Tenn. Code Ann. § 56-12-207 — TN Code / Title 56 / Chapter 12 / Section 56-12-207
Impaired or insolvent insurers
Status: in_force

(a) If a member insurer is an impaired insurer, the association may, in its discretion, and subject to any conditions imposed by the association that do not impair the contractual obligations of the impaired insurer and that are approved by the commissioner: (1) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, any or all of the policies or contracts of the impaired insurer; and (2) Provide monies, pledges, loans, notes, guarantees, or other means as are proper to effectuate subdivision (a)(1) and assure payment of the contractual obligations of the impaired insurer pending action under subdivision (a)(1). (b) If a member insurer is an insolvent insurer, then the association shall, in its discretion, either: (1) (A) (i) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, the policies or contracts of the insolvent insurer; or (ii) Assure payment of the contractual obligations of the insolvent insurer; and (B) Provide monies, pledges, loans, notes, guarantees, or other means reasonably necessary to discharge the association's duties; or (2) Provide benefits and coverage in accordance with the following provisions: (A) With respect to policies and contracts, assure payment of benefits that would have been payable under the policies or contracts of the insolvent insurer for claims incurred: (i) With respect to group policies and contracts, no later than the earlier of the next renewal date under those policies or contracts or forty-five (45) days, but in no event less than thirty (30) days, after the date on which the association becomes obligated with respect to the policies and contracts; and (ii) With respect to non-group policies, contracts, and annuities no later than the earlier of the next renewal date, if any, under the policies or contracts or one (1) year, but in no event less than thirty (30) days, from the date on which the association becomes obligated with respect to the policies or contracts; (B) Make diligent efforts to provide all known insureds, enrollees, or annuitants for non-group policies and contracts, or group policy or contract owners with respect to group policies and contracts, thirty-days' notice of the termination pursuant to subdivision (b)(2)(A), of the benefits provided; (C) With respect to non-group policies and contracts covered by the association, make available to each known insured, enrollee, or annuitant, or owner if other than the insured or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with subdivision (b)(2)(D), if the insureds, enrollees, or annuitants had a right under law or the terminated policy, contract, or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class; (D) (i) In providing the substitute coverage required under subdivision (b)(2)(C), the association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates subject to the prior approval of the commissioner; (ii) Alternative or reissued policies or contracts must be offered without requiring evidence of insurability, and must not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract; and (iii) The association may reinsure any alternative or reissued policy or contract; (E) (i) Alternative policies or contracts adopted by the association are subject to the approval of the commissioner. The association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency; (ii) Alternative policies or contracts must contain at least the minimum statutory provisions required in this state and provide benefits that are not unreasonable in relation to the premium charged. The association shall set the premium in accordance with a table of rates that it shall adopt. The premium must reflect the amount of insurance to be provided and the age and class of risk of each insured, but must not reflect any changes in the health of the insured after the original policy or contract was last underwritten; and (iii) Any alternative policy or contract issued by the association must provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the association; (F) If the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium must be actuarially justified and set by the association in accordance with the amount of insurance or coverage provided and the age and class of risk, subject to prior approval of the commissioner; (G) The association's obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract ceases on the date the coverage or policy or contract is replaced by another similar policy or contract by the policy or contract owner, the insured, the enrollee, or the association; and (H) When proceeding under this subdivision (b)(2), with respect to a policy or contract carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with § 56-12-204(b)(2)(C) . (c) Nonpayment of premiums within thirty-one (31) days after the date required under the terms of any guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage terminates the association's obligations under the policy, contract, or coverage under this part with respect to the policy, contract, or coverage, except with respect to any claims incurred or any net cash surrender value which may be due in accordance with this part. (d) Premiums due for coverage after entry of an order of liquidation of an insolvent insurer belong to and are payable at the direction of the association. If the liquidator of an insolvent insurer requests, the association shall provide a report to the liquidator regarding such premium collected by the association. The association is liable for unearned premiums due to policy or contract owners arising after the entry of the order. (e) The protection provided by this part does not apply where any guaranty protection is provided to residents of this state by the laws of the domiciliary state or jurisdiction of the impaired or insolvent insurer other than this state. (f) In carrying out its duties under subsection (b), the association may: (1) Subject to approval by a court in this state, impose permanent policy or contract liens in connection with a guarantee, assumption, or reinsurance agreement if the association finds that the amounts that can be assessed under this part are less than the amounts needed to assure full and prompt performance of the association's duties under this part, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of permanent policy or contract liens, to be in the public interest; or (2) Subject to approval by a court in this state, impose temporary moratoriums or liens on payments of cash values and policy loans, or any other right to withdraw funds held in conjunction with policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan value. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court on payment of cash values or policy loans, or on any other right to withdraw funds held in conjunction with policies or contracts out of the assets of the impaired or insolvent insurer, the association may defer the payment of cash values, policy loans, or other rights by the association for the period of the moratorium or moratorium charge imposed by the receivership court, except for claims covered by the association to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court. (g) The commissioner shall promptly pay to the association a deposit in this state, held pursuant to law or required by the commissioner for the benefit of creditors, including policy or contract owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of a member insurer domiciled in this state or in a reciprocal state, pursuant to § 56-9-409 . The association is entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy or contract owners' claims related to that insolvency for which the association has provided statutory benefits by the aggregate amount of all policy or contract owners' claims in this state related to that insolvency and shall remit to the domiciliary receiver the amount so paid to the association less the amount retained pursuant to this subsection (g). Any amount so paid to the association and retained by it is treated as a distribution of estate assets pursuant to applicable state receivership law dealing with early access disbursements. (h) If the association fails to act within a reasonable period of time with respect to an insolvent insurer, as provided in subsection (b), then the commissioner has the powers and duties of the association under this part with respect to the insolvent insurer. (i) The association may render assistance and advice to the commissioner, upon the commissioner's request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of an impaired or insolvent insurer. (j) The association has standing to appear or intervene before a court or agency in this state with jurisdiction over an impaired or insolvent insurer concerning which the association is or may become obligated under this part, or with jurisdiction over any person or property against which the association may have rights through subrogation or otherwise. Standing extends to all matters germane to the powers and duties of the association, including, but not limited to, proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The association also has the right to appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the association is or may become obligated or with jurisdiction over any person or property against whom the association may have rights through subrogation or otherwise. (k) (1) A person receiving benefits under this part is deemed to have assigned the rights under, and any causes of action against any person for losses arising under, resulting from, or otherwise relating to, the covered policy or contract to the association to the extent of the benefits received because of this part, whether the benefits are payments of or on account of contractual obligations, continuation of coverage, or provision of substitute or alternative policies, contracts, or coverages. The association may require an assignment to it of the rights and cause of action by any enrollee, payee, policy, or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any right or benefits conferred by this part upon the person. (2) The subrogation rights of the association under this subsection (k) have the same priority against the assets of the impaired or insolvent insurer as that possessed by the person entitled to receive benefits under this part. (3) In addition to subdivisions (k)(1) and (2), the association has all common law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or contract with respect to the policy or contracts. (4) If the preceding provisions of this subsection (k) are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the association with respect to the related covered obligations must be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts or portion thereof covered by the association. (5) If the association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the association has rights as described in this subsection (k), the person shall pay to the association the portion of the recovery attributable to the policies or contracts or portion thereof covered by the association. (l) In addition to the rights and powers elsewhere in this part, the association may: (1) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this part; (2) Sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under § 56-12-208 and to settle claims or potential claims against it; (3) Borrow money to effect the purposes of this part. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic member insurers and may be carried as admitted assets; (4) Employ or retain persons as are necessary or appropriate to handle the financial transactions of the association, and to perform other functions as become necessary or proper under this part; (5) Take legal action as may be necessary or appropriate to avoid or recover payment of improper claims; (6) Exercise, for the purposes of this part and to the extent approved by the commissioner, the powers of a domestic life insurer, health insurer, or health maintenance organization, but in no case may the association issue policies or contracts other than those issued to perform its obligations under this part; (7) Organize itself as a corporation or in other legal form permitted by the laws of the state; (8) Request information from a person seeking coverage from the association in order to aid the association in determining its obligations under this part with respect to the person, and the person shall promptly comply with the request; (9) Unless prohibited by law, in accordance with the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this part; and (10) Take other necessary or appropriate action to discharge its duties and obligations under this part or to exercise its powers under this part. (m) The association may join an organization of one (1) or more other state associations of similar purposes, to further the purposes and administer the powers and duties of the association. (n) (1) (A) At any time within one hundred eighty (180) days of the date of the order of liquidation, the association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts, or annuities covered, in whole or in part, by the association, in each case under any one (1) or more reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the association. Any assumption is effective as of the date of the order of liquidation. The election is effected by the association or the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) on its behalf sending written notice, return receipt requested, to the affected reinsurers. (B) To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance, and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer shall make the following available upon request to the association or to NOLHGA on its behalf as soon as possible after commencement of formal delinquency proceedings: (i) Copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether the contracts should be assumed; and (ii) Notices of any defaults under the reinsurance contracts or any known event or condition that with the passage of time could become a default under the reinsurance contracts. (C) The following apply to reinsurance contracts assumed by the association: (i) The association is responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation, and is responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case that relates to policies, contracts, or annuities covered, in whole or in part, by the association. The association may charge policies, contracts, or annuities covered in part by the association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the association and shall provide notice and an accounting of these charges to the liquidator; (ii) The association is entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts, or annuities covered, in whole or in part, by the association. Upon receipt of any such amounts, the association is obliged to pay to the beneficiary under the policy, contracts, or annuity on account of which the amounts were paid a portion of the amount equal to the lesser of: (a) The amount received by the association; or (b) The excess of the amount received by the association over the amount equal to the benefits paid by the association on account of the policy, contracts, or annuity less the retention of the insurer applicable to the loss or event; (iii) Within thirty (30) days following the association's election, the association and each reinsurer under contracts assumed by the association shall calculate the