Tenn. Code Ann. § 56-45-103 — TN Code / Title 56 / Chapter 45 / Section 56-45-103
Risk retention groups - Permitted liability insurance - Plan of operation or feasibility study - Application for charter - Contents - Governance standards
Status: in_force

(a) A risk retention group shall, pursuant to this chapter, be chartered and licensed to write only liability insurance pursuant to this chapter and, except as provided elsewhere in this chapter, must comply with all of the laws, rules, regulations and requirements applicable to the insurers chartered and licensed in this state and with § 56-45-104 , to the extent the requirements are not a limitation on laws, rules, regulations or requirements of this state. (b) Before it may offer insurance in any state, each risk retention group shall also submit for approval to the commissioner a plan of operation or feasibility study. The risk retention group shall submit an appropriate revision in the event of any subsequent material change in any item of the plan of operation or feasibility study, within ten (10) days of the change. The group shall not offer any additional kinds of liability insurance, in this state or in any other state, until a revision of the plan or study is approved by the commissioner. (c) (1) At the time of filing its application for a charter, the risk retention group shall provide to the commissioner in summary form the following information: (A) The identity of the initial members of the group; (B) The identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group; (C) The amount and nature of initial capitalization; (D) The coverages to be afforded; and (E) The states in which the group intends to operate. (2) Upon receipt of this information, the commissioner shall forward the information to the National Association of Insurance Commissioners. (3) Providing notification to the National Association of Insurance Commissioners is in addition to, and does not suffice as, satisfying the requirements of § 56-45-104 or any other sections of this chapter. (d) Governance Standards For Risk Retention Groups. Within one (1) year of April 7, 2016, existing risk retention groups shall ensure compliance with the following governance standards. Risk retention groups that are licensed on or after April 7, 2016, shall be in compliance with the following standards at the time of licensure: (1) (A) The board of directors of the risk retention group shall have a majority of independent directors. If the risk retention group is a reciprocal, then the attorney-in-fact would be required to adhere to the same standards regarding independence of operation and governance as imposed on the risk retention group's board of directors/subscribers advisory committee under the standards set out in this subsection (d); and, to the extent permissible under state law, service providers of a reciprocal risk retention group should contract with the risk retention group and not the attorney-in-fact; (B) No director qualifies as "independent" unless the board of directors affirmatively determines that the director has no material relationship with the risk retention group. Each risk retention group shall disclose these determinations to its domestic regulator, at least annually. For purposes of this subdivision (d)(1)(B), any person who is a direct or indirect owner of or subscriber in the risk retention group (or is an officer, director, or employee of such an owner and insured, unless some other position of such officer, director, or employee constitutes a material relationship), as contemplated by 15 U.S.C. § 3901(a)(4)(E)(ii) of the Liability Risk Retention Act, is considered to be "independent;" (2) Service Provider Contracts. (A) The term of any material service provider contract with the risk retention group shall not exceed five (5) years. Any such contract, or its renewal, shall require the approval of the majority of the risk retention group's independent directors. The risk retention group's board of directors shall have the right to terminate any service provider, audit or actuarial contract at any time for cause after providing adequate notice pursuant to the terms of the contract. The service provider contract is deemed material if the amount to be paid for such contract is greater than or equal to five percent (5%) of the risk retention group's annual gross written premium or two percent (2%) of its surplus, whichever is greater; (B) No service provider contract constituting a material relationship shall be entered into unless the risk retention group has notified the commissioner in writing of its intention to enter into such transaction at least thirty (30) days prior to entering into the proposed transaction and the commissioner has not disapproved it within such period; (3) Written Policy. The risk retention group's board of directors shall adopt a written policy in the plan of operation as approved by the board that requires the board to: (A) Assure that all owner and insureds of the risk retention group receive evidence of ownership interest; (B) Develop a set of governance standards applicable to the risk retention group; (C) Oversee the evaluation of the risk retention group's management, including, but not limited to, the performance of the captive manager, managing general underwriter or other party or parties responsible for underwriting, determination of rates, collection of premium, adjusting or settling claims, or the preparation of financial statements; (D) Review and approve the amount to be paid to material service providers; and (E) Review and approve, at least annually: (i) The risk retention group's goals and objectives relevant to the compensation of officers and service providers; (ii) The officers' and service providers' performance in accordance with those goals and objectives; and (iii) The continued engagement of the officers and material service providers; (4) Audit Committee. (A) The risk retention group shall have an audit committee composed of at least three (3) independent board members. A non-independent board member may participate in the activities of the audit committee, if invited by the members, but cannot be a member of such committee; (B) The audit committee shall have a written charter that defines the committee's purpose, which, at a minimum, must be to: (i) Assist board oversight of the: (a) Integrity of the risk retention group's financial statements; (b) Compliance with legal and regulatory requirements; and (c) Qualifications, independence, and performance of the independent auditor and actuary; (ii) Discuss the annual audited financial statements and quarterly financial statements with management; (iii) Discuss the annual audited financial statements with the independent auditor and, if advisable, discuss quarterly financial statements with the independent auditor; (iv) Discuss policies with respect to risk assessment and risk management; (v) Meet separately and periodically, either directly or through a designated representative of the committee, with management and independent auditors; (vi) Review with the independent auditor any audit problems or difficulties and management's response; (vii) Set clear hiring policies of the risk retention group regarding the hiring of employees or former employees of the independent auditor; (viii) Require the external auditor to rotate the lead (or coordinating) audit partner having primary responsibility for the risk retention group's audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for a particular risk retention group for more than five (5) consecutive fiscal years; and (ix) Report regularly to the board of directors; (C) The domestic regulator may waive the requirement to establish an audit committee composed of independent board members if the risk retention group is able to demonstrate to the domestic regulator that it is impracticable to do so and the risk retention group's board of directors itself is otherwise able to accomplish the purposes of an audit committee, as described in subdivision (d)(4)(B); (5) Governance Standards. The board of directors shall adopt governance standards and shall make such standards available electronically, including, but not limited to, posting such information on the risk retention group's web site, or by other means, and provide such information to members/insureds upon request. Governance standards shall include: (A) The process by which the directors are elected by the owner and insureds; (B) Director qualification standards; (C) Director responsibilities; (D) Director access to management and, as necessary and appropriate, independent advisors; (E) Director compensation; (F) Director orientation and continuing education; (G) Management succession policies and procedures; and (H) The policies and procedures that are followed for annual performance evaluation of the board; (6) Business Conduct and Ethics. The board of directors shall adopt and disclose a code of business conduct and ethics for directors, officers and employees and promptly disclose to the board of directors any waivers of the code for directors or executive officers. The code shall address the following topics: (A) Conflicts of interest; (B) Matters subject to the corporate opportunities doctrine under the group's state of domicile; (C) Confidentiality; (D) Fair dealing; (E) Protection and proper use of risk retention group assets; (F) Compliance with all applicable laws, rules, and regulations; and (G) Mandatory reporting of any illegal or unethical behavior which affects the operation of the risk retention group; (7) The captive manager, president, or chief executive officer of the risk retention group shall promptly notify the domestic regulator in writing if either becomes aware of any material noncompliance with any of these governance standards; and (8) For purposes of this subsection (d): (A) "Board of directors" or "board" means the governing body of the risk retention group elected by the owners and insureds to establish policy, elect or appoint officers and committees, and make other governing decisions; (B) "Director" means a natural person designated in the formation documents of the risk retention group, or designated, elected or appointed by any other manner, name or title to act as a director; (C) "Material relationship" includes, but is not limited to: (i) The receipt, in any twelve-month period, of compensation or payment of any other item of value by a person, a member of the person's immediate family or any business with which the person is affiliated from the risk retention group, or a consultant or service provider to the risk retention group that is greater than or equal to five percent (5%) of the risk retention group's gross written premium for such twelve-month period or two percent (2%) of its surplus, whichever is greater, as measured at the end of any fiscal quarter falling in such twelve-month period. Such person or the person's immediate family member shall not be independent until one (1) year after the person's compensation from the risk retention group falls below the threshold; (ii) In regards to a relationship with an auditor, a director or an immediate family member of a director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not independent until one (1) year after the end of the affiliation, employment, or auditing relationship; or (iii) In regards to a relationship with a related entity, a director or immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group's present executives serve on that other company's board of directors is not independent until one (1) year after the end of such service or the employment relationship; and (D) "Service providers" includes captive managers, auditors, accountants, attorneys, actuaries, investment advisors, managing general underwriters or other parties responsible for underwriting, determination of rates, collection of premium, adjusting and settling claims, or the preparation of financial statements. Any reference to attorneys in this subdivision (d)(8)(D) does not include defense counsel retained by the risk retention group to defend claims, unless the amount of fees paid to such attorneys are material as referenced in subdivision (d)(8)(C). Amended by 2016 Tenn. Acts, ch. 735,s 1, eff. 4/7/2016. Acts 1991, ch. 142, § 6; 1993, ch. 253, § 10.
(a) A risk retention group shall, pursuant to this chapter, be chartered and licensed to write only liability insurance pursuant to this chapter and, except as provided elsewhere in this chapter, must comply with all of the laws, rules, regulations and requirements applicable to the insurers chartered and licensed in this state and with § 56-45-104 , to the extent the requirements are not a limitation on laws, rules, regulations or requirements of this state.
(b) Before it may offer insurance in any state, each risk retention group shall also submit for approval to the commissioner a plan of operation or feasibility study. The risk retention group shall submit an appropriate revision in the event of any subsequent material change in any item of the plan of operation or feasibility study, within ten (10) days of the change. The group shall not offer any additional kinds of liability insurance, in this state or in any other state, until a revision of the plan or study is approved by the commissioner.
(c) (1) At the time of filing its application for a charter, the risk retention group shall provide to the commissioner in summary form the following information: (A) The identity of the initial members of the group; (B) The identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group; (C) The amount and nature of initial capitalization; (D) The coverages to be afforded; and (E) The states in which the group intends to operate. (2) Upon receipt of this information, the commissioner shall forward the information to the National Association of Insurance Commissioners. (3) Providing notification to the National Association of Insurance Commissioners is in addition to, and does not suffice as, satisfying the requirements of § 56-45-104 or any other sections of this chapter.
(1) At the time of filing its application for a charter, the risk retention group shall provide to the commissioner in summary form the following information: (A) The identity of the initial members of the group; (B) The identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group; (C) The amount and nature of initial capitalization; (D) The coverages to be afforded; and (E) The states in which the group intends to operate.
(A) The identity of the initial members of the group;
(B) The identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group;
(C) The amount and nature of initial capitalization;
(D) The coverages to be afforded; and
(E) The states in which the group intends to operate.
(2) Upon receipt of this information, the commissioner shall forward the information to the National Association of Insurance Commissioners.
(3) Providing notification to the National Association of Insurance Commissioners is in addition to, and does not suffice as, satisfying the requirements of § 56-45-104 or any other sections of this chapter.
(d) Governance Standards For Risk Retention Groups. Within one (1) year of April 7, 2016, existing risk retention groups shall ensure compliance with the following governance standards. Risk retention groups that are licensed on or after April 7, 2016, shall be in compliance with the following standards at the time of licensure: (1) (A) The board of directors of the risk retention group shall have a majority of independent directors. If the risk retention group is a reciprocal, then the attorney-in-fact would be required to adhere to the same standards regarding independence of operation and governance as imposed on the risk retention group's board of directors/subscribers advisory committee under the standards set out in this subsection (d); and, to the extent permissible under state law, service providers of a reciprocal risk retention group should contract with the risk retention group and not the attorney-in-fact; (B) No director qualifies as "independent" unless the board of directors affirmatively determines that the director has no material relationship with the risk retention group. Each risk retention group shall disclose these determinations to its domestic regulator, at least annually. For purposes of this subdivision (d)(1)(B), any person who is a direct or indirect owner of or subscriber in the risk retention group (or is an officer, director, or employee of such an owner and insured, unless some other position of such officer, director, or employee constitutes a material relationship), as contemplated by 15 U.S.C. § 3901(a)(4)(E)(ii) of the Liability Risk Retention Act, is considered to be "independent;" (2) Service Provider Contracts. (A) The term of any material service provider contract with the risk retention group shall not exceed five (5) years. Any such contract, or its renewal, shall require the approval of the majority of the risk retention group's independent directors. The risk retention group's board of directors shall have the right to terminate any service provider, audit or actuarial contract at any time for cause after providing adequate notice pursuant to the terms of the contract. The service provider contract is deemed material if the amount to be paid for such contract is greater than or equal to five percent (5%) of the risk retention group's annual gross written premium or two percent (2%) of its surplus, whichever is greater; (B) No service provider contract constituting a material relationship shall be entered into unless the risk retention group has notified the commissioner in writing of its intention to enter into such transaction at least thirty (30) days prior to entering into the proposed transaction and the commissioner has not disapproved it within such period; (3) Written Policy. The risk retention group's board of directors shall adopt a written policy in the plan of operation as approved by the board that requires the board to: (A) Assure that all owner and insureds of the risk retention group receive evidence of ownership interest; (B) Develop a set of governance standards applicable to the risk retention group; (C) Oversee the evaluation of the risk retention group's management, including, but not limited to, the performance of the captive manager, managing general underwriter or other party or parties responsible for underwriting, determination of rates, collection of premium, adjusting or settling claims, or the preparation of financial statements; (D) Review and approve the amount to be paid to material service providers; and (E) Review and approve, at least annually: (i) The risk retention group's goals and objectives relevant to the compensation of officers and service providers; (ii) The officers' and service providers' performance in accordance with those goals and objectives; and (iii) The continued engagement of the officers and material service providers; (4) Audit Committee. (A) The risk retention group shall have an audit committee composed of at least three (3) independent board members. A non-independent board member may participate in the activities of the audit committee, if invited by the members, but cannot be a member of such committee; (B) The audit committee shall have a written charter that defines the committee's purpose, which, at a minimum, must be to: (i) Assist board oversight of the: (a) Integrity of the risk retention group's financial statements; (b) Compliance with legal and regulatory requirements; and (c) Qualifications, independence, and performance of the independent auditor and actuary; (ii) Discuss the annual audited financial statements and quarterly financial statements with management; (iii) Discuss the annual audited financial statements with the independent auditor and, if advisable, discuss quarterly financial statements with the independent auditor; (iv) Discuss policies with respect to risk assessment and risk management; (v) Meet separately and periodically, either directly or through a designated representative of the committee, with management and independent auditors; (vi) Review with the independent auditor any audit problems or difficulties and management's response; (vii) Set clear hiring policies of the risk retention group regarding the hiring of employees or former employees of the independent auditor; (viii) Require the external auditor to rotate the lead (or coordinating) audit partner having primary responsibility for the risk retention group's audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for a particular risk retention group for more than five (5) consecutive fiscal years; and (ix) Report regularly to the board of directors; (C) The domestic regulator may waive the requirement to establish an audit committee composed of independent board members if the risk retention group is able to demonstrate to the domestic regulator that it is impracticable to do so and the risk retention group's board of directors itself is otherwise able to accomplish the purposes of an audit committee, as described in subdivision (d)(4)(B); (5) Governance Standards. The board of directors shall adopt governance standards and shall make such standards available electronically, including, but not limited to, posting such information on the risk retention group's web site, or by other means, and provide such information to members/insureds upon request. Governance standards shall include: (A) The process by which the directors are elected by the owner and insureds; (B) Director qualification standards; (C) Director responsibilities; (D) Director access to management and, as necessary and appropriate, independent advisors; (E) Director compensation; (F) Director orientation and continuing education; (G) Management succession policies and procedures; and (H) The policies and procedures that are followed for annual performance evaluation of the board; (6) Business Conduct and Ethics. The board of directors shall adopt and disclose a code of business conduct and ethics for directors, officers and employees and promptly disclose to the board of directors any waivers of the code for directors or executive officers. The code shall address the following topics: (A) Conflicts of interest; (B) Matters subject to the corporate opportunities doctrine under the group's state of domicile; (C) Confidentiality; (D) Fair dealing; (E) Protection and proper use of risk retention group assets; (F) Compliance with all applicable laws, rules, and regulations; and (G) Mandatory reporting of any illegal or unethical behavior which affects the operation of the risk retention group; (7) The captive manager, president, or chief executive officer of the risk retention group shall promptly notify the domestic regulator in writing if either becomes aware of any material noncompliance with any of these governance standards; and (8) For purposes of this subsection (d): (A) "Board of directors" or "board" means the governing body of the risk retention group elected by the owners and insureds to establish policy, elect or appoint officers and committees, and make other governing decisions; (B) "Director" means a natural person designated in the formation documents of the risk retention group, or designated, elected or appointed by any other manner, name or title to act as a director; (C) "Material relationship" includes, but is not limited to: (i) The receipt, in any twelve-month period, of compensation or payment of any other item of value by a person, a member of the person's immediate family or any business with which the person is affiliated from the risk retention group, or a consultant or service provider to the risk retention group that is greater than or equal to five percent (5%) of the risk retention group's gross written premium for such twelve-month period or two percent (2%) of its surplus, whichever is greater, as measured at the end of any fiscal quarter falling in such twelve-month period. Such person or the person's immediate family member shall not be independent until one (1) year after the person's compensation from the risk retention group falls below the threshold; (ii) In regards to a relationship with an auditor, a director or an immediate family member of a director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not independent until one (1) year after the end of the affiliation, employment, or auditing relationship; or (iii) In regards to a relationship with a related entity, a director or immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group's present executives serve on that other company's board of directors is not independent until one (1) year after the end of such service or the employment relationship; and (D) "Service providers" includes captive managers, auditors, accountants, attorneys, actuaries, investment advisors, managing general underwriters or other parties responsible for underwriting, determination of rates, collection of premium, adjusting and settling claims, or the preparation of financial statements. Any reference to attorneys in this subdivision (d)(8)(D) does not include defense counsel retained by the risk retention group to defend claims, unless the amount of fees paid to such attorneys are material as referenced in subdivision (d)(8)(C).
