insurance, and, coupled with that right, the right to grant and sell annuity, or contract loans based on life annuity, with benefit of survivorship, and accept and execute all legal trusts that may be confided to it.

[Acts 1875, ch. 142, § 10; Shan., § 2261; Code 1932, § 3974; T.C.A. (orig. ed.), §§ 56-206, 56-220.]  

56-2-204 - Casualty, accident, sickness, theft and marine insurance.

56-2-204. Casualty, accident, sickness, theft and marine insurance.

The company also has the power to insure:

     (1)  Against all accidents:

          (A)  To property in transit; and

          (B)  To persons traveling or otherwise;

     (2)  Against disabilities to persons by disease or sickness, or other bodily infirmities;

     (3)  Against thefts of property;

     (4)  Ships, steamboats, and other craft; and

     (5)  Freight and sailors' wages, including all marine risks.

[Acts 1875, ch. 142, § 10; 1889, ch. 224, § 1; Shan., § 2262; mod. Code 1932, § 3975; T.C.A. (orig. ed.), §§ 56-207, 56-221.]  

56-2-205 - Insurance company may exercise one or all branches of authorized business.

56-2-205. Insurance company may exercise one or all branches of authorized business.

The corporation may, at its option, exercise one (1) or more or all of the branches of business in which it is authorized to engage.

[Acts 1875, ch. 142, § 10; Shan., § 2263; mod. Code 1932, § 3976; T.C.A. (orig. ed.), §§ 56-208, 56-222.]  

56-2-206 - Companies on Lloyd's plan authorized to do business.

56-2-206. Companies on Lloyd's plan authorized to do business.

(a)  Associations of individuals, citizens of the United States, whether organized within this state or elsewhere within the United States, formed on the plan known as Lloyd's, whereby each associate underwriter becomes liable for a proportionate part of the whole amount insured by policy, may be authorized to transact insurance other than life in this state, in like manner and upon the same terms and conditions as are required of and imposed upon insurance companies of the United States, or one (1) of the states.

(b)  All Lloyd's, whether organized within this state or elsewhere in the United States, not having an actual, paid-up cash capital, shall make the same deposit, and upon the same terms and conditions as is required by § 56-2-405 of foreign insurance companies incorporated or associated under the laws of any government or state other than the United States or one (1) of the states.

[Acts 1895, ch. 160, § 15; Shan., § 3298; Code 1932, § 6114; T.C.A. (orig. ed.), §§ 56-210, 56-224.]  

56-2-207 - Reinsurance contracts Liability of ceding and assuming insurers.

56-2-207. Reinsurance contracts Liability of ceding and assuming insurers.

(a)  (1)  Every insurer authorized to do an insurance, surety or bonding business in this state, called the ?ceding insurer? in this title, may, subject to the limitations of this section, reinsure its risks and policy liabilities in any other insurer, called the ?assuming insurer? in this title, with the effects prescribed in this section; but no prohibition or limitation contained in this section shall invalidate the contract or reinsurance as between the parties.

     (2)  No credit shall be allowed, as an admitted asset or as a deduction from liability, to any ceding insurer for reinsurance made, ceded, renewed, or otherwise becoming effective after June 12, 1947, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding insurer under the contract or contracts reinsured without diminution, because of the insolvency of the ceding insurer nor unless, under the contract or contracts of reinsurance, the liability for the reinsurance is assumed by the assuming insurer or insurers as of the same effective date.

     (3)  The reinsurance agreement may provide that the liquidator or receiver or statutory successor of an insolvent ceding insurer shall give written notice of the pendency of a claim against the insolvent ceding insurer on the policy or bond reinsured, within a reasonable time after the claim is filed in the insolvency proceeding and that during the pendency of the claim, any assuming insurer may investigate the claim and interpose, at its own expense, in the proceeding where the claim is to be adjudicated, any defense or defenses that it may deem available to the ceding company or its liquidator or receiver or statutory successor.

     (4)  The expense thus incurred by the assuming insurer shall be chargeable, subject to court approval, against the insolvent ceding insurer as part of the expense of liquidation to the extent of a proportionate share of the benefit, which may accrue to the ceding insurer, solely as a result of the defense undertaken by the assuming insurer.

(b)  Where two (2) or more assuming insurers are involved in the same claim and a majority in interest elect to interpose defense to the claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreement, as though the expense had been incurred by the ceding company.

[Acts 1947, ch. 154, § 1; C. Supp. 1950, § 6105.1 (Williams, § 6459.70); T.C.A. (orig. ed.), §§ 56-211, 56-225.]  

56-2-208 - Credit for reinsurance Reduction from liability for reinsurance.

56-2-208. Credit for reinsurance Reduction from liability for reinsurance.

Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a deduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of subdivision (1), (2), (3), (4) or (5). If an insurer is meeting the requirements of subdivision (3) or (4), the requirements of subdivision (6) must also be met.

     (1)  Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state;

     (2)  Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this state. An accredited reinsurer is one that:

          (A)  Files with the commissioner evidence of its submission to this state's jurisdiction;

          (B)  Submits to this state's authority to examine its books and records;

          (C)  Is licensed to transact insurance or reinsurance in at least one (1) state, or in the case of a United States branch of an alien assuming insurer is entered through and licensed to transact insurance or reinsurance in at least one (1) state;

          (D)  Files annually with the commissioner a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and either:

                (i)  Maintains a surplus as regards policyholders in an amount that is not less than twenty million dollars ($20,000,000) and whose accreditation has not been denied by the commissioner within ninety (90) days of its submission; or

                (ii)  Maintains a surplus as regards policyholders in an amount that is not less than twenty million dollars ($20,000,000) and whose accreditation has been approved by the commissioner;

          (E)  No credit shall be allowed a domestic ceding insurer if the assuming insurer's accreditation has been revoked by the commissioner after notice and hearing;

     (3)  (A)  Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled and licensed in, or in the case of a United States branch of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this title, and the assuming insurer or United States branch of an alien assuming insurer:

                (i)  Maintains a surplus as regards policyholders in an amount of not less than twenty million dollars ($20,000,000); and

                (ii)  Submits to the authority of this state to examine its books and records;