net balance due to or from the association under each reinsurance contract as of the election date with respect to policies, contracts, or annuities covered, in whole or in part, by the association, which calculation must give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the association or reinsurer shall pay any remaining balance due the other, in each case within five (5) days of the completion of the calculation. Any disputes over the amounts due to either the association or the reinsurer must be resolved by arbitration pursuant to the terms of the affected reinsurance contracts or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the association pursuant to subdivision (n)(1)(C)(ii), the receiver shall remit the same to the association as promptly as practicable; and (iv) If the association or receiver, on the association's behalf, within sixty (60) days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts, or annuities covered, in whole or in part, by the association, the reinsurer is not entitled to terminate the reinsurance contracts for failure to pay premium insofar as the reinsurance contracts relate to policies, contracts, or annuities covered, in whole or in part, by the association, and is not entitled to set off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the association, against amounts due the association. (2) During the period from the date of the order of liquidation until the election date, or, if the election date does not occur, until one hundred eighty (180) days after the date of the order of liquidation: (A) (i) Neither the association nor the reinsurer has any rights or obligations under reinsurance contracts that the association has the right to assume under subdivision (n)(1), whether for periods prior to or after the date of the order of liquidation; and (ii) The reinsurer, the receiver, and the association shall, to the extent practicable, provide each other data and records reasonably requested; and (B) Provided that once the association has elected to assume a reinsurance contract, the parties' rights and obligations are governed by subdivision (n)(1). (3) If the association does not elect to assume a reinsurance contract by the election date pursuant to subdivision (n)(1), the association has no rights or obligations for periods both before and after the date of the order of liquidation, with respect to the reinsurance contract. (4) When policies, contracts, or annuities, or covered obligations with respect thereto, are transferred to an assuming insurer, then the association may also transfer the reinsurance on the policies, contracts, or annuities in the case of contracts assumed under subdivision (n)(1), subject to the following: (A) Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred does not cover any new policies of insurance, contracts, or annuities in addition to those transferred; (B) The obligations described in subdivision (n)(1) no longer apply with respect to matters arising after the effective date of the transfer; and (C) The transferring party shall give notice in writing, return receipt requested, to the affected reinsurer not less than thirty (30) days prior to the effective date of the transfer. (5) This subsection (n) supersedes the provisions of any state law or of any affected reinsurance contract that provides for or requires any payment of reinsurance proceeds on account of losses or events that occur in periods after the date of the order of liquidation to the receiver of the insolvent insurer or any other person. The receiver remains entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods prior to the date of the order of liquidation, subject to applicable set-off provisions. (6) Except as otherwise provided in this section, nothing in this subsection (n) alters or modifies the terms and conditions of any reinsurance contract. Nothing in this section abrogates or limits any rights of any reinsurer to claim that it is entitled to rescind a reinsurance contract. Nothing in this section gives a policyholder, contract owner, enrollee, certificate holder, or beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in the reinsurance contract. Nothing in this section limits or affects the association's rights as a creditor of the estate against the assets of the estate. Nothing in this section applies to reinsurance agreements covering property or casualty risks. (o) The board of directors of the association has discretion and shall exercise reasonable business judgment to determine the means by which the association is to provide the benefits of this part in an economical and efficient manner. (p) Where the association has arranged or offered to provide the benefits of this part to a covered person under a plan or arrangement that fulfills the association's obligations under this part, the person is not entitled to benefits from the association in addition to or other than those provided under the plan or arrangement. (q) Venue in a suit against the association arising under this part is in chancery court of Davidson County. The association is not required to give an appeal bond in an appeal that relates to a cause of action arising under this part. (r) In carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts under this section, the association may issue substitute coverage for a policy or contract that provides an interest rate, crediting rate, or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following: (1) In lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for: (A) A fixed interest rate; (B) Payment of dividends with minimum guarantees; and (C) A different method for calculating interest or changes in value; (2) There is no requirement for evidence of insurability, waiting period, or other exclusion that would not have applied under the replaced policy or contract; and (3) The alternative policy or contract is substantially similar to the replaced policy or contract in all other material terms. Amended by 2019 Tenn. Acts, ch. 5,s 5, eff. 7/1/2019. Acts 1988, ch. 1032, § 7; 2010, ch. 713, § 4.
(a) If a member insurer is an impaired insurer, the association may, in its discretion, and subject to any conditions imposed by the association that do not impair the contractual obligations of the impaired insurer and that are approved by the commissioner: (1) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, any or all of the policies or contracts of the impaired insurer; and (2) Provide monies, pledges, loans, notes, guarantees, or other means as are proper to effectuate subdivision (a)(1) and assure payment of the contractual obligations of the impaired insurer pending action under subdivision (a)(1).
(1) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, any or all of the policies or contracts of the impaired insurer; and
(2) Provide monies, pledges, loans, notes, guarantees, or other means as are proper to effectuate subdivision (a)(1) and assure payment of the contractual obligations of the impaired insurer pending action under subdivision (a)(1).
(b) If a member insurer is an insolvent insurer, then the association shall, in its discretion, either: (1) (A) (i) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, the policies or contracts of the insolvent insurer; or (ii) Assure payment of the contractual obligations of the insolvent insurer; and (B) Provide monies, pledges, loans, notes, guarantees, or other means reasonably necessary to discharge the association's duties; or (2) Provide benefits and coverage in accordance with the following provisions: (A) With respect to policies and contracts, assure payment of benefits that would have been payable under the policies or contracts of the insolvent insurer for claims incurred: (i) With respect to group policies and contracts, no later than the earlier of the next renewal date under those policies or contracts or forty-five (45) days, but in no event less than thirty (30) days, after the date on which the association becomes obligated with respect to the policies and contracts; and (ii) With respect to non-group policies, contracts, and annuities no later than the earlier of the next renewal date, if any, under the policies or contracts or one (1) year, but in no event less than thirty (30) days, from the date on which the association becomes obligated with respect to the policies or contracts; (B) Make diligent efforts to provide all known insureds, enrollees, or annuitants for non-group policies and contracts, or group policy or contract owners with respect to group policies and contracts, thirty-days' notice of the termination pursuant to subdivision (b)(2)(A), of the benefits provided; (C) With respect to non-group policies and contracts covered by the association, make available to each known insured, enrollee, or annuitant, or owner if other than the insured or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with subdivision (b)(2)(D), if the insureds, enrollees, or annuitants had a right under law or the terminated policy, contract, or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class; (D) (i) In providing the substitute coverage required under subdivision (b)(2)(C), the association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates subject to the prior approval of the commissioner; (ii) Alternative or reissued policies or contracts must be offered without requiring evidence of insurability, and must not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract; and (iii) The association may reinsure any alternative or reissued policy or contract; (E) (i) Alternative policies or contracts adopted by the association are subject to the approval of the commissioner. The association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency; (ii) Alternative policies or contracts must contain at least the minimum statutory provisions required in this state and provide benefits that are not unreasonable in relation to the premium charged. The association shall set the premium in accordance with a table of rates that it shall adopt. The premium must reflect the amount of insurance to be provided and the age and class of risk of each insured, but must not reflect any changes in the health of the insured after the original policy or contract was last underwritten; and (iii) Any alternative policy or contract issued by the association must provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the association; (F) If the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium must be actuarially justified and set by the association in accordance with the amount of insurance or coverage provided and the age and class of risk, subject to prior approval of the commissioner; (G) The association's obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract ceases on the date the coverage or policy or contract is replaced by another similar policy or contract by the policy or contract owner, the insured, the enrollee, or the association; and (H) When proceeding under this subdivision (b)(2), with respect to a policy or contract carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with § 56-12-204(b)(2)(C) .
(1) (A) (i) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, the policies or contracts of the insolvent insurer; or (ii) Assure payment of the contractual obligations of the insolvent insurer; and (B) Provide monies, pledges, loans, notes, guarantees, or other means reasonably necessary to discharge the association's duties; or
(A) (i) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, the policies or contracts of the insolvent insurer; or (ii) Assure payment of the contractual obligations of the insolvent insurer; and
(i) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, the policies or contracts of the insolvent insurer; or
(ii) Assure payment of the contractual obligations of the insolvent insurer; and
(B) Provide monies, pledges, loans, notes, guarantees, or other means reasonably necessary to discharge the association's duties; or
(2) Provide benefits and coverage in accordance with the following provisions: (A) With respect to policies and contracts, assure payment of benefits that would have been payable under the policies or contracts of the insolvent insurer for claims incurred: (i) With respect to group policies and contracts, no later than the earlier of the next renewal date under those policies or contracts or forty-five (45) days, but in no event less than thirty (30) days, after the date on which the association becomes obligated with respect to the policies and contracts; and (ii) With respect to non-group policies, contracts, and annuities no later than the earlier of the next renewal date, if any, under the policies or contracts or one (1) year, but in no event less than thirty (30) days, from the date on which the association becomes obligated with respect to the policies or contracts; (B) Make diligent efforts to provide all known insureds, enrollees, or annuitants for non-group policies and contracts, or group policy or contract owners with respect to group policies and contracts, thirty-days' notice of the termination pursuant to subdivision (b)(2)(A), of the benefits provided; (C) With respect to non-group policies and contracts covered by the association, make available to each known insured, enrollee, or annuitant, or owner if other than the insured or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with subdivision (b)(2)(D), if the insureds, enrollees, or annuitants had a right under law or the terminated policy, contract, or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class; (D) (i) In providing the substitute coverage required under subdivision (b)(2)(C), the association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates subject to the prior approval of the commissioner; (ii) Alternative or reissued policies or contracts must be offered without requiring evidence of insurability, and must not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract; and (iii) The association may reinsure any alternative or reissued policy or contract; (E) (i) Alternative policies or contracts adopted by the association are subject to the approval of the commissioner. The association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency; (ii) Alternative policies or contracts must contain at least the minimum statutory provisions required in this state and provide benefits that are not unreasonable in relation to the premium charged. The association shall set the premium in accordance with a table of rates that it shall adopt. The premium must reflect the amount of insurance to be provided and the age and class of risk of each insured, but must not reflect any changes in the health of the insured after the original policy or contract was last underwritten; and (iii) Any alternative policy or contract issued by the association must provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the association; (F) If the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium must be actuarially justified and set by the association in accordance with the amount of insurance or coverage provided and the age and class of risk, subject to prior approval of the commissioner; (G) The association's obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract ceases on the date the coverage or policy or contract is replaced by another similar policy or contract by the policy or contract owner, the insured, the enrollee, or the association; and (H) When proceeding under this subdivision (b)(2), with respect to a policy or contract carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with § 56-12-204(b)(2)(C) .