(1) (A) The board of directors of the risk retention group shall have a majority of independent directors. If the risk retention group is a reciprocal, then the attorney-in-fact would be required to adhere to the same standards regarding independence of operation and governance as imposed on the risk retention group's board of directors/subscribers advisory committee under the standards set out in this subsection (d); and, to the extent permissible under state law, service providers of a reciprocal risk retention group should contract with the risk retention group and not the attorney-in-fact; (B) No director qualifies as "independent" unless the board of directors affirmatively determines that the director has no material relationship with the risk retention group. Each risk retention group shall disclose these determinations to its domestic regulator, at least annually. For purposes of this subdivision (d)(1)(B), any person who is a direct or indirect owner of or subscriber in the risk retention group (or is an officer, director, or employee of such an owner and insured, unless some other position of such officer, director, or employee constitutes a material relationship), as contemplated by 15 U.S.C. § 3901(a)(4)(E)(ii) of the Liability Risk Retention Act, is considered to be "independent;"
(A) The board of directors of the risk retention group shall have a majority of independent directors. If the risk retention group is a reciprocal, then the attorney-in-fact would be required to adhere to the same standards regarding independence of operation and governance as imposed on the risk retention group's board of directors/subscribers advisory committee under the standards set out in this subsection (d); and, to the extent permissible under state law, service providers of a reciprocal risk retention group should contract with the risk retention group and not the attorney-in-fact;
(B) No director qualifies as "independent" unless the board of directors affirmatively determines that the director has no material relationship with the risk retention group. Each risk retention group shall disclose these determinations to its domestic regulator, at least annually. For purposes of this subdivision (d)(1)(B), any person who is a direct or indirect owner of or subscriber in the risk retention group (or is an officer, director, or employee of such an owner and insured, unless some other position of such officer, director, or employee constitutes a material relationship), as contemplated by 15 U.S.C. § 3901(a)(4)(E)(ii) of the Liability Risk Retention Act, is considered to be "independent;"
(2) Service Provider Contracts. (A) The term of any material service provider contract with the risk retention group shall not exceed five (5) years. Any such contract, or its renewal, shall require the approval of the majority of the risk retention group's independent directors. The risk retention group's board of directors shall have the right to terminate any service provider, audit or actuarial contract at any time for cause after providing adequate notice pursuant to the terms of the contract. The service provider contract is deemed material if the amount to be paid for such contract is greater than or equal to five percent (5%) of the risk retention group's annual gross written premium or two percent (2%) of its surplus, whichever is greater; (B) No service provider contract constituting a material relationship shall be entered into unless the risk retention group has notified the commissioner in writing of its intention to enter into such transaction at least thirty (30) days prior to entering into the proposed transaction and the commissioner has not disapproved it within such period;
(A) The term of any material service provider contract with the risk retention group shall not exceed five (5) years. Any such contract, or its renewal, shall require the approval of the majority of the risk retention group's independent directors. The risk retention group's board of directors shall have the right to terminate any service provider, audit or actuarial contract at any time for cause after providing adequate notice pursuant to the terms of the contract. The service provider contract is deemed material if the amount to be paid for such contract is greater than or equal to five percent (5%) of the risk retention group's annual gross written premium or two percent (2%) of its surplus, whichever is greater;
(B) No service provider contract constituting a material relationship shall be entered into unless the risk retention group has notified the commissioner in writing of its intention to enter into such transaction at least thirty (30) days prior to entering into the proposed transaction and the commissioner has not disapproved it within such period;
(3) Written Policy. The risk retention group's board of directors shall adopt a written policy in the plan of operation as approved by the board that requires the board to: (A) Assure that all owner and insureds of the risk retention group receive evidence of ownership interest; (B) Develop a set of governance standards applicable to the risk retention group; (C) Oversee the evaluation of the risk retention group's management, including, but not limited to, the performance of the captive manager, managing general underwriter or other party or parties responsible for underwriting, determination of rates, collection of premium, adjusting or settling claims, or the preparation of financial statements; (D) Review and approve the amount to be paid to material service providers; and (E) Review and approve, at least annually: (i) The risk retention group's goals and objectives relevant to the compensation of officers and service providers; (ii) The officers' and service providers' performance in accordance with those goals and objectives; and (iii) The continued engagement of the officers and material service providers;
(A) Assure that all owner and insureds of the risk retention group receive evidence of ownership interest;
(B) Develop a set of governance standards applicable to the risk retention group;
(C) Oversee the evaluation of the risk retention group's management, including, but not limited to, the performance of the captive manager, managing general underwriter or other party or parties responsible for underwriting, determination of rates, collection of premium, adjusting or settling claims, or the preparation of financial statements;
(D) Review and approve the amount to be paid to material service providers; and
(E) Review and approve, at least annually: (i) The risk retention group's goals and objectives relevant to the compensation of officers and service providers; (ii) The officers' and service providers' performance in accordance with those goals and objectives; and (iii) The continued engagement of the officers and material service providers;
(i) The risk retention group's goals and objectives relevant to the compensation of officers and service providers;
(ii) The officers' and service providers' performance in accordance with those goals and objectives; and
(iii) The continued engagement of the officers and material service providers;
(4) Audit Committee. (A) The risk retention group shall have an audit committee composed of at least three (3) independent board members. A non-independent board member may participate in the activities of the audit committee, if invited by the members, but cannot be a member of such committee; (B) The audit committee shall have a written charter that defines the committee's purpose, which, at a minimum, must be to: (i) Assist board oversight of the: (a) Integrity of the risk retention group's financial statements; (b) Compliance with legal and regulatory requirements; and (c) Qualifications, independence, and performance of the independent auditor and actuary; (ii) Discuss the annual audited financial statements and quarterly financial statements with management; (iii) Discuss the annual audited financial statements with the independent auditor and, if advisable, discuss quarterly financial statements with the independent auditor; (iv) Discuss policies with respect to risk assessment and risk management; (v) Meet separately and periodically, either directly or through a designated representative of the committee, with management and independent auditors; (vi) Review with the independent auditor any audit problems or difficulties and management's response; (vii) Set clear hiring policies of the risk retention group regarding the hiring of employees or former employees of the independent auditor; (viii) Require the external auditor to rotate the lead (or coordinating) audit partner having primary responsibility for the risk retention group's audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for a particular risk retention group for more than five (5) consecutive fiscal years; and (ix) Report regularly to the board of directors; (C) The domestic regulator may waive the requirement to establish an audit committee composed of independent board members if the risk retention group is able to demonstrate to the domestic regulator that it is impracticable to do so and the risk retention group's board of directors itself is otherwise able to accomplish the purposes of an audit committee, as described in subdivision (d)(4)(B);
(A) The risk retention group shall have an audit committee composed of at least three (3) independent board members. A non-independent board member may participate in the activities of the audit committee, if invited by the members, but cannot be a member of such committee;
(B) The audit committee shall have a written charter that defines the committee's purpose, which, at a minimum, must be to: (i) Assist board oversight of the: (a) Integrity of the risk retention group's financial statements; (b) Compliance with legal and regulatory requirements; and (c) Qualifications, independence, and performance of the independent auditor and actuary; (ii) Discuss the annual audited financial statements and quarterly financial statements with management; (iii) Discuss the annual audited financial statements with the independent auditor and, if advisable, discuss quarterly financial statements with the independent auditor; (iv) Discuss policies with respect to risk assessment and risk management; (v) Meet separately and periodically, either directly or through a designated representative of the committee, with management and independent auditors; (vi) Review with the independent auditor any audit problems or difficulties and management's response; (vii) Set clear hiring policies of the risk retention group regarding the hiring of employees or former employees of the independent auditor; (viii) Require the external auditor to rotate the lead (or coordinating) audit partner having primary responsibility for the risk retention group's audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for a particular risk retention group for more than five (5) consecutive fiscal years; and (ix) Report regularly to the board of directors;
(i) Assist board oversight of the: (a) Integrity of the risk retention group's financial statements; (b) Compliance with legal and regulatory requirements; and (c) Qualifications, independence, and performance of the independent auditor and actuary;
(a) Integrity of the risk retention group's financial statements;
(b) Compliance with legal and regulatory requirements; and
(c) Qualifications, independence, and performance of the independent auditor and actuary;
(ii) Discuss the annual audited financial statements and quarterly financial statements with management;
(iii) Discuss the annual audited financial statements with the independent auditor and, if advisable, discuss quarterly financial statements with the independent auditor;
(iv) Discuss policies with respect to risk assessment and risk management;
(v) Meet separately and periodically, either directly or through a designated representative of the committee, with management and independent auditors;
(vi) Review with the independent auditor any audit problems or difficulties and management's response;
(vii) Set clear hiring policies of the risk retention group regarding the hiring of employees or former employees of the independent auditor;
(viii) Require the external auditor to rotate the lead (or coordinating) audit partner having primary responsibility for the risk retention group's audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for a particular risk retention group for more than five (5) consecutive fiscal years; and
(ix) Report regularly to the board of directors;
(C) The domestic regulator may waive the requirement to establish an audit committee composed of independent board members if the risk retention group is able to demonstrate to the domestic regulator that it is impracticable to do so and the risk retention group's board of directors itself is otherwise able to accomplish the purposes of an audit committee, as described in subdivision (d)(4)(B);
(5) Governance Standards. The board of directors shall adopt governance standards and shall make such standards available electronically, including, but not limited to, posting such information on the risk retention group's web site, or by other means, and provide such information to members/insureds upon request. Governance standards shall include: (A) The process by which the directors are elected by the owner and insureds; (B) Director qualification standards; (C) Director responsibilities; (D) Director access to management and, as necessary and appropriate, independent advisors; (E) Director compensation; (F) Director orientation and continuing education; (G) Management succession policies and procedures; and (H) The policies and procedures that are followed for annual performance evaluation of the board;
(A) The process by which the directors are elected by the owner and insureds;
(B) Director qualification standards;
(C) Director responsibilities;
(D) Director access to management and, as necessary and appropriate, independent advisors;
(E) Director compensation;
(F) Director orientation and continuing education;
(G) Management succession policies and procedures; and
(H) The policies and procedures that are followed for annual performance evaluation of the board;
(6) Business Conduct and Ethics. The board of directors shall adopt and disclose a code of business conduct and ethics for directors, officers and employees and promptly disclose to the board of directors any waivers of the code for directors or executive officers. The code shall address the following topics: (A) Conflicts of interest; (B) Matters subject to the corporate opportunities doctrine under the group's state of domicile; (C) Confidentiality; (D) Fair dealing; (E) Protection and proper use of risk retention group assets; (F) Compliance with all applicable laws, rules, and regulations; and (G) Mandatory reporting of any illegal or unethical behavior which affects the operation of the risk retention group;
(A) Conflicts of interest;
(B) Matters subject to the corporate opportunities doctrine under the group's state of domicile;
(C) Confidentiality;
(D) Fair dealing;
(E) Protection and proper use of risk retention group assets;
(F) Compliance with all applicable laws, rules, and regulations; and
(G) Mandatory reporting of any illegal or unethical behavior which affects the operation of the risk retention group;
(7) The captive manager, president, or chief executive officer of the risk retention group shall promptly notify the domestic regulator in writing if either becomes aware of any material noncompliance with any of these governance standards; and
(8) For purposes of this subsection (d): (A) "Board of directors" or "board" means the governing body of the risk retention group elected by the owners and insureds to establish policy, elect or appoint officers and committees, and make other governing decisions; (B) "Director" means a natural person designated in the formation documents of the risk retention group, or designated, elected or appointed by any other manner, name or title to act as a director; (C) "Material relationship" includes, but is not limited to: (i) The receipt, in any twelve-month period, of compensation or payment of any other item of value by a person, a member of the person's immediate family or any business with which the person is affiliated from the risk retention group, or a consultant or service provider to the risk retention group that is greater than or equal to five percent (5%) of the risk retention group's gross written premium for such twelve-month period or two percent (2%) of its surplus, whichever is greater, as measured at the end of any fiscal quarter falling in such twelve-month period. Such person or the person's immediate family member shall not be independent until one (1) year after the person's compensation from the risk retention group falls below the threshold; (ii) In regards to a relationship with an auditor, a director or an immediate family member of a director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not independent until one (1) year after the end of the affiliation, employment, or auditing relationship; or (iii) In regards to a relationship with a related entity, a director or immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group's present executives serve on that other company's board of directors is not independent until one (1) year after the end of such service or the employment relationship; and (D) "Service providers" includes captive managers, auditors, accountants, attorneys, actuaries, investment advisors, managing general underwriters or other parties responsible for underwriting, determination of rates, collection of premium, adjusting and settling claims, or the preparation of financial statements. Any reference to attorneys in this subdivision (d)(8)(D) does not include defense counsel retained by the risk retention group to defend claims, unless the amount of fees paid to such attorneys are material as referenced in subdivision (d)(8)(C).
(A) "Board of directors" or "board" means the governing body of the risk retention group elected by the owners and insureds to establish policy, elect or appoint officers and committees, and make other governing decisions;
(B) "Director" means a natural person designated in the formation documents of the risk retention group, or designated, elected or appointed by any other manner, name or title to act as a director;
(C) "Material relationship" includes, but is not limited to: (i) The receipt, in any twelve-month period, of compensation or payment of any other item of value by a person, a member of the person's immediate family or any business with which the person is affiliated from the risk retention group, or a consultant or service provider to the risk retention group that is greater than or equal to five percent (5%) of the risk retention group's gross written premium for such twelve-month period or two percent (2%) of its surplus, whichever is greater, as measured at the end of any fiscal quarter falling in such twelve-month period. Such person or the person's immediate family member shall not be independent until one (1) year after the person's compensation from the risk retention group falls below the threshold; (ii) In regards to a relationship with an auditor, a director or an immediate family member of a director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not independent until one (1) year after the end of the affiliation, employment, or auditing relationship; or (iii) In regards to a relationship with a related entity, a director or immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group's present executives serve on that other company's board of directors is not independent until one (1) year after the end of such service or the employment relationship; and
(i) The receipt, in any twelve-month period, of compensation or payment of any other item of value by a person, a member of the person's immediate family or any business with which the person is affiliated from the risk retention group, or a consultant or service provider to the risk retention group that is greater than or equal to five percent (5%) of the risk retention group's gross written premium for such twelve-month period or two percent (2%) of its surplus, whichever is greater, as measured at the end of any fiscal quarter falling in such twelve-month period. Such person or the person's immediate family member shall not be independent until one (1) year after the person's compensation from the risk retention group falls below the threshold;
(ii) In regards to a relationship with an auditor, a director or an immediate family member of a director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not independent until one (1) year after the end of the affiliation, employment, or auditing relationship; or
(iii) In regards to a relationship with a related entity, a director or immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group's present executives serve on that other company's board of directors is not independent until one (1) year after the end of such service or the employment relationship; and
(D) "Service providers" includes captive managers, auditors, accountants, attorneys, actuaries, investment advisors, managing general underwriters or other parties responsible for underwriting, determination of rates, collection of premium, adjusting and settling claims, or the preparation of financial statements. Any reference to attorneys in this subdivision (d)(8)(D) does not include defense counsel retained by the risk retention group to defend claims, unless the amount of fees paid to such attorneys are material as referenced in subdivision (d)(8)(C).
Amended by 2016 Tenn. Acts, ch. 735,s 1, eff. 4/7/2016.
Acts 1991, ch. 142, § 6; 1993, ch. 253, § 10.
Tenn. Code Ann. § 56-44-101 — TN Code / Title 56 / Chapter 44 / Section 56-44-101
Applicability
Status: in_force