          (B)  Provided, that the requirement of subdivision (3)(A)(i) does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system;

     (4)  (A)  Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in § 56-2-209(d), for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns and successors in interest. The assuming insurer shall report annually to the commissioner information substantially the same as that required to be reported on the National Association of Insurance Commissioners (NAIC) annual statement form by licensed insurers to enable the commissioner to determine the sufficiency of the trust fund. In the case of a single assuming insurer, the trust shall consist of a trustee account representing the assuming insurer's liabilities attributable to business written in the United States and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars ($20,000,000). In the case of a group including incorporated and individual unincorporated underwriters, the trust shall consist of a trusteed account representing the group's liabilities attributable to business written in the United States and, in addition, the group shall maintain a trusteed surplus of which one hundred million dollars ($100,000,000) shall be held jointly for the benefit of United States ceding insurers of any member of the group; the incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members; and the group shall make available to the commissioner an annual certification of the solvency of each underwriter by the group's domiciliary regulator and its independent public accountants;

          (B)  In the case of a group of incorporated insurers under common administration which complies with the filing requirements contained in subdivision (4)(A), and that has continuously transacted an insurance business outside the United States for at least three (3) years immediately prior to making application for accreditation, and submits to this state's authority to examine its books and records and bears the expense of the examination, and that has an aggregate policyholders surplus of ten billion dollars ($10,000,000,000), the trust shall be in an amount equal to the group's several liabilities attributable to business ceded by United States ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group; plus the group shall maintain a joint trusteed surplus of which one hundred million dollars ($100,000,000) shall be held jointly and exclusively for the benefit of United States ceding insurers of any member of the group as additional security for the liabilities, and each member of the group shall make available to the commissioner an annual certification of the member's solvency by the member's domiciliary regulator and its independent public accountant;

          (C)  The trust shall be established in a form approved by the commissioner. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in the trustees of the trust for its United States policyholders and ceding insurers, their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the commissioner. The trust described in this subdivision (4) must remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust;

          (D)  No later than February 28 of each year, the trustees of the trust shall report to the commissioner in writing setting forth the balance of the trust and listing the trust's investments at the preceding year end and shall certify the date of termination of the trust, if so planned, or certify that the trust shall not expire prior to the next following December 31;

     (5)  Credits shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subdivision (1), (2), (3) or (4), but only with respect to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction; and

     (6)  If the assuming insurer is not licensed or accredited to transact insurance or reinsurance in this state, the credit permitted by subdivisions (3) and (4) shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:

          (A)  That, in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction, and will abide by the final decision of the court or of any appellate court in the event of an appeal; and

          (B)  To designate the commissioner or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the ceding company. This subdivision (6)(B) is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if such an obligation is created in the agreement.

[Acts 1947, ch. 154, § 2; 1949, ch. 105, § 1; C. Supp. 1950, § 6105.2 (Williams, § 6459.71); T.C.A. (orig. ed.), §§ 56-212; 56-226; Acts 1985, ch. 252, § 1; 1993, ch. 253, § 8; 1994, ch. 585, §§ 1, 2.]  

56-2-209 - Assuming insurers Determination of financial condition.

56-2-209. Assuming insurers Determination of financial condition.

(a)  A reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of § 56-2-208 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer, and the reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations under the contract, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer, or, in the case of a trust, held in a qualified United States financial institution, as defined in subsection (d). This security may be in the form of:

     (1)  Cash;

     (2)  Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners and qualifying as admitted assets;

     (3)  Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States institution, as defined in subsection (c), no later than December 31 of the year for which filing is being made, and in the possession of the ceding company on or before the filing date of its annual statement; or

     (4)  Any other form of security acceptable to the commissioner.

(b)  Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance, or confirmation, shall, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs.

(c)  For purposes of subdivision (a)(3), a ?qualified United States financial institution? means an institution that:

     (1)  Is organized or  licensed, in the case of a United States office of a foreign banking organization, under the laws of the United States or any state in the United States;

     (2)  Is regulated, supervised and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and

     (3)  Has been determined by either the commissioner, or the Securities Valuation Office of the National Association of Insurance Commissioners, to meet the standards of financial condition and standing considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner.

(d)  For purposes of those provisions of this chapter specifying those institutions that are eligible to act as a fiduciary of a trust, ?qualified United States financial institution? means an institution that:

     (1)  Is organized or  licensed, in the case of a United States branch or agency office of a foreign banking organization, under the laws of the United States or any state and has been granted authority to operate with fiduciary powers; and

     (2)  Is regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies.

(e)  The commissioner may adopt rules and regulations implementing this section and § 56-2-208. The rules and regulations shall be promulgated pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.

(f)  This section and § 56-2-208 apply to all cessions after July 1, 1993, under reinsurance agreements that have had an inception, anniversary, or renewal date not less than six (6) months after July 1, 1993.

[Acts 1947, ch. 154, § 3; C. Supp. 1950, § 6105.3 (Williams, § 6459.72); T.C.A. (orig. ed.), §§ 56-213, 56-227; Acts 1993, ch. 253, § 8.]  

56-2-210 - Responsibilities and obligations of limited credit life and credit accident and health reinsurer.

56-2-210. Responsibilities and obligations of limited credit life and credit accident and health reinsurer.

(a)  As used in this section, ?limited credit life and credit accident and health reinsurer? means a domestic credit life and credit accident and health reinsurer that:

     (1)  Reinsures only credit life insurance or credit accident and health insurance as defined in § 56-2-201, or both, in the manner provided for in § 56-2-114(b);

     (2)  Has been authorized by the commissioner to do so in Tennessee and is not so authorized in any other state; and

     (3)  Secures all of its reinsurance reserve liabilities that have been assumed under a reinsurance agreement that has been approved by the commissioner with funds withheld or maintained in a trust fund that complies with §§ 56-2-207, 56-2-208 and 56-2-209 and in an amount that is not less than one hundred ten percent (110%) of the amount of the liabilities assumed.