(A) With respect to policies and contracts, assure payment of benefits that would have been payable under the policies or contracts of the insolvent insurer for claims incurred: (i) With respect to group policies and contracts, no later than the earlier of the next renewal date under those policies or contracts or forty-five (45) days, but in no event less than thirty (30) days, after the date on which the association becomes obligated with respect to the policies and contracts; and (ii) With respect to non-group policies, contracts, and annuities no later than the earlier of the next renewal date, if any, under the policies or contracts or one (1) year, but in no event less than thirty (30) days, from the date on which the association becomes obligated with respect to the policies or contracts;
(i) With respect to group policies and contracts, no later than the earlier of the next renewal date under those policies or contracts or forty-five (45) days, but in no event less than thirty (30) days, after the date on which the association becomes obligated with respect to the policies and contracts; and
(ii) With respect to non-group policies, contracts, and annuities no later than the earlier of the next renewal date, if any, under the policies or contracts or one (1) year, but in no event less than thirty (30) days, from the date on which the association becomes obligated with respect to the policies or contracts;
(B) Make diligent efforts to provide all known insureds, enrollees, or annuitants for non-group policies and contracts, or group policy or contract owners with respect to group policies and contracts, thirty-days' notice of the termination pursuant to subdivision (b)(2)(A), of the benefits provided;
(C) With respect to non-group policies and contracts covered by the association, make available to each known insured, enrollee, or annuitant, or owner if other than the insured or annuitant, and with respect to an individual formerly an insured, enrollee, or annuitant under a group policy or contract who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with subdivision (b)(2)(D), if the insureds, enrollees, or annuitants had a right under law or the terminated policy, contract, or annuity to convert coverage to individual coverage or to continue an individual policy, contract, or annuity in force until a specified age or for a specified time, during which the insurer or health maintenance organization had no right unilaterally to make changes in any provision of the policy, contract, or annuity or had a right only to make changes in premium by class;
(D) (i) In providing the substitute coverage required under subdivision (b)(2)(C), the association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates subject to the prior approval of the commissioner; (ii) Alternative or reissued policies or contracts must be offered without requiring evidence of insurability, and must not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract; and (iii) The association may reinsure any alternative or reissued policy or contract;
(i) In providing the substitute coverage required under subdivision (b)(2)(C), the association may offer either to reissue the terminated coverage or to issue an alternative policy or contract at actuarially justified rates subject to the prior approval of the commissioner;
(ii) Alternative or reissued policies or contracts must be offered without requiring evidence of insurability, and must not provide for any waiting period or exclusion that would not have applied under the terminated policy or contract; and
(iii) The association may reinsure any alternative or reissued policy or contract;
(E) (i) Alternative policies or contracts adopted by the association are subject to the approval of the commissioner. The association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency; (ii) Alternative policies or contracts must contain at least the minimum statutory provisions required in this state and provide benefits that are not unreasonable in relation to the premium charged. The association shall set the premium in accordance with a table of rates that it shall adopt. The premium must reflect the amount of insurance to be provided and the age and class of risk of each insured, but must not reflect any changes in the health of the insured after the original policy or contract was last underwritten; and (iii) Any alternative policy or contract issued by the association must provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the association;
(i) Alternative policies or contracts adopted by the association are subject to the approval of the commissioner. The association may adopt alternative policies or contracts of various types for future issuance without regard to any particular impairment or insolvency;
(ii) Alternative policies or contracts must contain at least the minimum statutory provisions required in this state and provide benefits that are not unreasonable in relation to the premium charged. The association shall set the premium in accordance with a table of rates that it shall adopt. The premium must reflect the amount of insurance to be provided and the age and class of risk of each insured, but must not reflect any changes in the health of the insured after the original policy or contract was last underwritten; and
(iii) Any alternative policy or contract issued by the association must provide coverage of a type similar to that of the policy or contract issued by the impaired or insolvent insurer, as determined by the association;
(F) If the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy or contract, the premium must be actuarially justified and set by the association in accordance with the amount of insurance or coverage provided and the age and class of risk, subject to prior approval of the commissioner;
(G) The association's obligations with respect to coverage under any policy or contract of the impaired or insolvent insurer or under any reissued or alternative policy or contract ceases on the date the coverage or policy or contract is replaced by another similar policy or contract by the policy or contract owner, the insured, the enrollee, or the association; and
(H) When proceeding under this subdivision (b)(2), with respect to a policy or contract carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with § 56-12-204(b)(2)(C) .
(c) Nonpayment of premiums within thirty-one (31) days after the date required under the terms of any guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage terminates the association's obligations under the policy, contract, or coverage under this part with respect to the policy, contract, or coverage, except with respect to any claims incurred or any net cash surrender value which may be due in accordance with this part.
(d) Premiums due for coverage after entry of an order of liquidation of an insolvent insurer belong to and are payable at the direction of the association. If the liquidator of an insolvent insurer requests, the association shall provide a report to the liquidator regarding such premium collected by the association. The association is liable for unearned premiums due to policy or contract owners arising after the entry of the order.
(e) The protection provided by this part does not apply where any guaranty protection is provided to residents of this state by the laws of the domiciliary state or jurisdiction of the impaired or insolvent insurer other than this state.
(f) In carrying out its duties under subsection (b), the association may: (1) Subject to approval by a court in this state, impose permanent policy or contract liens in connection with a guarantee, assumption, or reinsurance agreement if the association finds that the amounts that can be assessed under this part are less than the amounts needed to assure full and prompt performance of the association's duties under this part, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of permanent policy or contract liens, to be in the public interest; or (2) Subject to approval by a court in this state, impose temporary moratoriums or liens on payments of cash values and policy loans, or any other right to withdraw funds held in conjunction with policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan value. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court on payment of cash values or policy loans, or on any other right to withdraw funds held in conjunction with policies or contracts out of the assets of the impaired or insolvent insurer, the association may defer the payment of cash values, policy loans, or other rights by the association for the period of the moratorium or moratorium charge imposed by the receivership court, except for claims covered by the association to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court.
(1) Subject to approval by a court in this state, impose permanent policy or contract liens in connection with a guarantee, assumption, or reinsurance agreement if the association finds that the amounts that can be assessed under this part are less than the amounts needed to assure full and prompt performance of the association's duties under this part, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of permanent policy or contract liens, to be in the public interest; or
(2) Subject to approval by a court in this state, impose temporary moratoriums or liens on payments of cash values and policy loans, or any other right to withdraw funds held in conjunction with policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan value. In addition, in the event of a temporary moratorium or moratorium charge imposed by the receivership court on payment of cash values or policy loans, or on any other right to withdraw funds held in conjunction with policies or contracts out of the assets of the impaired or insolvent insurer, the association may defer the payment of cash values, policy loans, or other rights by the association for the period of the moratorium or moratorium charge imposed by the receivership court, except for claims covered by the association to be paid in accordance with a hardship procedure established by the liquidator or rehabilitator and approved by the receivership court.
(g) The commissioner shall promptly pay to the association a deposit in this state, held pursuant to law or required by the commissioner for the benefit of creditors, including policy or contract owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of a member insurer domiciled in this state or in a reciprocal state, pursuant to § 56-9-409 . The association is entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy or contract owners' claims related to that insolvency for which the association has provided statutory benefits by the aggregate amount of all policy or contract owners' claims in this state related to that insolvency and shall remit to the domiciliary receiver the amount so paid to the association less the amount retained pursuant to this subsection (g). Any amount so paid to the association and retained by it is treated as a distribution of estate assets pursuant to applicable state receivership law dealing with early access disbursements.
(h) If the association fails to act within a reasonable period of time with respect to an insolvent insurer, as provided in subsection (b), then the commissioner has the powers and duties of the association under this part with respect to the insolvent insurer.
(i) The association may render assistance and advice to the commissioner, upon the commissioner's request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of an impaired or insolvent insurer.
(j) The association has standing to appear or intervene before a court or agency in this state with jurisdiction over an impaired or insolvent insurer concerning which the association is or may become obligated under this part, or with jurisdiction over any person or property against which the association may have rights through subrogation or otherwise. Standing extends to all matters germane to the powers and duties of the association, including, but not limited to, proposals for reinsuring, reissuing, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The association also has the right to appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the association is or may become obligated or with jurisdiction over any person or property against whom the association may have rights through subrogation or otherwise.
(k) (1) A person receiving benefits under this part is deemed to have assigned the rights under, and any causes of action against any person for losses arising under, resulting from, or otherwise relating to, the covered policy or contract to the association to the extent of the benefits received because of this part, whether the benefits are payments of or on account of contractual obligations, continuation of coverage, or provision of substitute or alternative policies, contracts, or coverages. The association may require an assignment to it of the rights and cause of action by any enrollee, payee, policy, or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any right or benefits conferred by this part upon the person. (2) The subrogation rights of the association under this subsection (k) have the same priority against the assets of the impaired or insolvent insurer as that possessed by the person entitled to receive benefits under this part. (3) In addition to subdivisions (k)(1) and (2), the association has all common law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or contract with respect to the policy or contracts. (4) If the preceding provisions of this subsection (k) are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the association with respect to the related covered obligations must be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts or portion thereof covered by the association. (5) If the association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the association has rights as described in this subsection (k), the person shall pay to the association the portion of the recovery attributable to the policies or contracts or portion thereof covered by the association.
(1) A person receiving benefits under this part is deemed to have assigned the rights under, and any causes of action against any person for losses arising under, resulting from, or otherwise relating to, the covered policy or contract to the association to the extent of the benefits received because of this part, whether the benefits are payments of or on account of contractual obligations, continuation of coverage, or provision of substitute or alternative policies, contracts, or coverages. The association may require an assignment to it of the rights and cause of action by any enrollee, payee, policy, or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any right or benefits conferred by this part upon the person.