This chapter applies to all domestic, foreign and alien insurers who are authorized to transact business in this state. Acts 1991, ch. 142, § 5.
This chapter applies to all domestic, foreign and alien insurers who are authorized to transact business in this state.
Acts 1991, ch. 142, § 5.
Tenn. Code Ann. § 56-30-113 — TN Code / Title 56 / Chapter 30 / Section 56-30-113
Investment of funds
Status: in_force

The funds of the dental service corporations subject to this chapter shall be invested only in securities permitted by the laws of this state for the investment of assets of life insurance companies. Acts 1961, ch. 340, § 12; T.C.A., § 56-3513.
The funds of the dental service corporations subject to this chapter shall be invested only in securities permitted by the laws of this state for the investment of assets of life insurance companies.
Acts 1961, ch. 340, § 12; T.C.A., § 56-3513.
Tenn. Code Ann. § 56-1-420 — TN Code / Title 56 / Chapter 1 / Section 56-1-420
Statement of actuarial opinion provided with annual statement and treated as public document - Materials provided in support of opinion that are confidential and privileged - Release of documents - Testimony - Powers of commissioner - Waiver of privilege or confidentiality
Status: in_force

(a) The statement of actuarial opinion, submitted pursuant to § 56-1-419 , shall be provided with the annual statement in accordance with the appropriate National Association of Insurance Commissioners (NAIC) property and casualty annual statement instructions and shall be treated as a public document. (b) (1) Notwithstanding § 10-7-503 or any other law to the contrary, documents, materials or other information in the possession or control of the department of commerce and insurance that are considered an actuarial report, work papers or actuarial opinion summary provided in support of the opinion, and any other material provided by the company to the commissioner in connection with the actuarial report, work papers or actuarial opinion summary, shall be confidential by law and privileged, shall not be subject to open records requests or sunshine laws, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. (2) This subsection (b) shall not be construed to limit the commissioner's authority to release the documents to the Actuarial Board for Counseling and Discipline (ABCD) so long as the material is required for the purpose of professional disciplinary proceedings and that the ABCD establishes procedures satisfactory to the commissioner for preserving the confidentiality of the documents, nor shall this section be construed to limit the commissioner's authority to use the documents, materials or other information in furtherance of any regulatory or legal action brought as part of the commissioner's official duties. (c) Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (b). (d) In order to assist in the performance of the commissioner's duties, the commissioner: (1) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (b) with other state, federal and international regulatory agencies, with NAIC and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information and has the legal authority to maintain confidentiality; (2) May receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and (3) May enter into agreements governing sharing and use of information consistent with subsections (b)-(d). (e) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subsection (d). Acts 2010, ch. 892, § 4.
(a) The statement of actuarial opinion, submitted pursuant to § 56-1-419 , shall be provided with the annual statement in accordance with the appropriate National Association of Insurance Commissioners (NAIC) property and casualty annual statement instructions and shall be treated as a public document.
(b) (1) Notwithstanding § 10-7-503 or any other law to the contrary, documents, materials or other information in the possession or control of the department of commerce and insurance that are considered an actuarial report, work papers or actuarial opinion summary provided in support of the opinion, and any other material provided by the company to the commissioner in connection with the actuarial report, work papers or actuarial opinion summary, shall be confidential by law and privileged, shall not be subject to open records requests or sunshine laws, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. (2) This subsection (b) shall not be construed to limit the commissioner's authority to release the documents to the Actuarial Board for Counseling and Discipline (ABCD) so long as the material is required for the purpose of professional disciplinary proceedings and that the ABCD establishes procedures satisfactory to the commissioner for preserving the confidentiality of the documents, nor shall this section be construed to limit the commissioner's authority to use the documents, materials or other information in furtherance of any regulatory or legal action brought as part of the commissioner's official duties.
(1) Notwithstanding § 10-7-503 or any other law to the contrary, documents, materials or other information in the possession or control of the department of commerce and insurance that are considered an actuarial report, work papers or actuarial opinion summary provided in support of the opinion, and any other material provided by the company to the commissioner in connection with the actuarial report, work papers or actuarial opinion summary, shall be confidential by law and privileged, shall not be subject to open records requests or sunshine laws, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.
(2) This subsection (b) shall not be construed to limit the commissioner's authority to release the documents to the Actuarial Board for Counseling and Discipline (ABCD) so long as the material is required for the purpose of professional disciplinary proceedings and that the ABCD establishes procedures satisfactory to the commissioner for preserving the confidentiality of the documents, nor shall this section be construed to limit the commissioner's authority to use the documents, materials or other information in furtherance of any regulatory or legal action brought as part of the commissioner's official duties.
(c) Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (b).
(d) In order to assist in the performance of the commissioner's duties, the commissioner: (1) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (b) with other state, federal and international regulatory agencies, with NAIC and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information and has the legal authority to maintain confidentiality; (2) May receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and (3) May enter into agreements governing sharing and use of information consistent with subsections (b)-(d).
(1) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (b) with other state, federal and international regulatory agencies, with NAIC and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information and has the legal authority to maintain confidentiality;
(2) May receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and
(3) May enter into agreements governing sharing and use of information consistent with subsections (b)-(d).
(e) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subsection (d).
Acts 2010, ch. 892, § 4.
Tenn. Code Ann. § 56-1-915 — TN Code / Title 56 / Chapter 1 / Section 56-1-915
Requirements of a principle-based valuation
Status: in_force

(a) A company shall establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual: (1) Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. For policies or contracts with significant tail risk, reflects conditions appropriately adverse to quantify the tail risk; (2) Incorporate assumptions, risk analysis methods and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods; (3) Incorporate assumptions that are derived in one (1) of the following manners: (A) The assumption is prescribed in the valuation manual; (B) For assumptions that are not prescribed, the assumptions shall: (i) Be established utilizing the company's available experience to the extent it is relevant and statistically credible; or (ii) To the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience; (4) Provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve. (b) A company using a principle-based valuation for one (1) or more policies or contracts subject to this section as specified in the valuation manual shall: (1) Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual; (2) Provide to the commissioner and the board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to assure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification shall be based on the controls in place as of the end of the preceding calendar year; (3) Develop, and file with the commissioner upon request, a principle-based valuation report that complies with standards prescribed in the valuation manual. (c) A principle-based valuation may include a prescribed formulaic reserve component. Added by 2013 Tenn. Acts, ch. 260, s 3, eff. 7/1/2013.
(a) A company shall establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual: (1) Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. For policies or contracts with significant tail risk, reflects conditions appropriately adverse to quantify the tail risk; (2) Incorporate assumptions, risk analysis methods and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods; (3) Incorporate assumptions that are derived in one (1) of the following manners: (A) The assumption is prescribed in the valuation manual; (B) For assumptions that are not prescribed, the assumptions shall: (i) Be established utilizing the company's available experience to the extent it is relevant and statistically credible; or (ii) To the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience; (4) Provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve.
(1) Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. For policies or contracts with significant tail risk, reflects conditions appropriately adverse to quantify the tail risk;
(2) Incorporate assumptions, risk analysis methods and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods;
(3) Incorporate assumptions that are derived in one (1) of the following manners: (A) The assumption is prescribed in the valuation manual; (B) For assumptions that are not prescribed, the assumptions shall: (i) Be established utilizing the company's available experience to the extent it is relevant and statistically credible; or (ii) To the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience;
(A) The assumption is prescribed in the valuation manual;
(B) For assumptions that are not prescribed, the assumptions shall: (i) Be established utilizing the company's available experience to the extent it is relevant and statistically credible; or (ii) To the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience;
(i) Be established utilizing the company's available experience to the extent it is relevant and statistically credible; or
(ii) To the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience;
(4) Provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve.
(b) A company using a principle-based valuation for one (1) or more policies or contracts subject to this section as specified in the valuation manual shall: (1) Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual; (2) Provide to the commissioner and the board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to assure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification shall be based on the controls in place as of the end of the preceding calendar year; (3) Develop, and file with the commissioner upon request, a principle-based valuation report that complies with standards prescribed in the valuation manual.
(1) Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual;
(2) Provide to the commissioner and the board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to assure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification shall be based on the controls in place as of the end of the preceding calendar year;
(3) Develop, and file with the commissioner upon request, a principle-based valuation report that complies with standards prescribed in the valuation manual.
(c) A principle-based valuation may include a prescribed formulaic reserve component.
Added by 2013 Tenn. Acts, ch. 260, s 3, eff. 7/1/2013.
Tenn. Code Ann. § 56-25-702 — TN Code / Title 56 / Chapter 25 / Section 56-25-702
Judicial review
Status: in_force

All decisions and findings of the commissioner made under this chapter shall be subject to review by proper proceedings in any court of competent jurisdiction in this state. Acts 1990, ch. 703, § 1.
All decisions and findings of the commissioner made under this chapter shall be subject to review by proper proceedings in any court of competent jurisdiction in this state.
Acts 1990, ch. 703, § 1.
Tenn. Code Ann. § 56-33-104 — TN Code / Title 56 / Chapter 33 / Section 56-33-104
Fulfillment materials - Cancellation - Negative option or opt-out prohibited
Status: in_force