(b)  (1)  The responsibilities and obligations of a limited credit life and credit accident and health reinsurer under this title shall be modified as set out in this section. A limited credit life and credit accident and health reinsurer shall demonstrate its compliance with the requirements in subsection (a) in the annual statement filed with the commissioner for the preceding year and shall maintain assets to secure the liabilities in the percentage relationship at all times. In determining compliance with this requirement, the commissioner shall value securities in the manner prescribed in §§ 56-3-113 and 56-3-114, and shall take into account only the securities that constitute admitted assets under chapter 3, part 3 of this title, and § 56-1-405.

     (2)  A company may not be a limited credit life and credit accident and health reinsurer during any period in which it is an affiliate of an insurer. In determining whether a company is an affiliate, tests provided for in § 56-11-101 shall be applied to determine a company's status.

(c)  Notwithstanding any contrary provision in this title, a limited credit life and credit accident and health reinsurer shall be excused from:

     (1)  Filing personal financial statements to accompany insurance holding company forms under § 56-11-105;

     (2)  Filing any audited financial statements pursuant to rules authorized by § 56-1-501(h);

     (3)  Filing any risk-based capital reports under chapter 46 of this title;

     (4)  Filing any management discussion and analysis;

     (5)  Filing with respect to material transactions under §§ 56-10-301 56-10-303;

     (6)  Filing any actuarial certification;

     (7)  Any filing of its annual statement or quarterly statement with the National Association of Insurance Commissioners; and

     (8)  Filing with respect to extraordinary dividends under § 56-11-106(b).

(d)  The commissioner is excused from any obligation to perform regular examination of a limited credit life and credit accident and health reinsurer under § 56-1-408, but shall retain the power to make an examination of any accounts, records, files, documents, and transactions pertaining to insurance of the limited credit life and credit disability reinsurer whenever the commissioner deems it prudent to do so under § 56-1-409.

(e)  A limited credit life and credit accident and health reinsurer shall file with the commissioner copies of all reinsurance agreements, including amendments to the agreements, to which the reinsurer is a party. The agreement or amendment shall not be effective until and unless the agreement or amendment is approved by the commissioner; provided, however, that the agreement or amendment shall be deemed approved if the commissioner does not disapprove the agreement or amendment in writing within thirty (30) days after the reinsurer files a copy of the agreement or amendment with the commissioner.

(f)  The commissioner may approve a merger in which a limited credit life and credit accident insurance company is a constituent party without holding the otherwise required hearing on a merger of a limited credit life and credit accident and health reinsurer with another entity, unless the requirement of a hearing under § 56-10-104(b) applies to another party to the merger.

(g)  The commissioner may permit an applicant to seek a certificate of authority pursuant to a simplified and abbreviated application form under which the company seeking authority from the commissioner to engage in the business of being a limited credit life and credit accident and health reinsurer may apply for a certificate of authority to engage in the business.

(h)  This section shall apply to all reports and documents required to be filed after December 31, 2000.

[Acts 2001, ch. 118, § 1.]  

Part 3 - Rules and Regulations

56-2-301 - Promulgation of rules and regulations.

56-2-301. Promulgation of rules and regulations.

(a)  The commissioner is authorized to promulgate rules and regulations not in conflict with this section and §§ 56-2-101, 56-2-103, 56-2-113 56-2-115, and 56-2-201 for the purpose of implementing those sections so as to regulate the writing of the various kinds and types of insurance provided for in those sections.

(b)  The commissioner is authorized to promulgate rules and regulations to allow for the filing of documents with the commissioner pursuant to this title through a designated filing depository.

(c)  Regulations promulgated pursuant to this section shall have the same force and effect of law.

[Acts 1955, ch. 13, § 1; T.C.A., §§ 56-308, 56-216; Acts 2003, ch. 215, §§ 1, 2.]  

56-2-302 - Notice of hearing on issuance of cease and desist order.

56-2-302. Notice of hearing on issuance of cease and desist order.

Whenever the commissioner determines that a company, corporation, association, person, or entity of whatever nature is violating or is about to violate § 56-2-105, the commissioner may issue a notice of hearing and charges requiring the company, corporation, association, person, or entity of whatever nature to show cause why an order should not issue requiring the person or entity to cease and desist the unauthorized business of insurance in this state.

[Acts 1993, ch. 253, § 16.]  

56-2-303 - Hearings.

56-2-303. Hearings.

Any hearing conducted under this part shall be conducted pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.

[Acts 1993, ch. 253, § 16.]  

56-2-304 - Cease and desist orders.

56-2-304. Cease and desist orders.

If the commissioner finds that public health, safety, or welfare imperatively requires emergency action, and incorporates a finding to that effect in an order, a summary cease and desist order may be issued pending proceedings for other actions under this part. These proceedings shall be promptly instituted and determined.

[Acts 1993, ch. 253, § 16.]  

56-2-305 - Violations Commissioner's orders Penalties.

56-2-305. Violations Commissioner's orders Penalties.

(a)  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, part 3, the commissioner finds that any insurer, person, or entity required to be licensed, permitted, or authorized by the division of insurance has violated any statute, rule or order, the commissioner may, at the commissioner's discretion, order:

     (1)  The insurer, person, or entity 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), unless the insurer, person, or entity knowingly violates a statute, rule or order, in which case the penalty shall not be more than twenty-five thousand dollars ($25,000) for each violation, not to exceed an aggregate penalty of two hundred fifty thousand dollars ($250,000). This subdivision (a)(2) shall not apply where a statute or rule specifically provides for other civil penalties for the violation. For purposes of this subdivision (a)(2), each day of continued violation shall constitute a separate violation; and

     (3)  The suspension or revocation of the insurer?s, person?s, or entity's license.

(b)  In determining the amount of penalty to assess under this section, or in determining whether the violation was a knowing violation for the purpose of subdivision (a)(2), the commissioner shall consider any evidence relative to the following criteria:

     (1)  Whether the insurer, person or entity could reasonably have interpreted its 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)  Whether the amount imposed would put the violator in a hazardous financial condition;

     (4)  The circumstances leading to the violation;

     (5)  The severity of the violation and the risk of harm to the public;

     (6)  The economic benefits gained by the violator as a result of noncompliance;

     (7)  The interest of the public; and

     (8)  The insurer's, person's, or entity's efforts to cure the violation.