(2) The subrogation rights of the association under this subsection (k) have the same priority against the assets of the impaired or insolvent insurer as that possessed by the person entitled to receive benefits under this part.
(3) In addition to subdivisions (k)(1) and (2), the association has all common law rights of subrogation and any other equitable or legal remedy that would have been available to the impaired or insolvent insurer or owner, beneficiary, enrollee, or payee of a policy or contract with respect to the policy or contracts.
(4) If the preceding provisions of this subsection (k) are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the association with respect to the related covered obligations must be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or contracts or portion thereof covered by the association.
(5) If the association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the association has rights as described in this subsection (k), the person shall pay to the association the portion of the recovery attributable to the policies or contracts or portion thereof covered by the association.
(l) In addition to the rights and powers elsewhere in this part, the association may: (1) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this part; (2) Sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under § 56-12-208 and to settle claims or potential claims against it; (3) Borrow money to effect the purposes of this part. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic member insurers and may be carried as admitted assets; (4) Employ or retain persons as are necessary or appropriate to handle the financial transactions of the association, and to perform other functions as become necessary or proper under this part; (5) Take legal action as may be necessary or appropriate to avoid or recover payment of improper claims; (6) Exercise, for the purposes of this part and to the extent approved by the commissioner, the powers of a domestic life insurer, health insurer, or health maintenance organization, but in no case may the association issue policies or contracts other than those issued to perform its obligations under this part; (7) Organize itself as a corporation or in other legal form permitted by the laws of the state; (8) Request information from a person seeking coverage from the association in order to aid the association in determining its obligations under this part with respect to the person, and the person shall promptly comply with the request; (9) Unless prohibited by law, in accordance with the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this part; and (10) Take other necessary or appropriate action to discharge its duties and obligations under this part or to exercise its powers under this part.
(1) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this part;
(2) Sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under § 56-12-208 and to settle claims or potential claims against it;
(3) Borrow money to effect the purposes of this part. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic member insurers and may be carried as admitted assets;
(4) Employ or retain persons as are necessary or appropriate to handle the financial transactions of the association, and to perform other functions as become necessary or proper under this part;
(5) Take legal action as may be necessary or appropriate to avoid or recover payment of improper claims;
(6) Exercise, for the purposes of this part and to the extent approved by the commissioner, the powers of a domestic life insurer, health insurer, or health maintenance organization, but in no case may the association issue policies or contracts other than those issued to perform its obligations under this part;
(7) Organize itself as a corporation or in other legal form permitted by the laws of the state;
(8) Request information from a person seeking coverage from the association in order to aid the association in determining its obligations under this part with respect to the person, and the person shall promptly comply with the request;
(9) Unless prohibited by law, in accordance with the terms and conditions of the policy or contract, file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this part; and
(10) Take other necessary or appropriate action to discharge its duties and obligations under this part or to exercise its powers under this part.
(m) The association may join an organization of one (1) or more other state associations of similar purposes, to further the purposes and administer the powers and duties of the association.
(n) (1) (A) At any time within one hundred eighty (180) days of the date of the order of liquidation, the association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts, or annuities covered, in whole or in part, by the association, in each case under any one (1) or more reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the association. Any assumption is effective as of the date of the order of liquidation. The election is effected by the association or the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) on its behalf sending written notice, return receipt requested, to the affected reinsurers. (B) To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance, and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer shall make the following available upon request to the association or to NOLHGA on its behalf as soon as possible after commencement of formal delinquency proceedings: (i) Copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether the contracts should be assumed; and (ii) Notices of any defaults under the reinsurance contracts or any known event or condition that with the passage of time could become a default under the reinsurance contracts. (C) The following apply to reinsurance contracts assumed by the association: (i) The association is responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation, and is responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case that relates to policies, contracts, or annuities covered, in whole or in part, by the association. The association may charge policies, contracts, or annuities covered in part by the association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the association and shall provide notice and an accounting of these charges to the liquidator; (ii) The association is entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts, or annuities covered, in whole or in part, by the association. Upon receipt of any such amounts, the association is obliged to pay to the beneficiary under the policy, contracts, or annuity on account of which the amounts were paid a portion of the amount equal to the lesser of: (a) The amount received by the association; or (b) The excess of the amount received by the association over the amount equal to the benefits paid by the association on account of the policy, contracts, or annuity less the retention of the insurer applicable to the loss or event; (iii) Within thirty (30) days following the association's election, the association and each reinsurer under contracts assumed by the association shall calculate the net balance due to or from the association under each reinsurance contract as of the election date with respect to policies, contracts, or annuities covered, in whole or in part, by the association, which calculation must give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the association or reinsurer shall pay any remaining balance due the other, in each case within five (5) days of the completion of the calculation. Any disputes over the amounts due to either the association or the reinsurer must be resolved by arbitration pursuant to the terms of the affected reinsurance contracts or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the association pursuant to subdivision (n)(1)(C)(ii), the receiver shall remit the same to the association as promptly as practicable; and (iv) If the association or receiver, on the association's behalf, within sixty (60) days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts, or annuities covered, in whole or in part, by the association, the reinsurer is not entitled to terminate the reinsurance contracts for failure to pay premium insofar as the reinsurance contracts relate to policies, contracts, or annuities covered, in whole or in part, by the association, and is not entitled to set off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the association, against amounts due the association. (2) During the period from the date of the order of liquidation until the election date, or, if the election date does not occur, until one hundred eighty (180) days after the date of the order of liquidation: (A) (i) Neither the association nor the reinsurer has any rights or obligations under reinsurance contracts that the association has the right to assume under subdivision (n)(1), whether for periods prior to or after the date of the order of liquidation; and (ii) The reinsurer, the receiver, and the association shall, to the extent practicable, provide each other data and records reasonably requested; and (B) Provided that once the association has elected to assume a reinsurance contract, the parties' rights and obligations are governed by subdivision (n)(1). (3) If the association does not elect to assume a reinsurance contract by the election date pursuant to subdivision (n)(1), the association has no rights or obligations for periods both before and after the date of the order of liquidation, with respect to the reinsurance contract. (4) When policies, contracts, or annuities, or covered obligations with respect thereto, are transferred to an assuming insurer, then the association may also transfer the reinsurance on the policies, contracts, or annuities in the case of contracts assumed under subdivision (n)(1), subject to the following: (A) Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred does not cover any new policies of insurance, contracts, or annuities in addition to those transferred; (B) The obligations described in subdivision (n)(1) no longer apply with respect to matters arising after the effective date of the transfer; and (C) The transferring party shall give notice in writing, return receipt requested, to the affected reinsurer not less than thirty (30) days prior to the effective date of the transfer. (5) This subsection (n) supersedes the provisions of any state law or of any affected reinsurance contract that provides for or requires any payment of reinsurance proceeds on account of losses or events that occur in periods after the date of the order of liquidation to the receiver of the insolvent insurer or any other person. The receiver remains entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods prior to the date of the order of liquidation, subject to applicable set-off provisions. (6) Except as otherwise provided in this section, nothing in this subsection (n) alters or modifies the terms and conditions of any reinsurance contract. Nothing in this section abrogates or limits any rights of any reinsurer to claim that it is entitled to rescind a reinsurance contract. Nothing in this section gives a policyholder, contract owner, enrollee, certificate holder, or beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in the reinsurance contract. Nothing in this section limits or affects the association's rights as a creditor of the estate against the assets of the estate. Nothing in this section applies to reinsurance agreements covering property or casualty risks.
(1) (A) At any time within one hundred eighty (180) days of the date of the order of liquidation, the association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts, or annuities covered, in whole or in part, by the association, in each case under any one (1) or more reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the association. Any assumption is effective as of the date of the order of liquidation. The election is effected by the association or the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) on its behalf sending written notice, return receipt requested, to the affected reinsurers. (B) To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance, and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer shall make the following available upon request to the association or to NOLHGA on its behalf as soon as possible after commencement of formal delinquency proceedings: (i) Copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether the contracts should be assumed; and (ii) Notices of any defaults under the reinsurance contracts or any known event or condition that with the passage of time could become a default under the reinsurance contracts. (C) The following apply to reinsurance contracts assumed by the association: (i) The association is responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation, and is responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case that relates to policies, contracts, or annuities covered, in whole or in part, by the association. The association may charge policies, contracts, or annuities covered in part by the association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the association and shall provide notice and an accounting of these charges to the liquidator; (ii) The association is entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts, or annuities covered, in whole or in part, by the association. Upon receipt of any such amounts, the association is obliged to pay to the beneficiary under the policy, contracts, or annuity on account of which the amounts were paid a portion of the amount equal to the lesser of: (a) The amount received by the association; or (b) The excess of the amount received by the association over the amount equal to the benefits paid by the association on account of the policy, contracts, or annuity less the retention of the insurer applicable to the loss or event; (iii) Within thirty (30) days following the association's election, the association and each reinsurer under contracts assumed by the association shall calculate the net balance due to or from the association under each reinsurance contract as of the election date with respect to policies, contracts, or annuities covered, in whole or in part, by the association, which calculation must give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the association or reinsurer shall pay any remaining balance due the other, in each case within five (5) days of the completion of the calculation. Any disputes over the amounts due to either the association or the reinsurer must be resolved by arbitration pursuant to the terms of the affected reinsurance contracts or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the association pursuant to subdivision (n)(1)(C)(ii), the receiver shall remit the same to the association as promptly as practicable; and (iv) If the association or receiver, on the association's behalf, within sixty (60) days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts, or annuities covered, in whole or in part, by the association, the reinsurer is not entitled to terminate the reinsurance contracts for failure to pay premium insofar as the reinsurance contracts relate to policies, contracts, or annuities covered, in whole or in part, by the association, and is not entitled to set off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the association, against amounts due the association.
(A) At any time within one hundred eighty (180) days of the date of the order of liquidation, the association may elect to succeed to the rights and obligations of the ceding member insurer that relate to policies, contracts, or annuities covered, in whole or in part, by the association, in each case under any one (1) or more reinsurance contracts entered into by the insolvent insurer and its reinsurers and selected by the association. Any assumption is effective as of the date of the order of liquidation. The election is effected by the association or the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) on its behalf sending written notice, return receipt requested, to the affected reinsurers.