(a) (1) As used in this section, "delivery" means handing fulfillment materials to the policyholder or certificate holder, or sending fulfillment materials by postal mail or electronic means to the policyholder or certificate holder. (2) Documents provided to consumers prior to the purchase of travel insurance, including sales materials, advertising materials, and marketing materials, must be consistent with the travel insurance policy itself, including forms, endorsements, policies, rate filings, and certificates of insurance. (3) For travel insurance policies or certificates that contain pre-existing condition exclusions, information and an opportunity to learn more about the pre-existing condition exclusions must be provided: (A) Prior to the time of purchase; and (B) In the coverage's fulfillment materials. (4) (A) The fulfillment materials and the information described in § 56-6-1403(a)(2)(A)(i)-(iv) must be provided to a policyholder or certificate holder as soon as practicable, following the purchase of a travel protection plan. (B) Unless the insured has started a covered trip or filed a claim under the travel insurance coverage, a policyholder or certificate holder may cancel a policy or certificate for a full refund of the travel protection plan price from the date of purchase of a travel protection plan until at least: (i) Fifteen (15) days following the date of delivery of the travel protection plan's fulfillment materials by postal mail; or (ii) Ten (10) days following the date of delivery of the travel protection plan's fulfillment materials by means other than postal mail. (5) The person shall disclose in the policy documentation and fulfillment materials whether the travel insurance is primary or secondary to other applicable coverage. (6) If travel insurance is marketed directly to a consumer through an insurer's website or by another through an aggregator site, then it is not an unfair trade practice or other violation of law to provide an accurate summary or short description of coverage on the web page, if the consumer has access to the full provisions of the policy through electronic means. (b) (1) A person offering, soliciting, or negotiating travel insurance or travel protection plans on an individual or group basis shall not do so by using a negative option or opt-out. (2) As used in this subsection (b), "negative option or opt-out" means an option that requires a consumer to take an affirmative action to deselect coverage when the consumer purchases a trip, such as unchecking a box on an electronic form. Acts 2022, ch. 703, § 6.
(a) (1) As used in this section, "delivery" means handing fulfillment materials to the policyholder or certificate holder, or sending fulfillment materials by postal mail or electronic means to the policyholder or certificate holder. (2) Documents provided to consumers prior to the purchase of travel insurance, including sales materials, advertising materials, and marketing materials, must be consistent with the travel insurance policy itself, including forms, endorsements, policies, rate filings, and certificates of insurance. (3) For travel insurance policies or certificates that contain pre-existing condition exclusions, information and an opportunity to learn more about the pre-existing condition exclusions must be provided: (A) Prior to the time of purchase; and (B) In the coverage's fulfillment materials. (4) (A) The fulfillment materials and the information described in § 56-6-1403(a)(2)(A)(i)-(iv) must be provided to a policyholder or certificate holder as soon as practicable, following the purchase of a travel protection plan. (B) Unless the insured has started a covered trip or filed a claim under the travel insurance coverage, a policyholder or certificate holder may cancel a policy or certificate for a full refund of the travel protection plan price from the date of purchase of a travel protection plan until at least: (i) Fifteen (15) days following the date of delivery of the travel protection plan's fulfillment materials by postal mail; or (ii) Ten (10) days following the date of delivery of the travel protection plan's fulfillment materials by means other than postal mail. (5) The person shall disclose in the policy documentation and fulfillment materials whether the travel insurance is primary or secondary to other applicable coverage. (6) If travel insurance is marketed directly to a consumer through an insurer's website or by another through an aggregator site, then it is not an unfair trade practice or other violation of law to provide an accurate summary or short description of coverage on the web page, if the consumer has access to the full provisions of the policy through electronic means.
(1) As used in this section, "delivery" means handing fulfillment materials to the policyholder or certificate holder, or sending fulfillment materials by postal mail or electronic means to the policyholder or certificate holder.
(2) Documents provided to consumers prior to the purchase of travel insurance, including sales materials, advertising materials, and marketing materials, must be consistent with the travel insurance policy itself, including forms, endorsements, policies, rate filings, and certificates of insurance.
(3) For travel insurance policies or certificates that contain pre-existing condition exclusions, information and an opportunity to learn more about the pre-existing condition exclusions must be provided: (A) Prior to the time of purchase; and (B) In the coverage's fulfillment materials.
(A) Prior to the time of purchase; and
(B) In the coverage's fulfillment materials.
(4) (A) The fulfillment materials and the information described in § 56-6-1403(a)(2)(A)(i)-(iv) must be provided to a policyholder or certificate holder as soon as practicable, following the purchase of a travel protection plan. (B) Unless the insured has started a covered trip or filed a claim under the travel insurance coverage, a policyholder or certificate holder may cancel a policy or certificate for a full refund of the travel protection plan price from the date of purchase of a travel protection plan until at least: (i) Fifteen (15) days following the date of delivery of the travel protection plan's fulfillment materials by postal mail; or (ii) Ten (10) days following the date of delivery of the travel protection plan's fulfillment materials by means other than postal mail.
(A) The fulfillment materials and the information described in § 56-6-1403(a)(2)(A)(i)-(iv) must be provided to a policyholder or certificate holder as soon as practicable, following the purchase of a travel protection plan.
(B) Unless the insured has started a covered trip or filed a claim under the travel insurance coverage, a policyholder or certificate holder may cancel a policy or certificate for a full refund of the travel protection plan price from the date of purchase of a travel protection plan until at least: (i) Fifteen (15) days following the date of delivery of the travel protection plan's fulfillment materials by postal mail; or (ii) Ten (10) days following the date of delivery of the travel protection plan's fulfillment materials by means other than postal mail.
(i) Fifteen (15) days following the date of delivery of the travel protection plan's fulfillment materials by postal mail; or
(ii) Ten (10) days following the date of delivery of the travel protection plan's fulfillment materials by means other than postal mail.
(5) The person shall disclose in the policy documentation and fulfillment materials whether the travel insurance is primary or secondary to other applicable coverage.
(6) If travel insurance is marketed directly to a consumer through an insurer's website or by another through an aggregator site, then it is not an unfair trade practice or other violation of law to provide an accurate summary or short description of coverage on the web page, if the consumer has access to the full provisions of the policy through electronic means.
(b) (1) A person offering, soliciting, or negotiating travel insurance or travel protection plans on an individual or group basis shall not do so by using a negative option or opt-out. (2) As used in this subsection (b), "negative option or opt-out" means an option that requires a consumer to take an affirmative action to deselect coverage when the consumer purchases a trip, such as unchecking a box on an electronic form.
(1) A person offering, soliciting, or negotiating travel insurance or travel protection plans on an individual or group basis shall not do so by using a negative option or opt-out.
(2) As used in this subsection (b), "negative option or opt-out" means an option that requires a consumer to take an affirmative action to deselect coverage when the consumer purchases a trip, such as unchecking a box on an electronic form.
Acts 2022, ch. 703, § 6.
Tenn. Code Ann. § 56-2-1007 — TN Code / Title 56 / Chapter 2 / Section 56-2-1007
Authority of commissioner
Status: in_force

(a) In addition to authority under chapter 1, part 4 of this title, the commissioner has the authority to examine and investigate a licensee to determine whether the licensee has been or is engaged in conduct in violation of this part. Those examinations or investigations must be conducted in accordance with chapter 1, part 4 of this title. (b) If the commissioner has reason to believe that a licensee has been or is engaged in conduct in this state that violates this part, then the commissioner may take necessary or appropriate action to enforce this part in accordance with part 3 of this chapter. Added by 2021 Tenn. Acts, ch. 345, s 1, eff. 7/1/2021.
(a) In addition to authority under chapter 1, part 4 of this title, the commissioner has the authority to examine and investigate a licensee to determine whether the licensee has been or is engaged in conduct in violation of this part. Those examinations or investigations must be conducted in accordance with chapter 1, part 4 of this title.
(b) If the commissioner has reason to believe that a licensee has been or is engaged in conduct in this state that violates this part, then the commissioner may take necessary or appropriate action to enforce this part in accordance with part 3 of this chapter.
Added by 2021 Tenn. Acts, ch. 345, s 1, eff. 7/1/2021.
Tenn. Code Ann. § 56-26-125 — TN Code / Title 56 / Chapter 26 / Section 56-26-125
Insurer's right of cancellation to be stated on face of policy
Status: in_force

No policy of accident, sickness or hospital insurance that is cancellable by the insurer shall be delivered or issued for delivery to any person in this state unless the policy shall show conspicuously on the face thereof the words "POLICY CANCELLABLE BY COMPANY," or similar wording which, in the opinion of the commissioner, has substantially the same meaning and effect. Acts 1970, ch. 455, § 1; 1976, ch. 397, § 5; T.C.A., § 56-3325.
No policy of accident, sickness or hospital insurance that is cancellable by the insurer shall be delivered or issued for delivery to any person in this state unless the policy shall show conspicuously on the face thereof the words "POLICY CANCELLABLE BY COMPANY," or similar wording which, in the opinion of the commissioner, has substantially the same meaning and effect.
Acts 1970, ch. 455, § 1; 1976, ch. 397, § 5; T.C.A., § 56-3325.
Tenn. Code Ann. § 56-13-418 — TN Code / Title 56 / Chapter 13 / Section 56-13-418
Applicability of insolvency provisions
Status: in_force

(a) Except as otherwise provided in this section, chapter 9 of this title shall apply in full to an SPFC. (b) Upon any order of supervision, rehabilitation, or liquidation of an SPFC, the receiver shall manage the assets and liabilities of the SPFC pursuant to this part. (c) Notwithstanding chapter 9 of this title: (1) No asset of a protected cell shall be used to pay any expenses or claims other than those attributable to such protected cell; and (2) An SPFC's capital and surplus shall, at all times, be available to pay any expenses of or claims against the SPFC. Acts 2011, ch. 468, § 1.
(a) Except as otherwise provided in this section, chapter 9 of this title shall apply in full to an SPFC.
(b) Upon any order of supervision, rehabilitation, or liquidation of an SPFC, the receiver shall manage the assets and liabilities of the SPFC pursuant to this part.
(c) Notwithstanding chapter 9 of this title: (1) No asset of a protected cell shall be used to pay any expenses or claims other than those attributable to such protected cell; and (2) An SPFC's capital and surplus shall, at all times, be available to pay any expenses of or claims against the SPFC.
(1) No asset of a protected cell shall be used to pay any expenses or claims other than those attributable to such protected cell; and
(2) An SPFC's capital and surplus shall, at all times, be available to pay any expenses of or claims against the SPFC.
Acts 2011, ch. 468, § 1.
Tenn. Code Ann. § 56-55-107 — TN Code / Title 56 / Chapter 55 / Section 56-55-107
Warranty requirements - Documentation of sale to be furnished purchaser
Status: in_force

(a) Every vehicle protection product warranty shall be written in clear, understandable language and shall be printed or typed in an easy-to-read point size and font and shall not be sold or offered for sale in the state unless the warranty: (1) Contains a disclosure that reads substantially as follows: "This agreement is a product warranty and is not insurance."; (2) Identifies the warrantor, the administrator, if any, the seller, and the warranty holder; (3) Sets forth the procedure for making a claim, including a telephone number; (4) Sets forth the total purchase price and the terms under which it is to be paid; provided, however, that the purchase price is not required to be preprinted on the vehicle protection product warranty and may be negotiated with the consumer at the time of sale; (5) Sets forth any terms, restrictions, or conditions governing transferability of the warranty, if any; (6) Conspicuously sets forth all of the obligations and duties of the warranty holder, such as the duty to protect against any further damage to the vehicle, the obligation to notify the warrantor in advance of any repair, or other similar requirements, if any; (7) Conspicuously states the existence of a deductible amount, if any; (8) Specifies the payments or performance to be provided under the warranty, including payments for incidental costs, the manner of calculation or determination of payments or performance, and any limitations, exceptions, or exclusions; (9) Sets forth the conditions on which substitution will be allowed; (10) Conspicuously states that the obligations of the warrantor to the warranty holder are insured under a warranty reimbursement insurance policy; (11) Conspicuously states that, in the event a warranty holder must make a claim against a party other than the warranty reimbursement insurance policy issuer, the warranty holder is entitled to make a direct claim against the insurer upon the failure of the warrantor to pay any claim or meet any obligation under the terms of the warranty, within sixty (60) days after proof of loss has been filed with the warrantor; and (12) Conspicuously states the name and address of the issuer of the warranty reimbursement insurance policy. This information need not be preprinted on the warranty form, but may be stamped on the warranty. (b) At the time of sale, the seller or warrantor shall provide to the purchaser: (1) A copy of the vehicle protection product warranty; or (2) A receipt, or other written evidence of the purchase of the vehicle protection product, and a copy of the warranty, within thirty (30) days of the date of purchase. Acts 2005, ch. 244, § 8.
(a) Every vehicle protection product warranty shall be written in clear, understandable language and shall be printed or typed in an easy-to-read point size and font and shall not be sold or offered for sale in the state unless the warranty: (1) Contains a disclosure that reads substantially as follows: "This agreement is a product warranty and is not insurance."; (2) Identifies the warrantor, the administrator, if any, the seller, and the warranty holder; (3) Sets forth the procedure for making a claim, including a telephone number; (4) Sets forth the total purchase price and the terms under which it is to be paid; provided, however, that the purchase price is not required to be preprinted on the vehicle protection product warranty and may be negotiated with the consumer at the time of sale; (5) Sets forth any terms, restrictions, or conditions governing transferability of the warranty, if any; (6) Conspicuously sets forth all of the obligations and duties of the warranty holder, such as the duty to protect against any further damage to the vehicle, the obligation to notify the warrantor in advance of any repair, or other similar requirements, if any; (7) Conspicuously states the existence of a deductible amount, if any; (8) Specifies the payments or performance to be provided under the warranty, including payments for incidental costs, the manner of calculation or determination of payments or performance, and any limitations, exceptions, or exclusions; (9) Sets forth the conditions on which substitution will be allowed; (10) Conspicuously states that the obligations of the warrantor to the warranty holder are insured under a warranty reimbursement insurance policy; (11) Conspicuously states that, in the event a warranty holder must make a claim against a party other than the warranty reimbursement insurance policy issuer, the warranty holder is entitled to make a direct claim against the insurer upon the failure of the warrantor to pay any claim or meet any obligation under the terms of the warranty, within sixty (60) days after proof of loss has been filed with the warrantor; and (12) Conspicuously states the name and address of the issuer of the warranty reimbursement insurance policy. This information need not be preprinted on the warranty form, but may be stamped on the warranty.
(1) Contains a disclosure that reads substantially as follows: "This agreement is a product warranty and is not insurance.";
(2) Identifies the warrantor, the administrator, if any, the seller, and the warranty holder;
(3) Sets forth the procedure for making a claim, including a telephone number;
(4) Sets forth the total purchase price and the terms under which it is to be paid; provided, however, that the purchase price is not required to be preprinted on the vehicle protection product warranty and may be negotiated with the consumer at the time of sale;
(5) Sets forth any terms, restrictions, or conditions governing transferability of the warranty, if any;
(6) Conspicuously sets forth all of the obligations and duties of the warranty holder, such as the duty to protect against any further damage to the vehicle, the obligation to notify the warrantor in advance of any repair, or other similar requirements, if any;
(7) Conspicuously states the existence of a deductible amount, if any;
(8) Specifies the payments or performance to be provided under the warranty, including payments for incidental costs, the manner of calculation or determination of payments or performance, and any limitations, exceptions, or exclusions;
(9) Sets forth the conditions on which substitution will be allowed;
(10) Conspicuously states that the obligations of the warrantor to the warranty holder are insured under a warranty reimbursement insurance policy;
(11) Conspicuously states that, in the event a warranty holder must make a claim against a party other than the warranty reimbursement insurance policy issuer, the warranty holder is entitled to make a direct claim against the insurer upon the failure of the warrantor to pay any claim or meet any obligation under the terms of the warranty, within sixty (60) days after proof of loss has been filed with the warrantor; and
(12) Conspicuously states the name and address of the issuer of the warranty reimbursement insurance policy. This information need not be preprinted on the warranty form, but may be stamped on the warranty.
(b) At the time of sale, the seller or warrantor shall provide to the purchaser: (1) A copy of the vehicle protection product warranty; or (2) A receipt, or other written evidence of the purchase of the vehicle protection product, and a copy of the warranty, within thirty (30) days of the date of purchase.
(1) A copy of the vehicle protection product warranty; or
(2) A receipt, or other written evidence of the purchase of the vehicle protection product, and a copy of the warranty, within thirty (30) days of the date of purchase.
Acts 2005, ch. 244, § 8.
Tenn. Code Ann. § 56-7-104 — TN Code / Title 56 / Chapter 7 / Section 56-7-104
Hostilities shall not invalidate policy
Status: in_force

No policy of insurance issued to a citizen of this state by an authorized company organized under the laws of a foreign country shall be invalidated by the occurrence of hostilities between the foreign country and the United States. Acts 1895, ch. 160, § 23; Shan., § 3307; Code 1932, § 6127; T.C.A. (orig. ed.), § 56-1104.
No policy of insurance issued to a citizen of this state by an authorized company organized under the laws of a foreign country shall be invalidated by the occurrence of hostilities between the foreign country and the United States.
Acts 1895, ch. 160, § 23; Shan., § 3307; Code 1932, § 6127; T.C.A. (orig. ed.), § 56-1104.
Tenn. Code Ann. § 56-37-108 — TN Code / Title 56 / Chapter 37 / Section 56-37-108
Interest charges - Computation - Maximum rates
Status: in_force