(c)  Notwithstanding the limitations set forth in subdivision (a)(2), no aggregate penalty limits shall apply to the following:

     (1)  Failure to file audited statements required pursuant to § 56-1-501(h) and rules promulgated under § 56-1-501(h);

     (2)  Failure to file quarterly financial statements as required by statute or regulation;

     (3)  Failure to file actuarial opinions pursuant to § 56-1-501(d) and rules promulgated under § 56-1-501(d);

     (4)  Failure to file annual reports pursuant to §§ 56-19-119, 56-28-111, 56-29-113, 56-30-117, 56-31-116, 56-43-108, and 56-44-104;

     (5)  Failure to file a risk-based capital report pursuant to § 56-46-103; and

     (6)  Violations of orders issued after a contested case hearing held in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, part 3, and pursuant to subdivision (a)(1).

(d)  This section does not apply to individual or business entity insurance producers licensed pursuant to chapter 6, part 1 of this title.

(e)  (1)  Notwithstanding any law to the contrary, civil penalties received under the authority of this section shall be utilized by the department, at the discretion of the commissioner, to:

          (A)  Defray its expenses related to the liquidation of insurance companies as provided by chapter 9 of this title;

          (B)  Promote consumer awareness of insurance; or

          (C)  Provide training or educational opportunities to employees of the division of insurance.

     (2)  Any subaccount currently used by the department for training and education may also be used for the promotion of consumer awareness.

[Acts 2007, ch. 338, § 1.]  

Part 4 - Foreign and Alien Insurance Companies

56-2-401 - Alien government controlled companies excluded Definition.

56-2-401. Alien government controlled companies excluded Definition.

(a)  Any insurance company or other insurance entity that is financially owned or financially controlled by any alien or foreign government outside the continental limits of the United States or the territories of the United States is prohibited from doing any kind of insurance business in this state.

(b)  For the purposes of this section and §§ 56-2-402 56-2-404, ?alien or foreign government? means any foreign government or any state, province, municipality, or political subdivision of any foreign government, but does not apply to any insurance company organized under the laws of a foreign nation that is financially owned or financially controlled by the private citizens or private business interests of the foreign nation.

[Acts 1955, ch. 3, § 1; T.C.A., §§ 56-323, 56-228.]  

56-2-402 - Issuance of license to company controlled by foreign government prohibited.

56-2-402. Issuance of license to company controlled by foreign government prohibited.

The commissioner is forbidden to grant a license to any insurance company or other insurance entity that is financially owned or financially controlled by any alien or foreign government outside the continental limits of the United States or the territories of the United States, or to authorize the company or entity to transact any kind of insurance business in this state.

[Acts 1955, ch. 3, § 2; T.C.A., §§ 56-324, 56-229.]  

56-2-403 - Penalty for violations.

56-2-403. Penalty for violations.

Any insurance company or other insurance entity that is financially owned or financially controlled by any alien or foreign government outside the continental limits of the United States or the territories of the United States, or any representative or agent of the company or entity, that violates §§ 56-2-401, 56-2-402, this section and § 56-2-404, commits a Class C misdemeanor.

[Acts 1955, ch. 3, § 3; T.C.A., §§ 56-325, 56-230; Acts 1989, ch. 591, § 113.]  

56-2-404 - Foreign government controlled company as public nuisance Injunction.

56-2-404. Foreign government controlled company as public nuisance Injunction.

Any violation of §§ 56-2-401 56-2-403 and this section by an insurance company or other insurance entity that is financially owned or financially controlled by any alien or foreign government outside the continental limits of the United States or the territories of the United States, or by any representative or agent of the company or entity, is declared to be a public nuisance, and the commissioner is authorized and empowered to enjoin the nuisance by injunctive proceedings in the chancery court in like manner as is provided by the general statutes pertaining to enjoining nuisances.

[Acts 1955, ch. 3, § 4; T.C.A., §§ 56-326, 56-231.]  

56-2-405 - Admission of companies of other countries Deposits.

56-2-405. Admission of companies of other countries Deposits.

(a)  Any foreign company, if incorporated or associated under the laws of any government or state other than the United States, shall not be admitted until, besides complying with the conditions of §§ 56-2-101 56-2-103, 56-2-113 56-2-115, 56-2-201 and 56-2-301, it has made a deposit with the state treasurer, or with the financial officer of some other state of the United States, a sum of not less than two hundred thousand dollars ($200,000).

(b)  The deposit must be in exclusive trust for the benefit and security of all the company's policyholders and creditors in the United States, and may be made in bonds of this state or of the United States, or of some state in the United States, or other good securities satisfactory to the commissioner.

(c)  The deposit shall be in lieu of any other deposit required of life insurance companies incorporated under the laws of any government or state other than the United States.

[Acts 1895, ch. 160, § 10; 1909, ch. 181, § 1; Shan., § 3293; Code 1932, § 6109; T.C.A. (orig. ed.), §§ 56-310, 56-232; Acts 1989, ch. 36, § 3.]  

56-2-406 - Trustees of companies of other countries.

56-2-406. Trustees of companies of other countries.

(a)  Any admitted company of a foreign country may appoint trustees who are citizens of the United States, and approved by the commissioner, to hold funds in trust for the benefit of its policyholders and creditors in the United States.

(b)  These trustees shall be named by the directors of the company, and a certified copy of the record of the appointment of the trustees and of the deed of trust shall be filed in the office of the commissioner, who may examine the trustees and the assets in trust, and all books and papers relating to the trust, in the same manner that the commissioner may examine the officers, agents, assets, and affairs of insurance companies.

(c)  The funds held by the trustees, so far as the funds are in securities, money, or credits, admissible as sound assets in the financial accounts of insurance companies, shall, together with its deposits made in accordance with § 56-2-405, constitute the assets of the company as regards its policyholders and creditors in the United States.

[Acts 1895, ch. 160, § 11; Shan., § 3294; Code 1932, § 6110; T.C.A. (orig. ed.), §§ 56-311, 56-233.]  

56-2-407 - Revocation of authority of foreign companies.

56-2-407. Revocation of authority of foreign companies.