(B) To facilitate the earliest practicable decision about whether to assume any of the contracts of reinsurance, and in order to protect the financial position of the estate, the receiver and each reinsurer of the ceding member insurer shall make the following available upon request to the association or to NOLHGA on its behalf as soon as possible after commencement of formal delinquency proceedings: (i) Copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether the contracts should be assumed; and (ii) Notices of any defaults under the reinsurance contracts or any known event or condition that with the passage of time could become a default under the reinsurance contracts.
(i) Copies of in-force contracts of reinsurance and all related files and records relevant to the determination of whether the contracts should be assumed; and
(ii) Notices of any defaults under the reinsurance contracts or any known event or condition that with the passage of time could become a default under the reinsurance contracts.
(C) The following apply to reinsurance contracts assumed by the association: (i) The association is responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation, and is responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case that relates to policies, contracts, or annuities covered, in whole or in part, by the association. The association may charge policies, contracts, or annuities covered in part by the association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the association and shall provide notice and an accounting of these charges to the liquidator; (ii) The association is entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts, or annuities covered, in whole or in part, by the association. Upon receipt of any such amounts, the association is obliged to pay to the beneficiary under the policy, contracts, or annuity on account of which the amounts were paid a portion of the amount equal to the lesser of: (a) The amount received by the association; or (b) The excess of the amount received by the association over the amount equal to the benefits paid by the association on account of the policy, contracts, or annuity less the retention of the insurer applicable to the loss or event; (iii) Within thirty (30) days following the association's election, the association and each reinsurer under contracts assumed by the association shall calculate the net balance due to or from the association under each reinsurance contract as of the election date with respect to policies, contracts, or annuities covered, in whole or in part, by the association, which calculation must give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the association or reinsurer shall pay any remaining balance due the other, in each case within five (5) days of the completion of the calculation. Any disputes over the amounts due to either the association or the reinsurer must be resolved by arbitration pursuant to the terms of the affected reinsurance contracts or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the association pursuant to subdivision (n)(1)(C)(ii), the receiver shall remit the same to the association as promptly as practicable; and (iv) If the association or receiver, on the association's behalf, within sixty (60) days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts, or annuities covered, in whole or in part, by the association, the reinsurer is not entitled to terminate the reinsurance contracts for failure to pay premium insofar as the reinsurance contracts relate to policies, contracts, or annuities covered, in whole or in part, by the association, and is not entitled to set off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the association, against amounts due the association.
(i) The association is responsible for all unpaid premiums due under the reinsurance contracts for periods both before and after the date of the order of liquidation, and is responsible for the performance of all other obligations to be performed after the date of the order of liquidation, in each case that relates to policies, contracts, or annuities covered, in whole or in part, by the association. The association may charge policies, contracts, or annuities covered in part by the association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the association and shall provide notice and an accounting of these charges to the liquidator;
(ii) The association is entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods after the date of the order of liquidation and that relate to policies, contracts, or annuities covered, in whole or in part, by the association. Upon receipt of any such amounts, the association is obliged to pay to the beneficiary under the policy, contracts, or annuity on account of which the amounts were paid a portion of the amount equal to the lesser of: (a) The amount received by the association; or (b) The excess of the amount received by the association over the amount equal to the benefits paid by the association on account of the policy, contracts, or annuity less the retention of the insurer applicable to the loss or event;
(a) The amount received by the association; or
(b) The excess of the amount received by the association over the amount equal to the benefits paid by the association on account of the policy, contracts, or annuity less the retention of the insurer applicable to the loss or event;
(iii) Within thirty (30) days following the association's election, the association and each reinsurer under contracts assumed by the association shall calculate the net balance due to or from the association under each reinsurance contract as of the election date with respect to policies, contracts, or annuities covered, in whole or in part, by the association, which calculation must give full credit to all items paid by either the member insurer or its receiver or the reinsurer prior to the election date. The reinsurer shall pay the receiver any amounts due for losses or events prior to the date of the order of liquidation, subject to any set-off for premiums unpaid for periods prior to the date, and the association or reinsurer shall pay any remaining balance due the other, in each case within five (5) days of the completion of the calculation. Any disputes over the amounts due to either the association or the reinsurer must be resolved by arbitration pursuant to the terms of the affected reinsurance contracts or, if the contract contains no arbitration clause, as otherwise provided by law. If the receiver has received any amounts due the association pursuant to subdivision (n)(1)(C)(ii), the receiver shall remit the same to the association as promptly as practicable; and
(iv) If the association or receiver, on the association's behalf, within sixty (60) days of the election date, pays the unpaid premiums due for periods both before and after the election date that relate to policies, contracts, or annuities covered, in whole or in part, by the association, the reinsurer is not entitled to terminate the reinsurance contracts for failure to pay premium insofar as the reinsurance contracts relate to policies, contracts, or annuities covered, in whole or in part, by the association, and is not entitled to set off any unpaid amounts due under other contracts, or unpaid amounts due from parties other than the association, against amounts due the association.
(2) During the period from the date of the order of liquidation until the election date, or, if the election date does not occur, until one hundred eighty (180) days after the date of the order of liquidation: (A) (i) Neither the association nor the reinsurer has any rights or obligations under reinsurance contracts that the association has the right to assume under subdivision (n)(1), whether for periods prior to or after the date of the order of liquidation; and (ii) The reinsurer, the receiver, and the association shall, to the extent practicable, provide each other data and records reasonably requested; and (B) Provided that once the association has elected to assume a reinsurance contract, the parties' rights and obligations are governed by subdivision (n)(1).
(A) (i) Neither the association nor the reinsurer has any rights or obligations under reinsurance contracts that the association has the right to assume under subdivision (n)(1), whether for periods prior to or after the date of the order of liquidation; and (ii) The reinsurer, the receiver, and the association shall, to the extent practicable, provide each other data and records reasonably requested; and
(i) Neither the association nor the reinsurer has any rights or obligations under reinsurance contracts that the association has the right to assume under subdivision (n)(1), whether for periods prior to or after the date of the order of liquidation; and
(ii) The reinsurer, the receiver, and the association shall, to the extent practicable, provide each other data and records reasonably requested; and
(B) Provided that once the association has elected to assume a reinsurance contract, the parties' rights and obligations are governed by subdivision (n)(1).
(3) If the association does not elect to assume a reinsurance contract by the election date pursuant to subdivision (n)(1), the association has no rights or obligations for periods both before and after the date of the order of liquidation, with respect to the reinsurance contract.
(4) When policies, contracts, or annuities, or covered obligations with respect thereto, are transferred to an assuming insurer, then the association may also transfer the reinsurance on the policies, contracts, or annuities in the case of contracts assumed under subdivision (n)(1), subject to the following: (A) Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred does not cover any new policies of insurance, contracts, or annuities in addition to those transferred; (B) The obligations described in subdivision (n)(1) no longer apply with respect to matters arising after the effective date of the transfer; and (C) The transferring party shall give notice in writing, return receipt requested, to the affected reinsurer not less than thirty (30) days prior to the effective date of the transfer.
(A) Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance contract transferred does not cover any new policies of insurance, contracts, or annuities in addition to those transferred;
(B) The obligations described in subdivision (n)(1) no longer apply with respect to matters arising after the effective date of the transfer; and
(C) The transferring party shall give notice in writing, return receipt requested, to the affected reinsurer not less than thirty (30) days prior to the effective date of the transfer.
(5) This subsection (n) supersedes the provisions of any state law or of any affected reinsurance contract that provides for or requires any payment of reinsurance proceeds on account of losses or events that occur in periods after the date of the order of liquidation to the receiver of the insolvent insurer or any other person. The receiver remains entitled to any amounts payable by the reinsurer under the reinsurance contracts with respect to losses or events that occur in periods prior to the date of the order of liquidation, subject to applicable set-off provisions.
(6) Except as otherwise provided in this section, nothing in this subsection (n) alters or modifies the terms and conditions of any reinsurance contract. Nothing in this section abrogates or limits any rights of any reinsurer to claim that it is entitled to rescind a reinsurance contract. Nothing in this section gives a policyholder, contract owner, enrollee, certificate holder, or beneficiary an independent cause of action against a reinsurer that is not otherwise set forth in the reinsurance contract. Nothing in this section limits or affects the association's rights as a creditor of the estate against the assets of the estate. Nothing in this section applies to reinsurance agreements covering property or casualty risks.
(o) The board of directors of the association has discretion and shall exercise reasonable business judgment to determine the means by which the association is to provide the benefits of this part in an economical and efficient manner.
(p) Where the association has arranged or offered to provide the benefits of this part to a covered person under a plan or arrangement that fulfills the association's obligations under this part, the person is not entitled to benefits from the association in addition to or other than those provided under the plan or arrangement.
(q) Venue in a suit against the association arising under this part is in chancery court of Davidson County. The association is not required to give an appeal bond in an appeal that relates to a cause of action arising under this part.
(r) In carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts under this section, the association may issue substitute coverage for a policy or contract that provides an interest rate, crediting rate, or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following: (1) In lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for: (A) A fixed interest rate; (B) Payment of dividends with minimum guarantees; and (C) A different method for calculating interest or changes in value; (2) There is no requirement for evidence of insurability, waiting period, or other exclusion that would not have applied under the replaced policy or contract; and (3) The alternative policy or contract is substantially similar to the replaced policy or contract in all other material terms.
(1) In lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for: (A) A fixed interest rate; (B) Payment of dividends with minimum guarantees; and (C) A different method for calculating interest or changes in value;
(A) A fixed interest rate;
(B) Payment of dividends with minimum guarantees; and
(C) A different method for calculating interest or changes in value;
(2) There is no requirement for evidence of insurability, waiting period, or other exclusion that would not have applied under the replaced policy or contract; and
(3) The alternative policy or contract is substantially similar to the replaced policy or contract in all other material terms.
Amended by 2019 Tenn. Acts, ch. 5,s 5, eff. 7/1/2019.
Acts 1988, ch. 1032, § 7; 2010, ch. 713, § 4.