(a) A premium finance company shall not charge, or contract for an interest charge, other than as permitted by this chapter. (b) The interest is to be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance contract, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable. (c) The maximum effective rate of interest under this chapter shall: (1) Be determined in accordance with the actuarial method; (2) In the case of precomputed interest, be calculated and determined as of the effective date of the insurance contract on the assumption that all scheduled payments will be made as contracted; and (3) Not be affected by the prepayment of the loan, in whole or in part. (d) The maximum effective rate of interest per annum under this chapter shall not exceed twenty-four percent (24%) per annum. (e) The term of a loan for the purposes of this section commences on the effective date of the insurance contract for which the premium is being advanced. Differences in the lengths of months are disregarded and, for any period less than a month, each day may be counted as one thirtieth ( 1 / 30 ) of a month. (f) Notwithstanding any premium finance agreement, any insured may prepay the obligation in full at any time. In this event, the insured shall receive a refund credit, which refund credit shall represent at least as great a proportion of the interest as the sum of the periodic balances after the month in which prepayment is made bears to the sum of all periodic balances under the schedules of installments in the agreement. Where the amount of the refund credit is less than one dollar ($1.00), no refund need be made. Acts 1980, ch. 920, § 8; 1981, ch. 414, § 1; 1983, ch. 431, § 1.
(a) A premium finance company shall not charge, or contract for an interest charge, other than as permitted by this chapter.
(b) The interest is to be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance contract, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable.
(c) The maximum effective rate of interest under this chapter shall: (1) Be determined in accordance with the actuarial method; (2) In the case of precomputed interest, be calculated and determined as of the effective date of the insurance contract on the assumption that all scheduled payments will be made as contracted; and (3) Not be affected by the prepayment of the loan, in whole or in part.
(1) Be determined in accordance with the actuarial method;
(2) In the case of precomputed interest, be calculated and determined as of the effective date of the insurance contract on the assumption that all scheduled payments will be made as contracted; and
(3) Not be affected by the prepayment of the loan, in whole or in part.
(d) The maximum effective rate of interest per annum under this chapter shall not exceed twenty-four percent (24%) per annum.
(e) The term of a loan for the purposes of this section commences on the effective date of the insurance contract for which the premium is being advanced. Differences in the lengths of months are disregarded and, for any period less than a month, each day may be counted as one thirtieth ( 1 / 30 ) of a month.
(f) Notwithstanding any premium finance agreement, any insured may prepay the obligation in full at any time. In this event, the insured shall receive a refund credit, which refund credit shall represent at least as great a proportion of the interest as the sum of the periodic balances after the month in which prepayment is made bears to the sum of all periodic balances under the schedules of installments in the agreement. Where the amount of the refund credit is less than one dollar ($1.00), no refund need be made.
Acts 1980, ch. 920, § 8; 1981, ch. 414, § 1; 1983, ch. 431, § 1.
Tenn. Code Ann. § 56-32-126 — TN Code / Title 56 / Chapter 32 / Section 56-32-126
Prompt payment requirements
Status: in_force