The authority of a foreign insurance company may be revoked:

     (1)  If it violates or neglects to comply with any law obligatory upon it;

     (2)  Whenever, in the opinion of the commissioner, its condition is unsound, or its assets above its liabilities exclusive of capital and inclusive of unearned premiums, as provided in §§ 56-1-402 56-1-405, are less than the amount of its original capital or required unimpaired funds; or

     (3)  If any foreign company licensed to transact business in this state reinsures or accepts reinsurance on property located in this state for any company not authorized to transact the business of insurance in this state; provided, that § 56-1-102 does not apply to foreign marine policies.

[Acts 1895, ch. 160, § 12; Shan., § 3295; Acts 1919, ch. 170, § 1; Code 1932, § 6111; T.C.A. (orig. ed.), §§ 56-312, 56-234.]  

56-2-408 - Licenses of foreign insurance companies expire on July 1.

56-2-408. Licenses of foreign insurance companies expire on July 1.

All licenses authorizing foreign insurance companies to transact their business in the state shall terminate or expire on July 1 next succeeding the date of their issuance, unless sooner revoked by the commissioner.

[Acts 1903, ch. 442, § 1; 1917, ch. 65, § 1; Shan., § 3302a1; Code 1932, § 6119; Acts 1947, ch. 91, § 1; C. Supp. 1950, § 6119; T.C.A. (orig. ed.), §§ 56-313, 56-235.]  

56-2-409 - Renewal of license of foreign fire or marine companies Terms.

56-2-409. Renewal of license of foreign fire or marine companies Terms.

Renewal of a license to transact the business of fire, fire marine, or marine insurance in this state, for companies or associations not incorporated under the laws of this state, shall only be issued after the secretary or manager of the company or association desiring to renew the license to do business in this state has first made oath that no policy or contract of insurance covering property located in the state has been issued, written, or placed during the twelve (12) months preceding, except by resident local agents of the company or association in the state, duly commissioned, and until and after the company or association has complied with all other laws of this state in respect to the admission of companies of other states and foreign countries.

[Acts 1899, ch. 430, § 2; Shan., § 3369a60; Code 1932, § 6342; T.C.A. (orig. ed.), §§ 56-314, 56-236.]  

56-2-410 - Revocation of license of fire or marine companies Reinstatement.

56-2-410. Revocation of license of fire or marine companies Reinstatement.

(a)  If any fire, fire marine, or marine insurance company or association violates or fails to observe and comply with any or all of the provisions of § 56-2-409, this section and § 56-2-411 applicable to it, it immediately shall become the duty of the commissioner to investigate the company's or association's conduct, and if the commissioner is satisfied as to the guilt of the insurance company or association, it shall be the commissioner's duty to revoke the license of the company or association to transact business in this state, and the revocation shall continue for at least one (1) year from the date of revocation.

(b)  No insurance company or association whose authority to transact business in this state has been so revoked shall be again authorized or permitted to transact business until it has filed in the office of the commissioner a certificate, signed by its president or other chief officer, to the effect that the terms and obligations of § 56-2-409, this section and § 56-2-411 are accepted by it as a part of the condition of its right and authority to transact business in this state.

[Acts 1899, ch. 430, § 4; Shan., § 3369a62; Code 1932, § 6344; T.C.A. (orig. ed.), §§ 56-317, 56-239.]  

56-2-411 - Citizens procuring insurance with foreign fire or marine companies Liability for taxes.

56-2-411. Citizens procuring insurance with foreign fire or marine companies Liability for taxes.

Under §§ 56-2-409, 56-2-410 and this section are also included citizens of this state procuring and holding insurance contracts or policies in fire, fire marine, or marine insurance companies or associations upon property situated or located in this state in companies not authorized to transact business in this state; and the procuring or accepting policies or contracts of the insurance in the unauthorized companies or associations makes every citizen holding the contracts or policies liable for taxes, the same as if each company or association was duly authorized to transact business in this state.

[Acts 1899, ch. 430, § 5; Shan., § 3369a63; Code 1932, § 6345; T.C.A. (orig. ed.), §§ 56-318, 56-240.]  

56-2-412 - Retaliatory provisions Dividing commissions between agents.

56-2-412. Retaliatory provisions Dividing commissions between agents.

(a)  Whenever the laws of any other state of the United States require of insurance companies incorporated by or organized under the laws of this state, or the agents of the companies, any deposit of securities in such state for the protection of policyholders, or otherwise, greater than the amount required for similar purposes from similar companies of other states by the then existing laws of this state, then, in every such case, all companies of the states establishing an agency or agencies in this state shall be required to make the same deposit for a like purpose with the state treasurer and to pay into the state treasury the taxes, fines, penalties, license fees, or otherwise, an amount equal to the amount of the charges and payments imposed by law of such state upon companies of this state, and their agents.

(b)  Any commission received by a Tennessee resident agent may be shared with another resident agent or with a licensed nonresident insurance agent or broker; provided, that if the nonresident insurance agent or broker resides in, or is a licensed agent or broker in, a state that requires the retention of a stipulated percentage of the commission on risks placed in the state by nonresident agents or brokers, then and in that event the Tennessee resident agent shall require the same percentage of the commission as would be required if a Tennessee agent or broker placed similar insurance in the state of the residence of the nonresident insurance agent or broker; and provided further, that if the nonresident insurance agent or broker resides in a state, county or municipality that by statute or ordinance prohibits the division of commissions on insurance covering property or risks in the city, county or state of the nonresident agent or broker, then and in that event it shall be unlawful for the Tennessee resident agent or broker to pay the nonresident agent or broker any share or portion of the commission on insurance on property or risks in this state.

[Acts 1895, ch. 160, § 20; Shan., § 3304; Code 1932, § 6124; T.C.A. (orig. ed.), § 56-309; Acts 1955, ch. 128, § 1; T.C.A. (orig. ed.), § 56-241.]  

Part 5 - Service of Process

56-2-501 - Service and acknowledgment of service of process against incorporated domestic insurance companies.

56-2-501. Service and acknowledgment of service of process against incorporated domestic insurance companies.