Tenn. Code Ann. § 56-1-903 — TN Code / Title 56 / Chapter 1 / Section 56-1-903
Actuarial opinion of reserves
Status: in_force

(a) For an actuarial opinion prior to the operative date of the valuation manual: (1) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The commissioner shall define by regulation the specifics of this opinion and add any other items deemed to be necessary to its scope; (2) For actuarial analysis of reserves and assets supporting reserves: (A) Every life insurance company, except as exempted by regulation, shall also annually include in the opinion required by subdivision (a)(1), an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under, and expenses associated with, the policies and contracts; (B) The commissioner may provide by regulation for a transition period for establishing any higher reserves that the qualified actuary may deem necessary in order to render the opinion required by this section; (3) Each opinion required by subdivision (a)(2) shall be governed by the following provisions: (A) A memorandum, in form and substance acceptable to the commissioner as specified by regulation, shall be prepared to support each actuarial opinion; (B) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified by regulation or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by regulations promulgated by the commissioner or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner; (4) Every opinion required by this subsection (a) shall be governed by the following provisions: (A) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1995; (B) The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the commissioner as specified by regulation; (C) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional standards as the commissioner prescribes by regulation; (D) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state; (E) For purposes of this section, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in the regulation; (F) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the actuary's opinion; (G) Disciplinary action by the commissioner against the company or the qualified actuary shall be defined in regulations promulgated by the commissioner; (H) Except as provided in subdivisions (a)(4)(L)-(N), documents, materials or other information in the possession or control of the department that are a memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, shall be confidential by law and privileged, shall not be subject to § 10-7-501 or § 56-1-602 , shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties; (I) Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subdivision (a)(4)(H); (J) In order to assist in the performance of the commissioner's duties, the commissioner may: (i) Share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subdivision (a)(4)(H) with other state, federal and international regulatory agencies, with the 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; (ii) Receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the 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 (iii) Enter into agreements governing sharing and use of information consistent with subdivisions (a)(4)(H)-(J); (K) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subdivision (a)(4)(J); (L) A memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, may be subject to subpoena for the purpose of defending an action seeking damages from the actuary submitting the memorandum by reason of an action required by this section or by regulation; (M) The memorandum or other material may otherwise be released by the commissioner with the written consent of the company or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material; and (N) Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential. (b) For an actuarial opinion of reserves after the operative date of the valuation manual: (1) Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The valuation manual will prescribe the specifics of this opinion including any items deemed to be necessary to its scope; (2) For actuarial analysis of reserves and assets supporting reserves, every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner, except as exempted in the valuation manual, shall also annually include in the opinion required by subdivision (b)(1), an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under, and expenses associated with, the policies and contracts; (3) Each opinion required by subdivision (b)(2) shall be governed by the following provisions: (A) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the commissioner, shall be prepared to support each actuarial opinion; and (B) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified in the valuation manual or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner; (4) Every opinion shall be governed by the following provisions: (A) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the commissioner; (B) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual; (C) The opinion shall apply to all policies and contracts subject to this subsection (b), plus other actuarial liabilities as may be specified in the valuation manual; (D) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board or its successor, and on such additional standards as may be prescribed in the valuation manual; (E) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state; (F) Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the insurance company and the commissioner for any act, error, omission, decision or conduct with respect to the appointed actuary's opinion; and (G) Disciplinary action by the commissioner against the company or the appointed actuary shall be defined in regulations promulgated by the commissioner. Added by 2013 Tenn. Acts, ch. 260,s 3, eff. 7/1/2013.
(a) For an actuarial opinion prior to the operative date of the valuation manual: (1) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The commissioner shall define by regulation the specifics of this opinion and add any other items deemed to be necessary to its scope; (2) For actuarial analysis of reserves and assets supporting reserves: (A) Every life insurance company, except as exempted by regulation, shall also annually include in the opinion required by subdivision (a)(1), an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under, and expenses associated with, the policies and contracts; (B) The commissioner may provide by regulation for a transition period for establishing any higher reserves that the qualified actuary may deem necessary in order to render the opinion required by this section; (3) Each opinion required by subdivision (a)(2) shall be governed by the following provisions: (A) A memorandum, in form and substance acceptable to the commissioner as specified by regulation, shall be prepared to support each actuarial opinion; (B) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified by regulation or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by regulations promulgated by the commissioner or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner; (4) Every opinion required by this subsection (a) shall be governed by the following provisions: (A) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1995; (B) The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the commissioner as specified by regulation; (C) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional standards as the commissioner prescribes by regulation; (D) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state; (E) For purposes of this section, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in the regulation; (F) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the actuary's opinion; (G) Disciplinary action by the commissioner against the company or the qualified actuary shall be defined in regulations promulgated by the commissioner; (H) Except as provided in subdivisions (a)(4)(L)-(N), documents, materials or other information in the possession or control of the department that are a memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, shall be confidential by law and privileged, shall not be subject to § 10-7-501 or § 56-1-602 , shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties; (I) Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subdivision (a)(4)(H); (J) In order to assist in the performance of the commissioner's duties, the commissioner may: (i) Share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subdivision (a)(4)(H) with other state, federal and international regulatory agencies, with the 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; (ii) Receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the 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 (iii) Enter into agreements governing sharing and use of information consistent with subdivisions (a)(4)(H)-(J); (K) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subdivision (a)(4)(J); (L) A memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, may be subject to subpoena for the purpose of defending an action seeking damages from the actuary submitting the memorandum by reason of an action required by this section or by regulation; (M) The memorandum or other material may otherwise be released by the commissioner with the written consent of the company or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material; and (N) Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.
(1) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The commissioner shall define by regulation the specifics of this opinion and add any other items deemed to be necessary to its scope;
(2) For actuarial analysis of reserves and assets supporting reserves: (A) Every life insurance company, except as exempted by regulation, shall also annually include in the opinion required by subdivision (a)(1), an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under, and expenses associated with, the policies and contracts; (B) The commissioner may provide by regulation for a transition period for establishing any higher reserves that the qualified actuary may deem necessary in order to render the opinion required by this section;
(A) Every life insurance company, except as exempted by regulation, shall also annually include in the opinion required by subdivision (a)(1), an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under, and expenses associated with, the policies and contracts;
(B) The commissioner may provide by regulation for a transition period for establishing any higher reserves that the qualified actuary may deem necessary in order to render the opinion required by this section;
(3) Each opinion required by subdivision (a)(2) shall be governed by the following provisions: (A) A memorandum, in form and substance acceptable to the commissioner as specified by regulation, shall be prepared to support each actuarial opinion; (B) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified by regulation or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by regulations promulgated by the commissioner or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner;
(A) A memorandum, in form and substance acceptable to the commissioner as specified by regulation, shall be prepared to support each actuarial opinion;
(B) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified by regulation or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by regulations promulgated by the commissioner or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner;
(4) Every opinion required by this subsection (a) shall be governed by the following provisions: (A) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1995; (B) The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the commissioner as specified by regulation; (C) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional standards as the commissioner prescribes by regulation; (D) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state; (E) For purposes of this section, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in the regulation; (F) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the actuary's opinion; (G) Disciplinary action by the commissioner against the company or the qualified actuary shall be defined in regulations promulgated by the commissioner; (H) Except as provided in subdivisions (a)(4)(L)-(N), documents, materials or other information in the possession or control of the department that are a memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, shall be confidential by law and privileged, shall not be subject to § 10-7-501 or § 56-1-602 , shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties; (I) Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subdivision (a)(4)(H); (J) In order to assist in the performance of the commissioner's duties, the commissioner may: (i) Share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subdivision (a)(4)(H) with other state, federal and international regulatory agencies, with the 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; (ii) Receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the 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 (iii) Enter into agreements governing sharing and use of information consistent with subdivisions (a)(4)(H)-(J); (K) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subdivision (a)(4)(J); (L) A memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, may be subject to subpoena for the purpose of defending an action seeking damages from the actuary submitting the memorandum by reason of an action required by this section or by regulation; (M) The memorandum or other material may otherwise be released by the commissioner with the written consent of the company or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material; and (N) Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.
(A) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1995;
(B) The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the commissioner as specified by regulation;
(C) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional standards as the commissioner prescribes by regulation;
(D) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state;
(E) For purposes of this section, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in the regulation;
(F) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the actuary's opinion;
(G) Disciplinary action by the commissioner against the company or the qualified actuary shall be defined in regulations promulgated by the commissioner;
(H) Except as provided in subdivisions (a)(4)(L)-(N), documents, materials or other information in the possession or control of the department that are a memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, shall be confidential by law and privileged, shall not be subject to § 10-7-501 or § 56-1-602 , shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties;
(I) Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subdivision (a)(4)(H);
(J) In order to assist in the performance of the commissioner's duties, the commissioner may: (i) Share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subdivision (a)(4)(H) with other state, federal and international regulatory agencies, with the 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; (ii) Receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the 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 (iii) Enter into agreements governing sharing and use of information consistent with subdivisions (a)(4)(H)-(J);
(i) Share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subdivision (a)(4)(H) with other state, federal and international regulatory agencies, with the 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;
(ii) Receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the 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
(iii) Enter into agreements governing sharing and use of information consistent with subdivisions (a)(4)(H)-(J);
(K) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subdivision (a)(4)(J);
(L) A memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, may be subject to subpoena for the purpose of defending an action seeking damages from the actuary submitting the memorandum by reason of an action required by this section or by regulation;
(M) The memorandum or other material may otherwise be released by the commissioner with the written consent of the company or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material; and
(N) Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.