(a) HMOs shall be subject to the same requirements regarding prompt payment of claims, and the additional liability for bad faith failure to pay claims promptly, as are applicable to insurance companies under § 56-7-105 . (b) This subsection (b) is intended to ensure the prompt and accurate payment of all provider claims for services delivered to an enrollee in the TennCare program that are submitted to an HMO involved in a TennCare line of business or a subcontractor of that HMO. Accordingly, each such HMO or subcontractor must establish and implement the following procedures for the processing of provider claims and the resolution of any disputes regarding the payment of claims: (1) The HMO shall ensure that ninety percent (90%) of claims for payment for services delivered to a TennCare enrollee, for which no further written information or substantiation is required in order to make payment, are processed, and, if appropriate, paid within thirty (30) calendar days of the receipt of the claims. The HMO shall process, and if appropriate pay, within sixty (60) calendar days ninety-nine and one half percent (99.5%) of all provider claims for services delivered to an enrollee in the TennCare program. If a provider agreement requires the HMO to pay a provider a capitated payment each month, the payment shall be made by the time specified in the contract between the provider and the HMO. If the contract between the provider and HMO does not specify a payment schedule, payment shall be made by the tenth day of each calendar month. Disputed capitated provider payments are subject to independent review; (A) "Pay" means that the HMO shall either send the provider cash or cash equivalent in full satisfaction of the allowed portion of the claim, or give the provider a credit against any outstanding balance owed by that provider to the HMO; (B) "Process" means the HMO must send the provider a written or electronic remittance advice or other appropriate written or electronic notice evidencing either that the claim has been paid or informing the provider that a claim has been either partially or totally denied and specify all known reasons for denial. If a claim is partially or totally denied on the basis that the provider did not submit any required information or documentation with the claim, then the remittance advice or other appropriate written or electronic notice must specifically identify all the information and documentation; (2) (A) If a provider's claim is partially or totally denied in a remittance advice or other appropriate written or electronic notice from an HMO, or a provider's previously allowed claim is subsequently partially or totally denied by an HMO by an appropriate written or electronic notice, then the provider may file a written request to the commissioner to submit the claim denial to an independent reviewer as provided in subdivision (b)(3). In the event the provider receives no remittance advice or other appropriate written or electronic notice from an HMO either partially or totally denying a claim within sixty (60) calendar days of the HMO's receipt of the claim, then the provider may file a written request to the commissioner to submit the claim to an independent reviewer as provided in subdivision (b)(3). However, prior to sending this request, the provider must send a written request for reconsideration to the HMO that identifies the claim or claims in dispute, the reasons for the dispute and any documentation supporting the provider's position or request by the HMO. The HMO must respond to the reconsideration request within thirty (30) calendar days after receipt of the request. The response may be a letter acknowledging the receipt of the reconsideration request with an estimated time frame in which the HMO will complete its investigation and provide a complete response to the provider. If the HMO determines that it needs longer than thirty (30) calendar days to completely respond to the provider, the HMO's reconsideration decision shall be issued within sixty (60) calendar days after receipt of the reconsideration request, unless a longer time to completely respond is agreed upon in writing by the provider and the HMO. If the HMO continues to deny the provider's claims or the HMO does not respond to the reconsideration request within the time frames allowed in this subdivision (b)(2)(A), then the provider may file a written request with the commissioner to submit the claims to an independent reviewer as provided in subdivision (b)(3); (B) The provider must include a copy of the written request for reconsideration with the request for an independent review. If the provider does not have a written contract with the HMO that denied the claim on the date the request is filed with the commissioner, then the provider must also send the commissioner payment satisfactory to the commissioner to cover the fees incurred by the independent reviewer. This payment shall be refunded to the provider if the provider is not ultimately required to pay the independent reviewer. Otherwise, the payment shall be used to reimburse any entity that paid the independent reviewer. The provider shall also furnish the commissioner any other information needed by the commissioner to process the provider's request; (C) The provider must file a request for independent review within three hundred sixty-five (365) calendar days after the HMO denies the claim for the first time or recoups the claims payment; (D) Claims payment disputes involved in litigation, arbitration or not associated with a TennCare member are not eligible for independent review; (3) Each HMO operating a TennCare line of business must contract with independent reviewers selected in accordance with subdivision (b)(4), and implement the following procedures to resolve disputed provider claims: (A) The commissioner shall use best efforts to refer an equal proportion of the total disputed claims to each independent reviewer. A provider may request, and the commissioner may allow, the claims of a provider involving the same HMO to be aggregated and submitted for simultaneous review by an independent reviewer when the specific reason for non-payment of the claims aggregated involve a dispute regarding a common substantive question of fact or law. The mere fact that a claim is not paid does not create a common substantive question of fact or law, unless the provider has received no remittance advice or other appropriate written or electronic notice from an HMO, either partially or totally denying a claim, within sixty (60) calendar days of the HMO's receipt of the claim and the claims regard a common substantive question of fact or law. The reviewer shall, within fourteen (14) calendar days of receipt of the disputed claim or claims, request in writing that both the provider and the HMO provide the reviewer any and all information and documentation regarding the disputed claim or claims. The reviewer shall request the provider and HMO to identify all information and documentation that has been submitted by the provider to the HMO regarding the disputed claim or claims, and advise that the reviewer will not consider any information or documentation not received within thirty (30) calendar days of receipt of the reviewer's request unless the HMO or provider requests the independent reviewer for additional time to complete the investigation of independent review requests when a provider elected to aggregate their claims. Thereupon, the reviewer may grant the HMO or provider an additional thirty (30) calendar days. The reviewer shall then examine all materials submitted and render a decision on the dispute within sixty (60) calendar days of the receipt of the disputed claim or claims, unless either the reviewer requests guidance on a medical issue from the TennCare appeals unit, or the reviewer requests and receives an extension of time from the commissioner to resolve the dispute. In reaching a decision, the reviewer shall not consider any information or documentation from the provider that the provider did not submit to the HMO during that organization's review of the provider's disputed claim or claims; (B) Should the reviewer need assistance on a medical issue connected with the disputed claim or claims, then the reviewer shall refer this specific issue for review and response to the person in charge of the TennCare appeals unit within the TennCare bureau, unless the department in writing designates a different contact. Medical issues requiring referral may include whether a medical benefit is a covered service under the TennCare contract. The TennCare appeals unit may respond to the request, refer the request to an independent contractor, or refer the request to the TennCare bureau for review. A request to determine whether a service received was medically necessary must be responded to by a physician licensed by one (1) or more states in the United States. The appeals unit shall provide a concise response to the request within ninety (90) calendar days after receipt. If the appeals unit seeks the guidance of the TennCare bureau on whether a benefit is a covered service, then the bureau must respond to that request in writing in sufficient time to allow the appeals unit to timely respond to the reviewer. The reviewer shall make a final decision within thirty (30) calendar days of receipt of the appeals unit's response; (C) The reviewer shall send the HMO, the provider, and the TennCare division of the department of commerce and insurance a copy of the decision. Once the reviewer makes a decision requiring an HMO to pay any claims or portion of the claims, then the HMO must send the payment in full to the provider within twenty (20) calendar days of receipt of the reviewer's decision; (D) Within sixty (60) calendar days of a reviewer's decision, either party to the dispute may file suit in any court having jurisdiction to review the reviewer's decision and to recover any funds awarded by the reviewer to the other party. Any claim concerning a reviewer's decision not brought within sixty (60) calendar days of the reviewer's decision will be forever barred. Suits filed pursuant to this section will be conducted in accordance with the Tennessee Rules of Civil Procedure, and the review by the court will be de novo without regard to the reviewer's decision. The reviewer, or any person assisting the reviewer in reaching a decision, shall be prohibited from testifying at the court proceeding considering the reviewer's decision. Unless the contract between the parties specifies otherwise, venue and jurisdiction will be in accordance with Tennessee law. If the dispute between the parties is not fully resolved prior to the entry of a final decision by the court initially hearing the dispute, then the prevailing party shall be entitled to an award of reasonable attorney's fees and expenses from the nonprevailing party. "Reasonable attorney's fees" means the number of hours reasonably expended on the dispute multiplied by a reasonable hourly rate, and shall not exceed ten percent (10%) of the total monetary amount in dispute or five hundred dollars ($500), whichever amount is greater; (E) In lieu of requesting independent review, a provider may pursue any appropriate legal or contractual remedy available to the provider to contest the partial or total denial of the claim. For all claims filed on or after October 1, 1999, the state may not mandate that the provider and HMO resolve the claims payment dispute through arbitration; (F) Providers who are owned by state or local governmental entities shall retain the statutory right of setoff if available. Judicial review of a reviewer's decision regarding a state or local governmental provider shall be in the chancery court of Davidson County, and not in the Tennessee claims commission, unless the provider and HMO have agreed to another appropriate venue and jurisdiction by contract. The Prompt Pay Act, compiled in title 12, chapter 4, part 7, does not impact any claim of sovereign immunity that a state or local governmental provider may possess, although the provider will be responsible for paying any appropriate attorney's fees and expenses awarded under subdivision (b)(3)(D); (G) All costs associated with implementing these procedures shall be paid by the applicable HMO. However, the provider shall reimburse the HMO the independent reviewer's fee within twenty (20) calendar days of receipt of the reviewer's decision, if the reviewer finds that the HMO properly denied the claim being reviewed. If a provider fails to properly reimburse the HMO, the TennCare division of the department of commerce and insurance may prohibit that provider from future participation in the independent review process; (H) The HMO shall compensate the independent reviewer pursuant to their written agreement within thirty (30) calendar days of the HMO's receipt of the independent reviewer's bill for services rendered. If the HMO fails to pay the bill for the independent reviewer's services, then the independent reviewer may request payment directly from the state from any funds held by the state that are payable to the HMO; and (I) The procedures in subdivisions (b)(3)(A)-(H) shall not apply to any claims filed with the HMO before October 1, 1999, even if that claim is refiled after that date; (4) The commissioner shall appoint a panel of five (5) persons, known as the selection panel for TennCare reviewers. The panel shall consist of two (2) provider representatives, one (1) representative from each of the two (2) HMOs with the largest number of TennCare enrollees, and the commissioner or the commissioner's duly designated representative. The panel shall select a chairperson, and all decisions of the panel shall be made by a majority vote of the members of the panel. The panel shall select and identify an appropriate number of independent reviewers to be retained by each HMO under subdivision (b)(3). The panel shall negotiate the rate of compensation for each reviewer, and the rate of compensation shall be the same for each reviewer. Each HMO engaged in a TennCare line of business, as a condition of participating in this contract or in the TennCare program, shall contract with each reviewer and agree to pay the rate of compensation negotiated by the panel. The members of the panel shall not be paid. The panel shall meet at least twice a year; (5) By no later than May 1 of each year, the commissioner shall report to the department of health and to the fiscal review committee the number of requests for TennCare claims review filed for each HMO operating a TennCare line of business during the prior calendar year. The commissioner shall also generally report the outcome of these independent review requests for each HMO. In addition, the commissioner shall report the name of any provider whose claim denial is upheld in more than fifty percent (50%) of the independent review requests, as well as the number of claim reviews with the claims denial upheld; (6) All claims for services furnished to a TennCare enrollee filed with an HMO must be processed by either the HMO or by a single subcontractor retained by the organization for the purpose of processing claims. However, another single entity can process claims related to each of the following: pharmacy, vision, dental or mental health benefits or durable medical equipment; (7) The HMO shall ensure all its subcontractors processing TennCare claims follow the same claims processing and resolution procedures required by the Prompt Pay Act, compiled in title 12, chapter 4, part 7. TennCare claims processed by a subcontractor are subject to the prompt payment requirements of this statute. Claims denied by a subcontractor are subject to independent review. If a provider requests independent review of a claim denied by a subcontractor, the HMO contracted with that subcontractor must initially pay the independent reviewer's fee. If the independent reviewer upholds the subcontractor's denial, the provider must reimburse the HMO the reviewer's fee. If the independent reviewer finds for the provider, the HMO contracted with the subcontractor must pay the provider within twenty (20) calendar days of the reviewer's decision; (8) An HMO that subcontracts with another entity to obtain services for TennCare enrollees shall guarantee and assure the payment of all contracted amounts agreed to be paid to the providers by that entity or that entity's agent. This does not preclude the HMO from seeking reimbursement from the subcontractor for any amounts paid. Nor does this prevent the HMO from asserting any legal defenses to the payment of a provider's claims that were available to the subcontractor. Claims filed with a subcontractor are subject to the prompt payment requirements of this statute. Claims denied by a subcontractor are subject to independent review. If a provider requests independent review of a claim denied by a subcontractor, the HMO contracted with that subcontractor must initially pay the independent reviewer's fee. If the independent reviewer upholds the subcontractor's denial, the provider must reimburse the HMO the reviewer's fee. If the independent reviewer finds for the provider, the HMO contracted with the subcontractor must pay the provider within twenty (20) calendar days of the reviewer's decision; and (9) Any HMO found by the commissioner to be in violation of this subsection (b) shall be subject to revocation or suspension of its certificate of authority under § 56-32-116 or, in the alternative, the imposition of the penalties and other remedies set forth at § 56-32-120 . Acts 1997 , ch. 267, § 1; 1999, ch. 276, § 1; 2002, ch. 597, §1; 2003 , ch. 37, §§ 1- 3; 2005, ch. 374, § 2; T.C.A. §56-32-226; Acts 2010 , ch. 1027, § 3.
(a) HMOs shall be subject to the same requirements regarding prompt payment of claims, and the additional liability for bad faith failure to pay claims promptly, as are applicable to insurance companies under § 56-7-105 .
(b) This subsection (b) is intended to ensure the prompt and accurate payment of all provider claims for services delivered to an enrollee in the TennCare program that are submitted to an HMO involved in a TennCare line of business or a subcontractor of that HMO. Accordingly, each such HMO or subcontractor must establish and implement the following procedures for the processing of provider claims and the resolution of any disputes regarding the payment of claims: (1) The HMO shall ensure that ninety percent (90%) of claims for payment for services delivered to a TennCare enrollee, for which no further written information or substantiation is required in order to make payment, are processed, and, if appropriate, paid within thirty (30) calendar days of the receipt of the claims. The HMO shall process, and if appropriate pay, within sixty (60) calendar days ninety-nine and one half percent (99.5%) of all provider claims for services delivered to an enrollee in the TennCare program. If a provider agreement requires the HMO to pay a provider a capitated payment each month, the payment shall be made by the time specified in the contract between the provider and the HMO. If the contract between the provider and HMO does not specify a payment schedule, payment shall be made by the tenth day of each calendar month. Disputed capitated provider payments are subject to independent review; (A) "Pay" means that the HMO shall either send the provider cash or cash equivalent in full satisfaction of the allowed portion of the claim, or give the provider a credit against any outstanding balance owed by that provider to the HMO; (B) "Process" means the HMO must send the provider a written or electronic remittance advice or other appropriate written or electronic notice evidencing either that the claim has been paid or informing the provider that a claim has been either partially or totally denied and specify all known reasons for denial. If a claim is partially or totally denied on the basis that the provider did not submit any required information or documentation with the claim, then the remittance advice or other appropriate written or electronic notice must specifically identify all the information and documentation; (2) (A) If a provider's claim is partially or totally denied in a remittance advice or other appropriate written or electronic notice from an HMO, or a provider's previously allowed claim is subsequently partially or totally denied by an HMO by an appropriate written or electronic notice, then the provider may file a written request to the commissioner to submit the claim denial to an independent reviewer as provided in subdivision (b)(3). In the event the provider receives no remittance advice or other appropriate written or electronic notice from an HMO either partially or totally denying a claim within sixty (60) calendar days of the HMO's receipt of the claim, then the provider may file a written request to the commissioner to submit the claim to an independent reviewer as provided in subdivision (b)(3). However, prior to sending this request, the provider must send a written request for reconsideration to the HMO that identifies the claim or claims in dispute, the reasons for the dispute and any documentation supporting the provider's position or request by the HMO. The HMO must respond to the reconsideration request within thirty (30) calendar days after receipt of the request. The response may be a letter acknowledging the receipt of the reconsideration request with an estimated time frame in which the HMO will complete its investigation and provide a complete response to the provider. If the HMO determines that it needs longer than thirty (30) calendar days to completely respond to the provider, the HMO's reconsideration decision shall be issued within sixty (60) calendar days after receipt of the reconsideration request, unless a longer time to completely respond is agreed upon in writing by the provider and the HMO. If the HMO continues to deny the provider's claims or the HMO does not respond to the reconsideration request within the time frames allowed in this subdivision (b)(2)(A), then the provider may file a written request with the commissioner to submit the claims to an independent reviewer as provided in subdivision (b)(3); (B) The provider must include a copy of the written request for reconsideration with the request for an independent review. If the provider does not have a written contract with the HMO that denied the claim on the date the request is filed with the commissioner, then the provider must also send the commissioner payment satisfactory to the commissioner to cover the fees incurred by the independent reviewer. This payment shall be refunded to the provider if the provider is not ultimately required to pay the independent reviewer. Otherwise, the payment shall be used to reimburse any entity that paid the independent reviewer. The provider shall also furnish the commissioner any other information needed by the commissioner to process the provider's request; (C) The provider must file a request for independent review within three hundred sixty-five (365) calendar days after the HMO denies the claim for the first time or recoups the claims payment; (D) Claims payment disputes involved in litigation, arbitration or not associated with a TennCare member are not eligible for independent review; (3) Each HMO operating a TennCare line of business must contract with independent reviewers selected in accordance with subdivision (b)(4), and implement the following procedures to resolve disputed provider claims: (A) The commissioner shall use best efforts to refer an equal proportion of the total disputed claims to each independent reviewer. A provider may request, and the commissioner may allow, the claims of a provider involving the same HMO to be aggregated and submitted for simultaneous review by an independent reviewer when the specific reason for non-payment of the claims aggregated involve a dispute regarding a common substantive question of fact or law. The mere fact that a claim is not paid does not create a common substantive question of fact or law, unless the provider has received no remittance advice or other appropriate written or electronic notice from an HMO, either partially or totally denying a claim, within sixty (60) calendar days of the HMO's receipt of the claim and the claims regard a common substantive question of fact or law. The reviewer shall, within fourteen (14) calendar days of receipt of the disputed claim or claims, request in writing that both the provider and the HMO provide the reviewer any and all information and documentation regarding the disputed claim or claims. The reviewer shall request the provider and HMO to identify all information and documentation that has been submitted by the provider to the HMO regarding the disputed claim or claims, and advise that the reviewer will not consider any information or documentation not received within thirty (30) calendar days of receipt of the reviewer's request unless the HMO or provider requests the independent reviewer for additional time to complete the investigation of independent review requests when a provider elected to aggregate their claims. Thereupon, the reviewer may grant the HMO or provider an additional thirty (30) calendar days. The reviewer shall then examine all materials submitted and render a decision on the dispute within sixty (60) calendar days of the receipt of the disputed claim or claims, unless either the reviewer requests guidance on a medical issue from the TennCare appeals unit, or the reviewer requests and receives an extension of time from the commissioner to resolve the dispute. In reaching a decision, the reviewer shall not consider any information or documentation from the provider that the provider did not submit to the HMO during that organization's review of the provider's disputed claim or claims; (B) Should the reviewer need assistance on a medical issue connected with the disputed claim or claims, then the reviewer shall refer this specific issue for review and response to the person in charge of the TennCare appeals unit within the TennCare bureau, unless the department in writing designates a different contact. Medical issues requiring referral may include whether a medical benefit is a covered service under the TennCare contract. The TennCare appeals unit may respond to the request, refer the request to an independent contractor, or refer the request to the TennCare bureau for review. A request to determine whether a service received was medically necessary must be responded to by a physician licensed by one (1) or more states in the United States. The appeals unit shall provide a concise response to the request within ninety (90) calendar days after receipt. If the appeals unit seeks the guidance of the TennCare bureau on whether a benefit is a covered service, then the bureau must respond to that request in writing in sufficient time to allow the appeals unit to timely respond to the reviewer. The reviewer shall make a final decision within thirty (30) calendar days of receipt of the appeals unit's response; (C) The reviewer shall send the HMO, the provider, and the TennCare division of the department of commerce and insurance a copy of the decision. Once the reviewer makes a decision requiring an HMO to pay any claims or portion of the claims, then the HMO must send the payment in full to the provider within twenty (20) calendar days of receipt of the reviewer's decision; (D) Within sixty (60) calendar days of a reviewer's decision, either party to the dispute may file suit in any court having jurisdiction to review the reviewer's decision and to recover any funds awarded by the reviewer to the other party. Any claim concerning a reviewer's decision not brought within sixty (60) calendar days of the reviewer's decision will be forever barred. Suits filed pursuant to this section will be conducted in accordance with the Tennessee Rules of Civil Procedure, and the review by the court will be de novo without regard to the reviewer's decision. The reviewer, or any person assisting the reviewer in reaching a decision, shall be prohibited from testifying at the court proceeding considering the reviewer's decision. Unless the contract between the parties specifies otherwise, venue and jurisdiction will be in accordance with Tennessee law. If the dispute between the parties is not fully resolved prior to the entry of a final decision by the court initially hearing the dispute, then the prevailing party shall be entitled to an award of reasonable attorney's fees and expenses from the nonprevailing party. "Reasonable attorney's fees" means the number of hours reasonably expended on the dispute multiplied by a reasonable hourly rate, and shall not exceed ten percent (10%) of the total monetary amount in dispute or five hundred dollars ($500), whichever amount is greater; (E) In lieu of requesting independent review, a provider may pursue any appropriate legal or contractual remedy available to the provider to contest the partial or total denial of the claim. For all claims filed on or after October 1, 1999, the state may not mandate that the provider and HMO resolve the claims payment dispute through arbitration; (F) Providers who are owned by state or local governmental entities shall retain the statutory right of setoff if available. Judicial review of a reviewer's decision regarding a state or local governmental provider shall be in the chancery court of Davidson County, and not in the Tennessee claims commission, unless the provider and HMO have agreed to another appropriate venue and jurisdiction by contract. The Prompt Pay Act, compiled in title 12, chapter 4, part 7, does not impact any claim of sovereign immunity that a state or local governmental provider may possess, although the provider will be responsible for paying any appropriate attorney's fees and expenses awarded under subdivision (b)(3)(D); (G) All costs associated with implementing these procedures shall be paid by the applicable HMO. However, the provider shall reimburse the HMO the independent reviewer's fee within twenty (20) calendar days of receipt of the reviewer's decision, if the reviewer finds that the HMO properly denied the claim being reviewed. If a provider fails to properly reimburse the HMO, the TennCare division of the department of commerce and insurance may prohibit that provider from future participation in the independent review process; (H) The HMO shall compensate the independent reviewer pursuant to their written agreement within thirty (30) calendar days of the HMO's receipt of the independent reviewer's bill for services rendered. If the HMO fails to pay the bill for the independent reviewer's services, then the independent reviewer may request payment directly from the state from any funds held by the state that are payable to the HMO; and (I) The procedures in subdivisions (b)(3)(A)-(H) shall not apply to any claims filed with the HMO before October 1, 1999, even if that claim is refiled after that date; (4) The commissioner shall appoint a panel of five (5) persons, known as the selection panel for TennCare reviewers. The panel shall consist of two (2) provider representatives, one (1) representative from each of the two (2) HMOs with the largest number of TennCare enrollees, and the commissioner or the commissioner's duly designated representative. The panel shall select a chairperson, and all decisions of the panel shall be made by a majority vote of the members of the panel. The panel shall select and identify an appropriate number of independent reviewers to be retained by each HMO under subdivision (b)(3). The panel shall negotiate the rate of compensation for each reviewer, and the rate of compensation shall be the same for each reviewer. Each HMO engaged in a TennCare line of business, as a condition of participating in this contract or in the TennCare program, shall contract with each reviewer and agree to pay the rate of compensation negotiated by the panel. The members of the panel shall not be paid. The panel shall meet at least twice a year; (5) By no later than May 1 of each year, the commissioner shall report to the department of health and to the fiscal review committee the number of requests for TennCare claims review filed for each HMO operating a TennCare line of business during the prior calendar year. The commissioner shall also generally report the outcome of these independent review requests for each HMO. In addition, the commissioner shall report the name of any provider whose claim denial is upheld in more than fifty percent (50%) of the independent review requests, as well as the number of claim reviews with the claims denial upheld; (6) All claims for services furnished to a TennCare enrollee filed with an HMO must be processed by either the HMO or by a single subcontractor retained by the organization for the purpose of processing claims. However, another single entity can process claims related to each of the following: pharmacy, vision, dental or mental health benefits or durable medical equipment; (7) The HMO shall ensure all its subcontractors processing TennCare claims follow the same claims processing and resolution procedures required by the Prompt Pay Act, compiled in title 12, chapter 4, part 7. TennCare claims processed by a subcontractor are subject to the prompt payment requirements of this statute. Claims denied by a subcontractor are subject to independent review. If a provider requests independent review of a claim denied by a subcontractor, the HMO contracted with that subcontractor must initially pay the independent reviewer's fee. If the independent reviewer upholds the subcontractor's denial, the provider must reimburse the HMO the reviewer's fee. If the independent reviewer finds for the provider, the HMO contracted with the subcontractor must pay the provider within twenty (20) calendar days of the reviewer's decision; (8) An HMO that subcontracts with another entity to obtain services for TennCare enrollees shall guarantee and assure the payment of all contracted amounts agreed to be paid to the providers by that entity or that entity's agent. This does not preclude the HMO from seeking reimbursement from the subcontractor for any amounts paid. Nor does this prevent the HMO from asserting any legal defenses to the payment of a provider's claims that were available to the subcontractor. Claims filed with a subcontractor are subject to the prompt payment requirements of this statute. Claims denied by a subcontractor are subject to independent review. If a provider requests independent review of a claim denied by a subcontractor, the HMO contracted with that subcontractor must initially pay the independent reviewer's fee. If the independent reviewer upholds the subcontractor's denial, the provider must reimburse the HMO the reviewer's fee. If the independent reviewer finds for the provider, the HMO contracted with the subcontractor must pay the provider within twenty (20) calendar days of the reviewer's decision; and (9) Any HMO found by the commissioner to be in violation of this subsection (b) shall be subject to revocation or suspension of its certificate of authority under § 56-32-116 or, in the alternative, the imposition of the penalties and other remedies set forth at § 56-32-120 .