(a)  Every insurance company incorporated under the laws of this state shall, by a duly executed instrument, constitute and appoint the commissioner, the commissioner's deputy and their successors in office its true and lawful attorneys, upon whom all lawful processes in any action or legal proceeding against it may be served and who may acknowledge any such lawful processes.

(b)  Every insurance company incorporated under the laws of this state shall agree that any lawful process against it that may be served upon its attorneys or upon which they may acknowledge service, shall be of the same force and validity as if served on the company, and that the authority thereof shall continue in force irrevocably as long as any liability of the company remains outstanding.

(c)  Any process issued by any court of record in this state and acknowledged by or served upon the commissioner or the commissioner's deputy by the proper officer of the county in which the office of commissioner or deputy is located shall be deemed a sufficient process on the company. It is the duty of the commissioner and deputy, immediately after service of process, to forward by registered return receipt mail to the company an exact copy of the process.

(d)  A record of each service of process shall be kept in the office of the commissioner, showing the date of service, the name of the company on whose behalf service was acknowledged, the name of the plaintiff or complainant, the date the defendant is required to answer, the court issuing the process, and the county in which the suit is brought.

(e)  The power of attorney shall be filed and kept in the office of the commissioner.

[Acts 1909, ch. 265, § 1; Shan., § 3292a2; mod. Code 1932, § 6108; T.C.A. (orig. ed.), §§ 56-237, 56-242.]  

56-2-502 - Service of process on foreign and alien companies Definitions.

56-2-502. Service of process on foreign and alien companies Definitions.

As used in this section and §§ 56-2-503 and 56-2-504:

     (1)  ?Alien insurance company? means an insurance company organized under the laws of any country other than the United States or territory or insular possession of the United States or of the District of Columbia;

     (2)  ?Doing business in this state? by any foreign or alien insurance company means the doing in this state by the company of any act whatsoever, whether interstate or intrastate in nature, including the soliciting, making, or delivering of insurance contracts in this state, by an agent, mail or otherwise;

     (3)  ?Foreign insurance company? means an insurance company organized under the laws of any state of the United States, other than this state, or under the law of any territory or insular possession of the United States or the District of Columbia; and

     (4)  ?Insurance company? means an insurance or surety company, including mutual companies, and includes a corporation, company, partnership, association, social, fraternal or otherwise, order, individual or aggregation of individuals engaging in or proposing or attempting to engage in any kind of insurance or surety business, including the exchange of reciprocal or interinsurance contracts between individuals, partnerships and corporations.

[Acts 1947, ch. 119, §§ 1, 2; C. Supp. 1950, § 6211.1 (Williams, §§ 6459.48, 6459.49); T.C.A. (orig. ed.), §§ 56-319, 56-243.]  

56-2-503 - Commissioner as attorney for purpose of process.

56-2-503. Commissioner as attorney for purpose of process.

(a)  Any foreign or alien insurance company, before doing business in this state, as defined in § 56-2-502, shall appoint the commissioner its true and lawful attorney as required by § 56-2-103(a)(3).

(b)  If the company does business in this state, as defined in § 56-2-502, without having appointed the commissioner its true and lawful attorney, as required in this part, it shall, by doing business in this state, be deemed to have thereby appointed the commissioner its true and lawful attorney for the purposes set forth in this part.

(c)  The requirements of this section shall be in addition to, and not in derogation of, any other law.

[Acts 1947, ch. 119, §§ 3-5; C. Supp. 1950, § 6211.2 (Williams, §§ 6459.50-6459.52); modified; T.C.A. (orig. ed.), § 56-320; impl. am. Acts 1971, ch. 137, § 2; T.C.A. (orig. ed.), § 56-244.]  

56-2-504 - Any lawful process may be served on commissioner or secretary of state Requirements.

56-2-504. Any lawful process may be served on commissioner or secretary of state Requirements.

(a)  When the commissioner has been appointed or constituted attorney for a foreign or alien insurance company, either by power of attorney or by failure to comply with § 56-2-503, any lawful process against or notice to the company in any action or proceeding against it from any cause of action arising in the state may be served on the commissioner, and filing the power of attorney or doing business in the state shall be a signification of its agreement that the process or notice served shall be of the same legal force and validity as if served upon it in the state. In case of any action or proceeding instituted by or on behalf of the commissioner against or with reference to the company, process may be lawfully served on the secretary of state.

(b)  Service of process shall be made by leaving two (2) copies of the process or notice, together with a fee of fifteen dollars ($15.00), in the office of the commissioner, together with an affidavit giving the last known address of the defendant, and the service shall be sufficient if notice of the service, and a copy of the process or notice are forthwith sent by registered mail, with return receipt requested, or certified mail by the commissioner to the company at the last known address. An affidavit of the commissioner showing compliance with this subsection (b) shall be filed with the paper in the action or proceeding.

(c)  The court in which the action or proceeding is pending may order continuances necessary to afford the defendant reasonable opportunity to defend the action. No judgment shall be entered against the defendant under this section until at least thirty (30) days have elapsed after process or notice has been served on the commissioner.

(d)  The references in this section to the commissioner shall, in the case of any action or proceeding instituted by or on behalf of the commissioner, be deemed to refer to the secretary of state, and the duties and responsibilities imposed by this section shall, in such cases, be performed and discharged by the secretary of state.

[Acts 1947, ch. 119, §§ 6, 7; C. Supp. 1950, § 6211.3 (Williams, §§ 6459.53, 6459.54); Acts 1953, ch. 136, § 1; T.C.A. (orig. ed.), § 56-321; impl. am. Acts 1971, ch. 137, § 2; Acts 1976, ch. 476, § 1; impl. am. Acts 1971, ch. 137, § 2; T.C.A., § 56-245; Acts 1980, ch. 821, §§ 1, 2; 2001, ch. 333, § 1.]  

56-2-505 - Unauthorized insurers doing business constitutes secretary of state as attorney for service of process.

56-2-505. Unauthorized insurers doing business constitutes secretary of state as attorney for service of process.

(a)  Any act of entering into a contract of insurance as an insurer or transacting insurance business in this state, as set forth in § 56-2-107, by an unauthorized foreign or alien company, is equivalent to and constitutes an appointment by the company of the secretary of state to be its true and lawful attorney upon whom may be served all lawful process in any action or proceeding against it:

     (1)  Arising out of a violation of § 56-2-105; or

     (2)  To collect the taxes imposed in chapter 4 of this title.