(b) For an actuarial opinion of reserves after the operative date of the valuation manual: (1) Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The valuation manual will prescribe the specifics of this opinion including any items deemed to be necessary to its scope; (2) For actuarial analysis of reserves and assets supporting reserves, every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner, except as exempted in the valuation manual, shall also annually include in the opinion required by subdivision (b)(1), an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under, and expenses associated with, the policies and contracts; (3) Each opinion required by subdivision (b)(2) shall be governed by the following provisions: (A) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the commissioner, shall be prepared to support each actuarial opinion; and (B) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified in the valuation manual or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner; (4) Every opinion shall be governed by the following provisions: (A) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the commissioner; (B) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual; (C) The opinion shall apply to all policies and contracts subject to this subsection (b), plus other actuarial liabilities as may be specified in the valuation manual; (D) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board or its successor, and on such additional standards as may be prescribed in the valuation manual; (E) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state; (F) Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the insurance company and the commissioner for any act, error, omission, decision or conduct with respect to the appointed actuary's opinion; and (G) Disciplinary action by the commissioner against the company or the appointed actuary shall be defined in regulations promulgated by the commissioner.
(1) Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The valuation manual will prescribe the specifics of this opinion including any items deemed to be necessary to its scope;
(2) For actuarial analysis of reserves and assets supporting reserves, every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner, except as exempted in the valuation manual, shall also annually include in the opinion required by subdivision (b)(1), an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under, and expenses associated with, the policies and contracts;
(3) Each opinion required by subdivision (b)(2) shall be governed by the following provisions: (A) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the commissioner, shall be prepared to support each actuarial opinion; and (B) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified in the valuation manual or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner;
(A) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the commissioner, shall be prepared to support each actuarial opinion; and
(B) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified in the valuation manual or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner;
(4) Every opinion shall be governed by the following provisions: (A) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the commissioner; (B) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual; (C) The opinion shall apply to all policies and contracts subject to this subsection (b), plus other actuarial liabilities as may be specified in the valuation manual; (D) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board or its successor, and on such additional standards as may be prescribed in the valuation manual; (E) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state; (F) Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the insurance company and the commissioner for any act, error, omission, decision or conduct with respect to the appointed actuary's opinion; and (G) Disciplinary action by the commissioner against the company or the appointed actuary shall be defined in regulations promulgated by the commissioner.
(A) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the commissioner;
(B) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual;
(C) The opinion shall apply to all policies and contracts subject to this subsection (b), plus other actuarial liabilities as may be specified in the valuation manual;
(D) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board or its successor, and on such additional standards as may be prescribed in the valuation manual;
(E) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state;
(F) Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the insurance company and the commissioner for any act, error, omission, decision or conduct with respect to the appointed actuary's opinion; and
(G) Disciplinary action by the commissioner against the company or the appointed actuary shall be defined in regulations promulgated by the commissioner.
Added by 2013 Tenn. Acts, ch. 260,s 3, eff. 7/1/2013.
Tenn. Code Ann. § 56-7-1002 — TN Code / Title 56 / Chapter 7 / Section 56-7-1002
Telehealth services
Status: in_force

(a) As used in this section: (1) "Health insurance entity" has the same meaning as defined in § 56-7-109 and includes managed care organizations participating in the medical assistance program under title 71, chapter 5; (2) "Healthcare services" has the same meaning as defined in § 56-61-102 ; (3) "Healthcare services provider" means an individual acting within the scope of a valid license issued pursuant to title 63 or any state-contracted crisis service provider employed by a facility licensed under title 33; (4) "Originating site" means the location where a patient is located pursuant to subdivision (a)(7)(A) and that originates a telehealth service to another qualified site; (5) "Qualified site" means the office of a healthcare services provider, a hospital licensed under title 68, a facility recognized as a rural health clinic under federal Medicare regulations, a federally qualified health center, any facility licensed under title 33, or any other location deemed acceptable by the health insurance entity; (6) "Store-and-forward telemedicine services": (A) Means the use of asynchronous computer-based communications between a patient and healthcare services provider at a distant site for the purpose of diagnostic and therapeutic assistance in the care of patients; and (B) Includes the transferring of medical data from one (1) site to another through the use of a camera or similar device that records or stores an image that is sent or forwarded via telecommunication to another site for consultation; (7) "Telehealth": (A) Means the use of real-time, interactive audio, video telecommunications or electronic technology, or store-and-forward telemedicine services by a healthcare services provider to deliver healthcare services to a patient within the scope of practice of the healthcare services provider when: (i) Such provider is at a qualified site other than the site where the patient is located; and (ii) The patient is at a qualified site, at a school clinic staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section, or at a public elementary or secondary school staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section; and (B) Does not include: (i) An audio-only conversation; (ii) An electronic mail message; or (iii) A facsimile transmission; and (8) "Telehealth provider" means a healthcare services provider engaged in the delivery of healthcare services through telehealth. (b) Healthcare services provided through a telehealth encounter shall comply with state licensure requirements promulgated by the appropriate licensure boards. Telehealth providers shall be held to the same standard of care as healthcare services providers providing the same healthcare service through in-person encounters. (c) A telehealth provider who seeks to contract with or who has contracted with a health insurance entity to participate in the health insurance entity's network shall be subject to the same requirements and contractual terms as a healthcare services provider in the health insurance entity's network. (d) Subject to subsection (c), a health insurance entity: (1) Shall provide coverage under a health insurance policy or contract for covered healthcare services delivered through telehealth; (2) Shall reimburse a healthcare services provider for the diagnosis, consultation, and treatment of an insured patient for a healthcare service covered under a health insurance policy or contract that is provided through telehealth without any distinction or consideration of the geographic location or any federal, state, or local designation, or classification of the geographic area where the patient is located; (3) Shall not exclude from coverage a healthcare service solely because it is provided through telehealth and is not provided through an in-person encounter between a healthcare services provider and a patient; and (4) Shall reimburse healthcare services providers who are out-of-network for telehealth care services under the same reimbursement policies applicable to other out-of-network healthcare services providers. (e) A health insurance entity shall provide coverage for healthcare services provided during a telehealth encounter in a manner that is consistent with what the health insurance policy or contract provides for in-person encounters for the same service, and shall reimburse for healthcare services provided during a telehealth encounter without distinction or consideration of the geographic location, or any federal, state, or local designation or classification of the geographic area where the patient is located. (f) [Deleted by 2020 (2nd Ex. Sess.) amendment.] (g) Any provisions not stipulated by this section shall be governed by the terms and conditions of the health insurance contract. (h) Telehealth is subject to utilization review under the Health Care Service Utilization Review Act, compiled in chapter 6, part 7 of this title. (i) (1) This section does not apply to accident-only, specified disease, hospital indemnity, plans described in § 1251 of the Patient Protection and Affordable Care Act, Public Law 111-148, as amended and § 2301 of the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, as amended (both in 42 U.S.C. § 18011 ), plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) ( 29 U.S.C. § 1001 et seq.), medicare supplement, disability income, long-term care, or other limited benefit hospital insurance policies. (2) This section does apply to the basic health plans authorized under title 8, chapter 27, parts 1, 2, 3, and 7. (j) A health insurance entity shall reimburse an originating site hosting a patient as part of a telehealth encounter an originating site fee in accordance with the federal centers for medicare and medicaid services telehealth services rule 42 C.F.R. § 410.78 and at an amount established prior to August 20, 2020, by the federal centers for medicare and medicaid services. (k) (1) This section does not require a health insurance entity to provide coverage for healthcare services that are not medically necessary, unless the terms and conditions of an applicable health insurance policy provide that coverage. (2) As used in subdivision (k)(1): (A) For a healthcare service for which coverage or reimbursement is provided under the Medical Assistance Act of 1968, compiled in title 71, chapter 5, part 1, or provided under title 71, chapter 3, part 11, "medically necessary" means a healthcare service that is determined by the bureau of TennCare to satisfy the medical necessity standard set forth in 71-5-144; and (B) For all other healthcare services, "medically necessary" means healthcare services that a healthcare services provider, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing, or treating an illness, injury, or disease or the symptoms of an illness, injury, or disease, and that are: (i) In accordance with generally accepted standards of medical practice; (ii) Clinically appropriate, in terms of type, frequency, extent, site and duration; and considered effective for the patient's illness, injury or disease; and (iii) Not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury, or disease excluding any costs paid pursuant to subsection (j). (3) This section does not require a health insurance entity to provide coverage for healthcare services delivered by means of telehealth if the applicable health insurance policy would not provide coverage for the same healthcare services if delivered by in-person means. (4) This section does not require a health insurance entity to reimburse a healthcare services provider for healthcare services delivered by means of telehealth if the applicable health insurance policy would not reimburse that healthcare services provider if the same healthcare services had been delivered by in-person means. Amended by 2020EX2 Tenn. Acts, ch. 4, Secs.s 1, s 2, s 3, s 4, s 5 eff. 8/20/2020. Amended by 2017 Tenn. Acts, ch. 130, s 1, eff. 4/17/2017. Amended by 2016 Tenn. Acts, ch. 990, Secs.s 2, s 3 eff. 1/1/2017. Amended by 2016 Tenn. Acts, ch. 990, s 1, eff. 1/1/2017. Amended by 2014 Tenn. Acts, ch. 675, s 1, eff. 1/1/2015.
(a) As used in this section: (1) "Health insurance entity" has the same meaning as defined in § 56-7-109 and includes managed care organizations participating in the medical assistance program under title 71, chapter 5; (2) "Healthcare services" has the same meaning as defined in § 56-61-102 ; (3) "Healthcare services provider" means an individual acting within the scope of a valid license issued pursuant to title 63 or any state-contracted crisis service provider employed by a facility licensed under title 33; (4) "Originating site" means the location where a patient is located pursuant to subdivision (a)(7)(A) and that originates a telehealth service to another qualified site; (5) "Qualified site" means the office of a healthcare services provider, a hospital licensed under title 68, a facility recognized as a rural health clinic under federal Medicare regulations, a federally qualified health center, any facility licensed under title 33, or any other location deemed acceptable by the health insurance entity; (6) "Store-and-forward telemedicine services": (A) Means the use of asynchronous computer-based communications between a patient and healthcare services provider at a distant site for the purpose of diagnostic and therapeutic assistance in the care of patients; and (B) Includes the transferring of medical data from one (1) site to another through the use of a camera or similar device that records or stores an image that is sent or forwarded via telecommunication to another site for consultation; (7) "Telehealth": (A) Means the use of real-time, interactive audio, video telecommunications or electronic technology, or store-and-forward telemedicine services by a healthcare services provider to deliver healthcare services to a patient within the scope of practice of the healthcare services provider when: (i) Such provider is at a qualified site other than the site where the patient is located; and (ii) The patient is at a qualified site, at a school clinic staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section, or at a public elementary or secondary school staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section; and (B) Does not include: (i) An audio-only conversation; (ii) An electronic mail message; or (iii) A facsimile transmission; and (8) "Telehealth provider" means a healthcare services provider engaged in the delivery of healthcare services through telehealth.