(1) The HMO shall ensure that ninety percent (90%) of claims for payment for services delivered to a TennCare enrollee, for which no further written information or substantiation is required in order to make payment, are processed, and, if appropriate, paid within thirty (30) calendar days of the receipt of the claims. The HMO shall process, and if appropriate pay, within sixty (60) calendar days ninety-nine and one half percent (99.5%) of all provider claims for services delivered to an enrollee in the TennCare program. If a provider agreement requires the HMO to pay a provider a capitated payment each month, the payment shall be made by the time specified in the contract between the provider and the HMO. If the contract between the provider and HMO does not specify a payment schedule, payment shall be made by the tenth day of each calendar month. Disputed capitated provider payments are subject to independent review; (A) "Pay" means that the HMO shall either send the provider cash or cash equivalent in full satisfaction of the allowed portion of the claim, or give the provider a credit against any outstanding balance owed by that provider to the HMO; (B) "Process" means the HMO must send the provider a written or electronic remittance advice or other appropriate written or electronic notice evidencing either that the claim has been paid or informing the provider that a claim has been either partially or totally denied and specify all known reasons for denial. If a claim is partially or totally denied on the basis that the provider did not submit any required information or documentation with the claim, then the remittance advice or other appropriate written or electronic notice must specifically identify all the information and documentation;
(A) "Pay" means that the HMO shall either send the provider cash or cash equivalent in full satisfaction of the allowed portion of the claim, or give the provider a credit against any outstanding balance owed by that provider to the HMO;
(B) "Process" means the HMO must send the provider a written or electronic remittance advice or other appropriate written or electronic notice evidencing either that the claim has been paid or informing the provider that a claim has been either partially or totally denied and specify all known reasons for denial. If a claim is partially or totally denied on the basis that the provider did not submit any required information or documentation with the claim, then the remittance advice or other appropriate written or electronic notice must specifically identify all the information and documentation;
(2) (A) If a provider's claim is partially or totally denied in a remittance advice or other appropriate written or electronic notice from an HMO, or a provider's previously allowed claim is subsequently partially or totally denied by an HMO by an appropriate written or electronic notice, then the provider may file a written request to the commissioner to submit the claim denial to an independent reviewer as provided in subdivision (b)(3). In the event the provider receives no remittance advice or other appropriate written or electronic notice from an HMO either partially or totally denying a claim within sixty (60) calendar days of the HMO's receipt of the claim, then the provider may file a written request to the commissioner to submit the claim to an independent reviewer as provided in subdivision (b)(3). However, prior to sending this request, the provider must send a written request for reconsideration to the HMO that identifies the claim or claims in dispute, the reasons for the dispute and any documentation supporting the provider's position or request by the HMO. The HMO must respond to the reconsideration request within thirty (30) calendar days after receipt of the request. The response may be a letter acknowledging the receipt of the reconsideration request with an estimated time frame in which the HMO will complete its investigation and provide a complete response to the provider. If the HMO determines that it needs longer than thirty (30) calendar days to completely respond to the provider, the HMO's reconsideration decision shall be issued within sixty (60) calendar days after receipt of the reconsideration request, unless a longer time to completely respond is agreed upon in writing by the provider and the HMO. If the HMO continues to deny the provider's claims or the HMO does not respond to the reconsideration request within the time frames allowed in this subdivision (b)(2)(A), then the provider may file a written request with the commissioner to submit the claims to an independent reviewer as provided in subdivision (b)(3); (B) The provider must include a copy of the written request for reconsideration with the request for an independent review. If the provider does not have a written contract with the HMO that denied the claim on the date the request is filed with the commissioner, then the provider must also send the commissioner payment satisfactory to the commissioner to cover the fees incurred by the independent reviewer. This payment shall be refunded to the provider if the provider is not ultimately required to pay the independent reviewer. Otherwise, the payment shall be used to reimburse any entity that paid the independent reviewer. The provider shall also furnish the commissioner any other information needed by the commissioner to process the provider's request; (C) The provider must file a request for independent review within three hundred sixty-five (365) calendar days after the HMO denies the claim for the first time or recoups the claims payment; (D) Claims payment disputes involved in litigation, arbitration or not associated with a TennCare member are not eligible for independent review;
(A) If a provider's claim is partially or totally denied in a remittance advice or other appropriate written or electronic notice from an HMO, or a provider's previously allowed claim is subsequently partially or totally denied by an HMO by an appropriate written or electronic notice, then the provider may file a written request to the commissioner to submit the claim denial to an independent reviewer as provided in subdivision (b)(3). In the event the provider receives no remittance advice or other appropriate written or electronic notice from an HMO either partially or totally denying a claim within sixty (60) calendar days of the HMO's receipt of the claim, then the provider may file a written request to the commissioner to submit the claim to an independent reviewer as provided in subdivision (b)(3). However, prior to sending this request, the provider must send a written request for reconsideration to the HMO that identifies the claim or claims in dispute, the reasons for the dispute and any documentation supporting the provider's position or request by the HMO. The HMO must respond to the reconsideration request within thirty (30) calendar days after receipt of the request. The response may be a letter acknowledging the receipt of the reconsideration request with an estimated time frame in which the HMO will complete its investigation and provide a complete response to the provider. If the HMO determines that it needs longer than thirty (30) calendar days to completely respond to the provider, the HMO's reconsideration decision shall be issued within sixty (60) calendar days after receipt of the reconsideration request, unless a longer time to completely respond is agreed upon in writing by the provider and the HMO. If the HMO continues to deny the provider's claims or the HMO does not respond to the reconsideration request within the time frames allowed in this subdivision (b)(2)(A), then the provider may file a written request with the commissioner to submit the claims to an independent reviewer as provided in subdivision (b)(3);
(B) The provider must include a copy of the written request for reconsideration with the request for an independent review. If the provider does not have a written contract with the HMO that denied the claim on the date the request is filed with the commissioner, then the provider must also send the commissioner payment satisfactory to the commissioner to cover the fees incurred by the independent reviewer. This payment shall be refunded to the provider if the provider is not ultimately required to pay the independent reviewer. Otherwise, the payment shall be used to reimburse any entity that paid the independent reviewer. The provider shall also furnish the commissioner any other information needed by the commissioner to process the provider's request;
(C) The provider must file a request for independent review within three hundred sixty-five (365) calendar days after the HMO denies the claim for the first time or recoups the claims payment;
(D) Claims payment disputes involved in litigation, arbitration or not associated with a TennCare member are not eligible for independent review;
(3) Each HMO operating a TennCare line of business must contract with independent reviewers selected in accordance with subdivision (b)(4), and implement the following procedures to resolve disputed provider claims: (A) The commissioner shall use best efforts to refer an equal proportion of the total disputed claims to each independent reviewer. A provider may request, and the commissioner may allow, the claims of a provider involving the same HMO to be aggregated and submitted for simultaneous review by an independent reviewer when the specific reason for non-payment of the claims aggregated involve a dispute regarding a common substantive question of fact or law. The mere fact that a claim is not paid does not create a common substantive question of fact or law, unless the provider has received no remittance advice or other appropriate written or electronic notice from an HMO, either partially or totally denying a claim, within sixty (60) calendar days of the HMO's receipt of the claim and the claims regard a common substantive question of fact or law. The reviewer shall, within fourteen (14) calendar days of receipt of the disputed claim or claims, request in writing that both the provider and the HMO provide the reviewer any and all information and documentation regarding the disputed claim or claims. The reviewer shall request the provider and HMO to identify all information and documentation that has been submitted by the provider to the HMO regarding the disputed claim or claims, and advise that the reviewer will not consider any information or documentation not received within thirty (30) calendar days of receipt of the reviewer's request unless the HMO or provider requests the independent reviewer for additional time to complete the investigation of independent review requests when a provider elected to aggregate their claims. Thereupon, the reviewer may grant the HMO or provider an additional thirty (30) calendar days. The reviewer shall then examine all materials submitted and render a decision on the dispute within sixty (60) calendar days of the receipt of the disputed claim or claims, unless either the reviewer requests guidance on a medical issue from the TennCare appeals unit, or the reviewer requests and receives an extension of time from the commissioner to resolve the dispute. In reaching a decision, the reviewer shall not consider any information or documentation from the provider that the provider did not submit to the HMO during that organization's review of the provider's disputed claim or claims; (B) Should the reviewer need assistance on a medical issue connected with the disputed claim or claims, then the reviewer shall refer this specific issue for review and response to the person in charge of the TennCare appeals unit within the TennCare bureau, unless the department in writing designates a different contact. Medical issues requiring referral may include whether a medical benefit is a covered service under the TennCare contract. The TennCare appeals unit may respond to the request, refer the request to an independent contractor, or refer the request to the TennCare bureau for review. A request to determine whether a service received was medically necessary must be responded to by a physician licensed by one (1) or more states in the United States. The appeals unit shall provide a concise response to the request within ninety (90) calendar days after receipt. If the appeals unit seeks the guidance of the TennCare bureau on whether a benefit is a covered service, then the bureau must respond to that request in writing in sufficient time to allow the appeals unit to timely respond to the reviewer. The reviewer shall make a final decision within thirty (30) calendar days of receipt of the appeals unit's response; (C) The reviewer shall send the HMO, the provider, and the TennCare division of the department of commerce and insurance a copy of the decision. Once the reviewer makes a decision requiring an HMO to pay any claims or portion of the claims, then the HMO must send the payment in full to the provider within twenty (20) calendar days of receipt of the reviewer's decision; (D) Within sixty (60) calendar days of a reviewer's decision, either party to the dispute may file suit in any court having jurisdiction to review the reviewer's decision and to recover any funds awarded by the reviewer to the other party. Any claim concerning a reviewer's decision not brought within sixty (60) calendar days of the reviewer's decision will be forever barred. Suits filed pursuant to this section will be conducted in accordance with the Tennessee Rules of Civil Procedure, and the review by the court will be de novo without regard to the reviewer's decision. The reviewer, or any person assisting the reviewer in reaching a decision, shall be prohibited from testifying at the court proceeding considering the reviewer's decision. Unless the contract between the parties specifies otherwise, venue and jurisdiction will be in accordance with Tennessee law. If the dispute between the parties is not fully resolved prior to the entry of a final decision by the court initially hearing the dispute, then the prevailing party shall be entitled to an award of reasonable attorney's fees and expenses from the nonprevailing party. "Reasonable attorney's fees" means the number of hours reasonably expended on the dispute multiplied by a reasonable hourly rate, and shall not exceed ten percent (10%) of the total monetary amount in dispute or five hundred dollars ($500), whichever amount is greater; (E) In lieu of requesting independent review, a provider may pursue any appropriate legal or contractual remedy available to the provider to contest the partial or total denial of the claim. For all claims filed on or after October 1, 1999, the state may not mandate that the provider and HMO resolve the claims payment dispute through arbitration; (F) Providers who are owned by state or local governmental entities shall retain the statutory right of setoff if available. Judicial review of a reviewer's decision regarding a state or local governmental provider shall be in the chancery court of Davidson County, and not in the Tennessee claims commission, unless the provider and HMO have agreed to another appropriate venue and jurisdiction by contract. The Prompt Pay Act, compiled in title 12, chapter 4, part 7, does not impact any claim of sovereign immunity that a state or local governmental provider may possess, although the provider will be responsible for paying any appropriate attorney's fees and expenses awarded under subdivision (b)(3)(D); (G) All costs associated with implementing these procedures shall be paid by the applicable HMO. However, the provider shall reimburse the HMO the independent reviewer's fee within twenty (20) calendar days of receipt of the reviewer's decision, if the reviewer finds that the HMO properly denied the claim being reviewed. If a provider fails to properly reimburse the HMO, the TennCare division of the department of commerce and insurance may prohibit that provider from future participation in the independent review process; (H) The HMO shall compensate the independent reviewer pursuant to their written agreement within thirty (30) calendar days of the HMO's receipt of the independent reviewer's bill for services rendered. If the HMO fails to pay the bill for the independent reviewer's services, then the independent reviewer may request payment directly from the state from any funds held by the state that are payable to the HMO; and (I) The procedures in subdivisions (b)(3)(A)-(H) shall not apply to any claims filed with the HMO before October 1, 1999, even if that claim is refiled after that date;
(A) The commissioner shall use best efforts to refer an equal proportion of the total disputed claims to each independent reviewer. A provider may request, and the commissioner may allow, the claims of a provider involving the same HMO to be aggregated and submitted for simultaneous review by an independent reviewer when the specific reason for non-payment of the claims aggregated involve a dispute regarding a common substantive question of fact or law. The mere fact that a claim is not paid does not create a common substantive question of fact or law, unless the provider has received no remittance advice or other appropriate written or electronic notice from an HMO, either partially or totally denying a claim, within sixty (60) calendar days of the HMO's receipt of the claim and the claims regard a common substantive question of fact or law. The reviewer shall, within fourteen (14) calendar days of receipt of the disputed claim or claims, request in writing that both the provider and the HMO provide the reviewer any and all information and documentation regarding the disputed claim or claims. The reviewer shall request the provider and HMO to identify all information and documentation that has been submitted by the provider to the HMO regarding the disputed claim or claims, and advise that the reviewer will not consider any information or documentation not received within thirty (30) calendar days of receipt of the reviewer's request unless the HMO or provider requests the independent reviewer for additional time to complete the investigation of independent review requests when a provider elected to aggregate their claims. Thereupon, the reviewer may grant the HMO or provider an additional thirty (30) calendar days. The reviewer shall then examine all materials submitted and render a decision on the dispute within sixty (60) calendar days of the receipt of the disputed claim or claims, unless either the reviewer requests guidance on a medical issue from the TennCare appeals unit, or the reviewer requests and receives an extension of time from the commissioner to resolve the dispute. In reaching a decision, the reviewer shall not consider any information or documentation from the provider that the provider did not submit to the HMO during that organization's review of the provider's disputed claim or claims;
(B) Should the reviewer need assistance on a medical issue connected with the disputed claim or claims, then the reviewer shall refer this specific issue for review and response to the person in charge of the TennCare appeals unit within the TennCare bureau, unless the department in writing designates a different contact. Medical issues requiring referral may include whether a medical benefit is a covered service under the TennCare contract. The TennCare appeals unit may respond to the request, refer the request to an independent contractor, or refer the request to the TennCare bureau for review. A request to determine whether a service received was medically necessary must be responded to by a physician licensed by one (1) or more states in the United States. The appeals unit shall provide a concise response to the request within ninety (90) calendar days after receipt. If the appeals unit seeks the guidance of the TennCare bureau on whether a benefit is a covered service, then the bureau must respond to that request in writing in sufficient time to allow the appeals unit to timely respond to the reviewer. The reviewer shall make a final decision within thirty (30) calendar days of receipt of the appeals unit's response;
(C) The reviewer shall send the HMO, the provider, and the TennCare division of the department of commerce and insurance a copy of the decision. Once the reviewer makes a decision requiring an HMO to pay any claims or portion of the claims, then the HMO must send the payment in full to the provider within twenty (20) calendar days of receipt of the reviewer's decision;
(D) Within sixty (60) calendar days of a reviewer's decision, either party to the dispute may file suit in any court having jurisdiction to review the reviewer's decision and to recover any funds awarded by the reviewer to the other party. Any claim concerning a reviewer's decision not brought within sixty (60) calendar days of the reviewer's decision will be forever barred. Suits filed pursuant to this section will be conducted in accordance with the Tennessee Rules of Civil Procedure, and the review by the court will be de novo without regard to the reviewer's decision. The reviewer, or any person assisting the reviewer in reaching a decision, shall be prohibited from testifying at the court proceeding considering the reviewer's decision. Unless the contract between the parties specifies otherwise, venue and jurisdiction will be in accordance with Tennessee law. If the dispute between the parties is not fully resolved prior to the entry of a final decision by the court initially hearing the dispute, then the prevailing party shall be entitled to an award of reasonable attorney's fees and expenses from the nonprevailing party. "Reasonable attorney's fees" means the number of hours reasonably expended on the dispute multiplied by a reasonable hourly rate, and shall not exceed ten percent (10%) of the total monetary amount in dispute or five hundred dollars ($500), whichever amount is greater;
(E) In lieu of requesting independent review, a provider may pursue any appropriate legal or contractual remedy available to the provider to contest the partial or total denial of the claim. For all claims filed on or after October 1, 1999, the state may not mandate that the provider and HMO resolve the claims payment dispute through arbitration;
(F) Providers who are owned by state or local governmental entities shall retain the statutory right of setoff if available. Judicial review of a reviewer's decision regarding a state or local governmental provider shall be in the chancery court of Davidson County, and not in the Tennessee claims commission, unless the provider and HMO have agreed to another appropriate venue and jurisdiction by contract. The Prompt Pay Act, compiled in title 12, chapter 4, part 7, does not impact any claim of sovereign immunity that a state or local governmental provider may possess, although the provider will be responsible for paying any appropriate attorney's fees and expenses awarded under subdivision (b)(3)(D);
(G) All costs associated with implementing these procedures shall be paid by the applicable HMO. However, the provider shall reimburse the HMO the independent reviewer's fee within twenty (20) calendar days of receipt of the reviewer's decision, if the reviewer finds that the HMO properly denied the claim being reviewed. If a provider fails to properly reimburse the HMO, the TennCare division of the department of commerce and insurance may prohibit that provider from future participation in the independent review process;
(H) The HMO shall compensate the independent reviewer pursuant to their written agreement within thirty (30) calendar days of the HMO's receipt of the independent reviewer's bill for services rendered. If the HMO fails to pay the bill for the independent reviewer's services, then the independent reviewer may request payment directly from the state from any funds held by the state that are payable to the HMO; and
(I) The procedures in subdivisions (b)(3)(A)-(H) shall not apply to any claims filed with the HMO before October 1, 1999, even if that claim is refiled after that date;
(4) The commissioner shall appoint a panel of five (5) persons, known as the selection panel for TennCare reviewers. The panel shall consist of two (2) provider representatives, one (1) representative from each of the two (2) HMOs with the largest number of TennCare enrollees, and the commissioner or the commissioner's duly designated representative. The panel shall select a chairperson, and all decisions of the panel shall be made by a majority vote of the members of the panel. The panel shall select and identify an appropriate number of independent reviewers to be retained by each HMO under subdivision (b)(3). The panel shall negotiate the rate of compensation for each reviewer, and the rate of compensation shall be the same for each reviewer. Each HMO engaged in a TennCare line of business, as a condition of participating in this contract or in the TennCare program, shall contract with each reviewer and agree to pay the rate of compensation negotiated by the panel. The members of the panel shall not be paid. The panel shall meet at least twice a year;
(5) By no later than May 1 of each year, the commissioner shall report to the department of health and to the fiscal review committee the number of requests for TennCare claims review filed for each HMO operating a TennCare line of business during the prior calendar year. The commissioner shall also generally report the outcome of these independent review requests for each HMO. In addition, the commissioner shall report the name of any provider whose claim denial is upheld in more than fifty percent (50%) of the independent review requests, as well as the number of claim reviews with the claims denial upheld;
(6) All claims for services furnished to a TennCare enrollee filed with an HMO must be processed by either the HMO or by a single subcontractor retained by the organization for the purpose of processing claims. However, another single entity can process claims related to each of the following: pharmacy, vision, dental or mental health benefits or durable medical equipment;
(7) The HMO shall ensure all its subcontractors processing TennCare claims follow the same claims processing and resolution procedures required by the Prompt Pay Act, compiled in title 12, chapter 4, part 7. TennCare claims processed by a subcontractor are subject to the prompt payment requirements of this statute. Claims denied by a subcontractor are subject to independent review. If a provider requests independent review of a claim denied by a subcontractor, the HMO contracted with that subcontractor must initially pay the independent reviewer's fee. If the independent reviewer upholds the subcontractor's denial, the provider must reimburse the HMO the reviewer's fee. If the independent reviewer finds for the provider, the HMO contracted with the subcontractor must pay the provider within twenty (20) calendar days of the reviewer's decision;
(8) An HMO that subcontracts with another entity to obtain services for TennCare enrollees shall guarantee and assure the payment of all contracted amounts agreed to be paid to the providers by that entity or that entity's agent. This does not preclude the HMO from seeking reimbursement from the subcontractor for any amounts paid. Nor does this prevent the HMO from asserting any legal defenses to the payment of a provider's claims that were available to the subcontractor. Claims filed with a subcontractor are subject to the prompt payment requirements of this statute. Claims denied by a subcontractor are subject to independent review. If a provider requests independent review of a claim denied by a subcontractor, the HMO contracted with that subcontractor must initially pay the independent reviewer's fee. If the independent reviewer upholds the subcontractor's denial, the provider must reimburse the HMO the reviewer's fee. If the independent reviewer finds for the provider, the HMO contracted with the subcontractor must pay the provider within twenty (20) calendar days of the reviewer's decision; and
(9) Any HMO found by the commissioner to be in violation of this subsection (b) shall be subject to revocation or suspension of its certificate of authority under § 56-32-116 or, in the alternative, the imposition of the penalties and other remedies set forth at § 56-32-120 .
Acts 1997 , ch. 267, § 1; 1999, ch. 276, § 1; 2002, ch. 597, §1; 2003 , ch. 37, §§ 1- 3; 2005, ch. 374, § 2; T.C.A. §56-32-226; Acts 2010 , ch. 1027, § 3.
Tenn. Code Ann. § 56-7-908 — TN Code / Title 56 / Chapter 7 / Section 56-7-908
Rates and premiums
Status: in_force