(b)  The performance of any of the acts enumerated in § 56-2-107 is signification of the company's agreement that any such process against it that is so served is of the same legal force and validity as if served upon the company.

[Acts 1968, ch. 536, § 7; T.C.A., § 56-255.]  

56-2-506 - Method of service Notice to defendant Filing with clerk.

56-2-506. Method of service Notice to defendant Filing with clerk.

(a)  Service of process shall be made by delivering and leaving with the secretary of state two (2) copies of the process.

(b)  The secretary of state shall forthwith mail by registered mail one (1) of the copies of the process to the company at its last known principal place of business, and shall keep a record of all process so served upon the secretary of state.

(c)  The service shall be sufficient service upon the company; provided, that notice of the service and a copy of the process are, within ten (10) days thereafter, sent by registered mail by or on behalf of the commissioner to the company at its last known principal place of business; and provided, further, that the receipt by the secretary of state and an affidavit of compliance with this section by or on behalf of the commissioner are filed with the clerk of the court in which the action or proceeding is pending on or before the return date of the process or within any further time that the court allows.

[Acts 1968, ch. 536, § 8; T.C.A., § 56-256.]  

56-2-507 - Continuance may be granted Motion to quash or set aside service.

56-2-507. Continuance may be granted Motion to quash or set aside service.

(a)  The court in any action or proceeding in which service is made in the manner provided in § 56-2-506 may, in its discretion, order a postponement necessary to afford the company reasonable opportunity to defend the action or proceeding.

(b)  Nothing in this section is to be construed to prevent an unauthorized foreign or alien company from filing a motion to quash a writ or to set aside service of the motion made in the manner provided in § 56-2-506 on the ground that the unauthorized company has not done any of the acts referred to in § 56-2-107.

[Acts 1968, ch. 536, § 9; T.C.A., § 56-257.]  

56-2-508 - Time allowed before judgment.

56-2-508. Time allowed before judgment.

No judgment by default shall be entered in the action or proceeding until the expiration of thirty (30) days from the date of the filing of the affidavit of compliance.

[Acts 1968, ch. 536, § 10; T.C.A., § 56-258.]  

56-2-509 - Provisions supplemental.

56-2-509. Provisions supplemental.

Nothing in §§ 56-2-505 56-2-508 or this section shall limit or affect the right to serve any process, notice or demand required or permitted by law to be served upon any company in any other manner now or hereafter permitted by law.

[Acts 1968, ch. 536, § 11; T.C.A., § 56-259.]  

Part 6 - Unauthorized Insurers Process Act

56-2-601 - Short title.

56-2-601. Short title.

This part shall be known and may be cited as the ?Unauthorized Insurers Process Act.?

[Acts 1955, ch. 2, § 6; T.C.A., §§ 56-327, 56-246.]  

56-2-602 - Acts constituting commissioner as attorney for service of process.

56-2-602. Acts constituting commissioner as attorney for service of process.

(a)  Any of the following acts in this state, effected by mail or otherwise, by an unauthorized foreign or alien insurer, is equivalent to and shall constitute an appointment by the insurer of the commissioner and the commissioner's successor or successors in office, to be its true and lawful attorney, upon whom may be served all lawful process in any action, suit, or proceeding instituted by or on behalf of an insured or beneficiary arising out of the contract of insurance:

     (1)  The issuance or delivery of contracts of insurance to residents of this state or to corporations authorized to do business in this state;

     (2)  The solicitation of applications for the contracts;

     (3)  The collection of premiums, membership fees, assessments or other considerations for the contracts; or

     (4)  Any other transaction of insurance business.

(b)  Any of the acts mentioned in subdivsions (a)(1)-(4) shall be signification of the insurer's agreement that the service of process is of the same legal force and validity as personal service of process in this state upon the insurer.

[Acts 1955, ch. 2, § 2; T.C.A., § 56-328; modified; T.C.A., § 56-247.]  

56-2-603 - Method of service Notice to defendant.

56-2-603. Method of service Notice to defendant.

(a)  The service of process shall be made by delivering to and leaving with the commissioner or some person in apparent charge of the commissioner's office two (2) copies of the service of process and the payment to the commissioner or other person of the fees prescribed by law.

(b)  The commissioner shall forthwith mail by registered mail one (1) of the copies of the process to the defendant at its last known principal place of business, and shall keep a record of all process so served upon the commissioner.

(c)  The service of process is sufficient; provided, that notice of the service and a copy of the process are sent within ten (10) days thereafter by registered mail by plaintiff or plaintiff's attorney to the defendant at its last known principal place of business, and the defendant's receipt, or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing a compliance with this section are filed with the clerk of the court in which the action is pending on or before the date the defendant is required to appear, or within a further time that the court allows.

[Acts 1955, ch. 2, § 2; T.C.A., §§ 56-329, 56-248.]  

56-2-604 - Personal service on agent or representative Copy of process to defendant Filing with clerk.

56-2-604. Personal service on agent or representative Copy of process to defendant Filing with clerk.

Service of process in the action, suit or proceeding shall, in addition to the manner provided in § 56-2-603, be valid if:

     (1)  Served upon any person within the state who, in this state on behalf of the insurer is soliciting insurance, is making, issuing or delivering any contract of insurance, or collecting or receiving any premium, membership fee, assessment or other consideration for insurance;

     (2)  A copy of the process is sent within ten (10) days thereafter by registered mail by the plaintiff or plaintiff's attorney to the defendant at the last known principal place of business of the defendant; and

     (3)  The defendant's receipt, or the receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing a compliance with this section are filed with the clerk of the court in which the action is pending on or before the date the defendant is required to appear, or within a further time that the court allows.

[Acts 1955, ch. 2, § 2; T.C.A., §§ 56-330, 56-249.]  

56-2-605 - Time allowed before judgment.

56-2-605. Time allowed before judgment.