(a) (1) No insurer shall issue any policy of group credit insurance covering debtors in this state, unless the rates are reasonable in relation to the benefits provided. The rates established prior to July 1, 1987, shall not be changed or adjusted until there has been an experience factor of four (4) years under the rates. (2) The rate levels are reasonable for policies that: (A) Condition coverage on the debtor's active employment at the time the indebtedness is incurred; (B) Extend coverage to all debtors regardless of age or to all debtors not older than a specified limit, which shall be not less than sixty-five (65) years of age at the time the insurance becomes effective; and (C) Exempt from coverage suicides committed, while sane or insane, within two (2) years from the most recent date of issue of the policy or certificate. (3) The applicability of the rate levels shall not be affected by the fact that the insurer requires the debtor to answer questions regarding health: (A) If the debtor applies for coverage more than thirty (30) days after the extension of credit for which coverage is sought; or (B) If the amount of credit life insurance applied for is twenty-five thousand dollars ($25,000) or more. (b) (1) A creditor may remit and an insurer may collect premiums on either a single premium basis or on a monthly outstanding balance basis. If the creditor adds identifiable insurance charges or premiums for credit life insurance to the total amount of indebtedness, the creditor has loaned the premium or insurance charge to the debtor and the premium on the insurance charge is deemed collected for the insurer as soon as it is added to the indebtedness. In that event the creditor must remit and the insurer must collect on a single premium basis only. A creditor may remit and an insurer may collect on the monthly basis if the insurance charge or premium is not added to the amount of the loan and does not constitute part of the outstanding indebtedness, or if no direct or indirect finance, carrying, credit or service charge is made to the debtor in connection with the insurance charge or premium. (2) (A) Nothing in this subsection (b) is intended to prohibit the premium or identifiable charge for decreasing, also known as reducing, term credit life insurance from being calculated prior to the commencement of the term of the insurance: (i) On that amount of insurance equal to each contractual monthly or other periodic outstanding principal balance of the specific loan or other credit transaction in connection with which the insurance is issued; and (ii) At the rate that is the actuarial equivalent of the dollar and cent approved per annum rate for equal decreasing term credit life insurance; (B) The premium or other identifiable charge so determined may be collected as a single premium at the commencement of the term of the insurance. (3) "Single premium," as used in this subsection (b), means and includes that premium that is paid in a single payment, with the commencement of the term notwithstanding the method of calculation or determination. (c) A minimum premium of fifty cents (50¢) shall be considered reasonable on any policy of credit life insurance. In the event any premium is unearned and to be returned to the insured, no returned premium calculated at less than one dollar ($1.00) need be refunded. (d) An insurer may receive approval of a different premium rate or schedule of premium rates to be used in connection with a particular policy form, or a class or classes of debtors of a creditor, the class or classes of debtors including, but not being limited to, debtors whose repayment schedules provide for less rapid repayment of principal than is assumed in calculating rates for decreasing term credit insurance, that demonstrates to the satisfaction of the commissioner that the mortality or morbidity experience that may reasonably be anticipated to result in a premium that is reasonable in relation to the benefits provided. (e) If an insurer proposes to write any type of life coverage in connection with loans or credit transactions other than those described in this section, it may request a public hearing to determine if a public need exists for the coverage, and to determine, through credible statistics, the initial rate to be employed. (f) Where an identifiable charge for group credit life insurance is made to insured borrowers or purchasers, the charge shall not exceed the premium provided for in the group policy issued to the creditor at the date of issue of the certificate. Acts 1985, ch. 107, §§ 3, 7; 1991, ch. 43, §§ 1, 2.
(a) (1) No insurer shall issue any policy of group credit insurance covering debtors in this state, unless the rates are reasonable in relation to the benefits provided. The rates established prior to July 1, 1987, shall not be changed or adjusted until there has been an experience factor of four (4) years under the rates. (2) The rate levels are reasonable for policies that: (A) Condition coverage on the debtor's active employment at the time the indebtedness is incurred; (B) Extend coverage to all debtors regardless of age or to all debtors not older than a specified limit, which shall be not less than sixty-five (65) years of age at the time the insurance becomes effective; and (C) Exempt from coverage suicides committed, while sane or insane, within two (2) years from the most recent date of issue of the policy or certificate. (3) The applicability of the rate levels shall not be affected by the fact that the insurer requires the debtor to answer questions regarding health: (A) If the debtor applies for coverage more than thirty (30) days after the extension of credit for which coverage is sought; or (B) If the amount of credit life insurance applied for is twenty-five thousand dollars ($25,000) or more.
(1) No insurer shall issue any policy of group credit insurance covering debtors in this state, unless the rates are reasonable in relation to the benefits provided. The rates established prior to July 1, 1987, shall not be changed or adjusted until there has been an experience factor of four (4) years under the rates.
(2) The rate levels are reasonable for policies that: (A) Condition coverage on the debtor's active employment at the time the indebtedness is incurred; (B) Extend coverage to all debtors regardless of age or to all debtors not older than a specified limit, which shall be not less than sixty-five (65) years of age at the time the insurance becomes effective; and (C) Exempt from coverage suicides committed, while sane or insane, within two (2) years from the most recent date of issue of the policy or certificate.
(A) Condition coverage on the debtor's active employment at the time the indebtedness is incurred;
(B) Extend coverage to all debtors regardless of age or to all debtors not older than a specified limit, which shall be not less than sixty-five (65) years of age at the time the insurance becomes effective; and
(C) Exempt from coverage suicides committed, while sane or insane, within two (2) years from the most recent date of issue of the policy or certificate.
(3) The applicability of the rate levels shall not be affected by the fact that the insurer requires the debtor to answer questions regarding health: (A) If the debtor applies for coverage more than thirty (30) days after the extension of credit for which coverage is sought; or (B) If the amount of credit life insurance applied for is twenty-five thousand dollars ($25,000) or more.
(A) If the debtor applies for coverage more than thirty (30) days after the extension of credit for which coverage is sought; or
(B) If the amount of credit life insurance applied for is twenty-five thousand dollars ($25,000) or more.
(b) (1) A creditor may remit and an insurer may collect premiums on either a single premium basis or on a monthly outstanding balance basis. If the creditor adds identifiable insurance charges or premiums for credit life insurance to the total amount of indebtedness, the creditor has loaned the premium or insurance charge to the debtor and the premium on the insurance charge is deemed collected for the insurer as soon as it is added to the indebtedness. In that event the creditor must remit and the insurer must collect on a single premium basis only. A creditor may remit and an insurer may collect on the monthly basis if the insurance charge or premium is not added to the amount of the loan and does not constitute part of the outstanding indebtedness, or if no direct or indirect finance, carrying, credit or service charge is made to the debtor in connection with the insurance charge or premium. (2) (A) Nothing in this subsection (b) is intended to prohibit the premium or identifiable charge for decreasing, also known as reducing, term credit life insurance from being calculated prior to the commencement of the term of the insurance: (i) On that amount of insurance equal to each contractual monthly or other periodic outstanding principal balance of the specific loan or other credit transaction in connection with which the insurance is issued; and (ii) At the rate that is the actuarial equivalent of the dollar and cent approved per annum rate for equal decreasing term credit life insurance; (B) The premium or other identifiable charge so determined may be collected as a single premium at the commencement of the term of the insurance. (3) "Single premium," as used in this subsection (b), means and includes that premium that is paid in a single payment, with the commencement of the term notwithstanding the method of calculation or determination.
(1) A creditor may remit and an insurer may collect premiums on either a single premium basis or on a monthly outstanding balance basis. If the creditor adds identifiable insurance charges or premiums for credit life insurance to the total amount of indebtedness, the creditor has loaned the premium or insurance charge to the debtor and the premium on the insurance charge is deemed collected for the insurer as soon as it is added to the indebtedness. In that event the creditor must remit and the insurer must collect on a single premium basis only. A creditor may remit and an insurer may collect on the monthly basis if the insurance charge or premium is not added to the amount of the loan and does not constitute part of the outstanding indebtedness, or if no direct or indirect finance, carrying, credit or service charge is made to the debtor in connection with the insurance charge or premium.
(2) (A) Nothing in this subsection (b) is intended to prohibit the premium or identifiable charge for decreasing, also known as reducing, term credit life insurance from being calculated prior to the commencement of the term of the insurance: (i) On that amount of insurance equal to each contractual monthly or other periodic outstanding principal balance of the specific loan or other credit transaction in connection with which the insurance is issued; and (ii) At the rate that is the actuarial equivalent of the dollar and cent approved per annum rate for equal decreasing term credit life insurance; (B) The premium or other identifiable charge so determined may be collected as a single premium at the commencement of the term of the insurance.
(A) Nothing in this subsection (b) is intended to prohibit the premium or identifiable charge for decreasing, also known as reducing, term credit life insurance from being calculated prior to the commencement of the term of the insurance: (i) On that amount of insurance equal to each contractual monthly or other periodic outstanding principal balance of the specific loan or other credit transaction in connection with which the insurance is issued; and (ii) At the rate that is the actuarial equivalent of the dollar and cent approved per annum rate for equal decreasing term credit life insurance;
(i) On that amount of insurance equal to each contractual monthly or other periodic outstanding principal balance of the specific loan or other credit transaction in connection with which the insurance is issued; and
(ii) At the rate that is the actuarial equivalent of the dollar and cent approved per annum rate for equal decreasing term credit life insurance;
(B) The premium or other identifiable charge so determined may be collected as a single premium at the commencement of the term of the insurance.
(3) "Single premium," as used in this subsection (b), means and includes that premium that is paid in a single payment, with the commencement of the term notwithstanding the method of calculation or determination.
(c) A minimum premium of fifty cents (50¢) shall be considered reasonable on any policy of credit life insurance. In the event any premium is unearned and to be returned to the insured, no returned premium calculated at less than one dollar ($1.00) need be refunded.
(d) An insurer may receive approval of a different premium rate or schedule of premium rates to be used in connection with a particular policy form, or a class or classes of debtors of a creditor, the class or classes of debtors including, but not being limited to, debtors whose repayment schedules provide for less rapid repayment of principal than is assumed in calculating rates for decreasing term credit insurance, that demonstrates to the satisfaction of the commissioner that the mortality or morbidity experience that may reasonably be anticipated to result in a premium that is reasonable in relation to the benefits provided.
(e) If an insurer proposes to write any type of life coverage in connection with loans or credit transactions other than those described in this section, it may request a public hearing to determine if a public need exists for the coverage, and to determine, through credible statistics, the initial rate to be employed.
(f) Where an identifiable charge for group credit life insurance is made to insured borrowers or purchasers, the charge shall not exceed the premium provided for in the group policy issued to the creditor at the date of issue of the certificate.
Acts 1985, ch. 107, §§ 3, 7; 1991, ch. 43, §§ 1, 2.