No plaintiff or complainant shall be entitled to a judgment by default, or a judgment with leave to prove damages, or a judgment pro confesso under §§ 56-2-602 56-2-604, this section and § 56-2-606 until the expiration of thirty (30) days from the date of the filing of the affidavit of compliance.

[Acts 1955, ch. 2, § 2; T.C.A., §§ 56-331, 56-250.]  

56-2-606 - Provisions supplemental.

56-2-606. Provisions supplemental.

Nothing contained in §§ 56-2-602 56-2-605 and this section shall limit or abridge the right to serve any process, notice or demand upon any insurer in any other manner now or hereafter permitted by law.

[Acts 1955, ch. 2, § 2; T.C.A., §§ 56-332, 56-251.]  

56-2-607 - Defense by insurer Bond or certificate of authority.

56-2-607. Defense by insurer Bond or certificate of authority.

Before any unauthorized foreign or alien insurer files or causes to be filed any pleading in any action, suit or proceeding instituted against it, the unauthorized insurer shall:

     (1)  Deposit with the clerk of the court in which the action, suit or proceeding is pending cash or securities or file with the clerk a bond with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure the payment of any final judgment that may be rendered in the action; or

     (2)  Procure a certificate of authority to transact the business of insurance in this state.

[Acts 1955, ch. 2, § 3; T.C.A., §§ 56-333, 56-252.]  

56-2-608 - Discretionary continuances.

56-2-608. Discretionary continuances.

The court, in any action, suit or proceeding in which service is made in the manner provided in § 56-2-603 or § 56-2-604, may, in its discretion, order a postponement that may be necessary to afford the defendant reasonable opportunity to comply with § 56-2-607, and to defend the action.

[Acts 1955, ch. 2, § 3; T.C.A., §§ 56-334, 56-253.]  

56-2-609 - Motions to quash or set aside service.

56-2-609. Motions to quash or set aside service.

Nothing in § 56-2-607 is to be construed to prevent an unauthorized foreign or alien insurer from filing a motion to quash a writ or to set aside service of the motion made in the manner provided in § 56-2-603 or § 56-2-604 on the ground either that:

     (1)  The unauthorized insurer has not done any of the acts enumerated in § 56-2-602; or

     (2)  The person on whom service was made pursuant to § 56-2-604 was not doing any of the acts enumerated in § 56-2-604.

[Acts 1955, ch. 2, § 3; T.C.A., §§ 56-335, 56-254.]  

Part 7 - Enforcement of Decisions and Orders

56-2-701 - Enforcement of orders or decisions against unauthorized insurers.

56-2-701. Enforcement of orders or decisions against unauthorized insurers.

Upon the request of the commissioner, the attorney general and reporter may proceed in the courts of this state, or any reciprocal state, to enforce any order or decision in any court proceeding, or in any administrative proceeding before the commissioner, against any insurer arising out of a violation of §§ 56-2-105 56-2-111.

[Acts 1969, ch. 315, § 1; impl. am. Acts 1971, ch. 137, § 2; T.C.A., § 56-260.]  

56-2-702 - Part definitions.

56-2-702. Part definitions.

As used in this part:

     (1)  ?Foreign decree? means any decree or order in equity of a court located in a reciprocal state, including a court of the United States located in the reciprocal state, against any insurer incorporated or authorized to do business in this state;

     (2)  ?Qualified party? means a state regulatory agency acting in its capacity to enforce the insurance laws of its state; and

     (3)  ?Reciprocal state? means any state or territory of the United States, the laws of which contain procedures substantially similar to those specified in this part for the enforcement of decrees or orders in equity issued by courts located in other states or territories of the United States, against any insurer incorporated or authorized to do business in the state or territory.

[Acts 1969, ch. 315, § 1; T.C.A., § 56-261.]  

56-2-703 - List of reciprocal states.

56-2-703. List of reciprocal states.

The commissioner shall determine which states and territories qualify as reciprocal states and shall maintain at all times an up-to-date list of those states.

[Acts 1969, ch. 315, § 1; T.C.A., § 56-262.]  

56-2-704 - Enforcement of foreign decrees.

56-2-704. Enforcement of foreign decrees.

(a)  Filing and Status. 

     (1)  A copy of any foreign decree authenticated in accordance with the statutes of this state may be filed in the office of the clerk of the chancery court of Davidson County.

     (2)  The clerk, upon verifying with the commissioner that the decree or order qualifies as a foreign decree, shall treat the foreign decree in the same manner as a decree of that court. A foreign decree so filed has the same effect and shall be deemed as a decree of that court, and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a decree of that court and may be enforced or satisfied in like manner.

(b)  Notice of Filing. 

     (1)  At the time of the filing of the foreign decree, the attorney general and reporter shall make and file with the clerk of the chancery court of Davidson County an affidavit setting forth the name and last known post office address of the defendant.

     (2)  Promptly upon the filing of the foreign decree and the affidavit, the clerk shall mail notice of the filing of the foreign decree to the defendant at the address given and to the commissioner and shall make a note of the mailing in the docket. In addition, the attorney general and reporter may mail a notice of the filing of the foreign decree to the defendant and to the commissioner and may file proof of mailing with the clerk. Lack of mailing notice of filing by the clerk shall not affect the enforcement proceedings if proof of mailing by the attorney general and reporter has been filed.

     (3)  No execution or other process for enforcement of a foreign decree filed under this part shall issue until thirty (30) days after the decree is filed.

(c)  Stay. 

     (1)  If the defendant shows the chancery court of Davidson County that an appeal from the foreign decree is pending or will be taken, or that a stay of execution has been granted, that court shall stay enforcement of the foreign decree until the appeal is concluded, the time for appeal expires, or the stay of execution expires or is vacated, upon proof that the defendant has furnished the security for the satisfaction of the decree required by the state in which it was rendered.

     (2)  If the defendant shows the court any ground upon which enforcement of a decree of the court would be stayed, the court shall stay enforcement of the foreign decree for an appropriate period, upon requiring the same security for satisfaction of the decree that is required in this state.

(d)  Fees. 

Fees for docketing, transcription or other enforcement proceedings shall be as provided for decrees of the chancery court of Davidson County.

[Acts 1969, ch. 315, § 1; T.C.A., § 56-263.]  

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