(1) "Health insurance entity" has the same meaning as defined in § 56-7-109 and includes managed care organizations participating in the medical assistance program under title 71, chapter 5;
(2) "Healthcare services" has the same meaning as defined in § 56-61-102 ;
(3) "Healthcare services provider" means an individual acting within the scope of a valid license issued pursuant to title 63 or any state-contracted crisis service provider employed by a facility licensed under title 33;
(4) "Originating site" means the location where a patient is located pursuant to subdivision (a)(7)(A) and that originates a telehealth service to another qualified site;
(5) "Qualified site" means the office of a healthcare services provider, a hospital licensed under title 68, a facility recognized as a rural health clinic under federal Medicare regulations, a federally qualified health center, any facility licensed under title 33, or any other location deemed acceptable by the health insurance entity;
(6) "Store-and-forward telemedicine services": (A) Means the use of asynchronous computer-based communications between a patient and healthcare services provider at a distant site for the purpose of diagnostic and therapeutic assistance in the care of patients; and (B) Includes the transferring of medical data from one (1) site to another through the use of a camera or similar device that records or stores an image that is sent or forwarded via telecommunication to another site for consultation;
(A) Means the use of asynchronous computer-based communications between a patient and healthcare services provider at a distant site for the purpose of diagnostic and therapeutic assistance in the care of patients; and
(B) Includes the transferring of medical data from one (1) site to another through the use of a camera or similar device that records or stores an image that is sent or forwarded via telecommunication to another site for consultation;
(7) "Telehealth": (A) Means the use of real-time, interactive audio, video telecommunications or electronic technology, or store-and-forward telemedicine services by a healthcare services provider to deliver healthcare services to a patient within the scope of practice of the healthcare services provider when: (i) Such provider is at a qualified site other than the site where the patient is located; and (ii) The patient is at a qualified site, at a school clinic staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section, or at a public elementary or secondary school staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section; and (B) Does not include: (i) An audio-only conversation; (ii) An electronic mail message; or (iii) A facsimile transmission; and
(A) Means the use of real-time, interactive audio, video telecommunications or electronic technology, or store-and-forward telemedicine services by a healthcare services provider to deliver healthcare services to a patient within the scope of practice of the healthcare services provider when: (i) Such provider is at a qualified site other than the site where the patient is located; and (ii) The patient is at a qualified site, at a school clinic staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section, or at a public elementary or secondary school staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section; and
(i) Such provider is at a qualified site other than the site where the patient is located; and
(ii) The patient is at a qualified site, at a school clinic staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section, or at a public elementary or secondary school staffed by a healthcare services provider and equipped to engage in the telecommunications described in this section; and
(B) Does not include: (i) An audio-only conversation; (ii) An electronic mail message; or (iii) A facsimile transmission; and
(i) An audio-only conversation;
(ii) An electronic mail message; or
(iii) A facsimile transmission; and
(8) "Telehealth provider" means a healthcare services provider engaged in the delivery of healthcare services through telehealth.
(b) Healthcare services provided through a telehealth encounter shall comply with state licensure requirements promulgated by the appropriate licensure boards. Telehealth providers shall be held to the same standard of care as healthcare services providers providing the same healthcare service through in-person encounters.
(c) A telehealth provider who seeks to contract with or who has contracted with a health insurance entity to participate in the health insurance entity's network shall be subject to the same requirements and contractual terms as a healthcare services provider in the health insurance entity's network.
(d) Subject to subsection (c), a health insurance entity: (1) Shall provide coverage under a health insurance policy or contract for covered healthcare services delivered through telehealth; (2) Shall reimburse a healthcare services provider for the diagnosis, consultation, and treatment of an insured patient for a healthcare service covered under a health insurance policy or contract that is provided through telehealth without any distinction or consideration of the geographic location or any federal, state, or local designation, or classification of the geographic area where the patient is located; (3) Shall not exclude from coverage a healthcare service solely because it is provided through telehealth and is not provided through an in-person encounter between a healthcare services provider and a patient; and (4) Shall reimburse healthcare services providers who are out-of-network for telehealth care services under the same reimbursement policies applicable to other out-of-network healthcare services providers.
(1) Shall provide coverage under a health insurance policy or contract for covered healthcare services delivered through telehealth;
(2) Shall reimburse a healthcare services provider for the diagnosis, consultation, and treatment of an insured patient for a healthcare service covered under a health insurance policy or contract that is provided through telehealth without any distinction or consideration of the geographic location or any federal, state, or local designation, or classification of the geographic area where the patient is located;
(3) Shall not exclude from coverage a healthcare service solely because it is provided through telehealth and is not provided through an in-person encounter between a healthcare services provider and a patient; and
(4) Shall reimburse healthcare services providers who are out-of-network for telehealth care services under the same reimbursement policies applicable to other out-of-network healthcare services providers.
(e) A health insurance entity shall provide coverage for healthcare services provided during a telehealth encounter in a manner that is consistent with what the health insurance policy or contract provides for in-person encounters for the same service, and shall reimburse for healthcare services provided during a telehealth encounter without distinction or consideration of the geographic location, or any federal, state, or local designation or classification of the geographic area where the patient is located.
(f) [Deleted by 2020 (2nd Ex. Sess.) amendment.]
(g) Any provisions not stipulated by this section shall be governed by the terms and conditions of the health insurance contract.
(h) Telehealth is subject to utilization review under the Health Care Service Utilization Review Act, compiled in chapter 6, part 7 of this title.
(i) (1) This section does not apply to accident-only, specified disease, hospital indemnity, plans described in § 1251 of the Patient Protection and Affordable Care Act, Public Law 111-148, as amended and § 2301 of the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, as amended (both in 42 U.S.C. § 18011 ), plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) ( 29 U.S.C. § 1001 et seq.), medicare supplement, disability income, long-term care, or other limited benefit hospital insurance policies. (2) This section does apply to the basic health plans authorized under title 8, chapter 27, parts 1, 2, 3, and 7.
(1) This section does not apply to accident-only, specified disease, hospital indemnity, plans described in § 1251 of the Patient Protection and Affordable Care Act, Public Law 111-148, as amended and § 2301 of the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, as amended (both in 42 U.S.C. § 18011 ), plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) ( 29 U.S.C. § 1001 et seq.), medicare supplement, disability income, long-term care, or other limited benefit hospital insurance policies.
(2) This section does apply to the basic health plans authorized under title 8, chapter 27, parts 1, 2, 3, and 7.
(j) A health insurance entity shall reimburse an originating site hosting a patient as part of a telehealth encounter an originating site fee in accordance with the federal centers for medicare and medicaid services telehealth services rule 42 C.F.R. § 410.78 and at an amount established prior to August 20, 2020, by the federal centers for medicare and medicaid services.
(k) (1) This section does not require a health insurance entity to provide coverage for healthcare services that are not medically necessary, unless the terms and conditions of an applicable health insurance policy provide that coverage. (2) As used in subdivision (k)(1): (A) For a healthcare service for which coverage or reimbursement is provided under the Medical Assistance Act of 1968, compiled in title 71, chapter 5, part 1, or provided under title 71, chapter 3, part 11, "medically necessary" means a healthcare service that is determined by the bureau of TennCare to satisfy the medical necessity standard set forth in 71-5-144; and (B) For all other healthcare services, "medically necessary" means healthcare services that a healthcare services provider, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing, or treating an illness, injury, or disease or the symptoms of an illness, injury, or disease, and that are: (i) In accordance with generally accepted standards of medical practice; (ii) Clinically appropriate, in terms of type, frequency, extent, site and duration; and considered effective for the patient's illness, injury or disease; and (iii) Not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury, or disease excluding any costs paid pursuant to subsection (j). (3) This section does not require a health insurance entity to provide coverage for healthcare services delivered by means of telehealth if the applicable health insurance policy would not provide coverage for the same healthcare services if delivered by in-person means. (4) This section does not require a health insurance entity to reimburse a healthcare services provider for healthcare services delivered by means of telehealth if the applicable health insurance policy would not reimburse that healthcare services provider if the same healthcare services had been delivered by in-person means.
(1) This section does not require a health insurance entity to provide coverage for healthcare services that are not medically necessary, unless the terms and conditions of an applicable health insurance policy provide that coverage.
(2) As used in subdivision (k)(1): (A) For a healthcare service for which coverage or reimbursement is provided under the Medical Assistance Act of 1968, compiled in title 71, chapter 5, part 1, or provided under title 71, chapter 3, part 11, "medically necessary" means a healthcare service that is determined by the bureau of TennCare to satisfy the medical necessity standard set forth in 71-5-144; and (B) For all other healthcare services, "medically necessary" means healthcare services that a healthcare services provider, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing, or treating an illness, injury, or disease or the symptoms of an illness, injury, or disease, and that are: (i) In accordance with generally accepted standards of medical practice; (ii) Clinically appropriate, in terms of type, frequency, extent, site and duration; and considered effective for the patient's illness, injury or disease; and (iii) Not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury, or disease excluding any costs paid pursuant to subsection (j).
(A) For a healthcare service for which coverage or reimbursement is provided under the Medical Assistance Act of 1968, compiled in title 71, chapter 5, part 1, or provided under title 71, chapter 3, part 11, "medically necessary" means a healthcare service that is determined by the bureau of TennCare to satisfy the medical necessity standard set forth in 71-5-144; and
(B) For all other healthcare services, "medically necessary" means healthcare services that a healthcare services provider, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing, or treating an illness, injury, or disease or the symptoms of an illness, injury, or disease, and that are: (i) In accordance with generally accepted standards of medical practice; (ii) Clinically appropriate, in terms of type, frequency, extent, site and duration; and considered effective for the patient's illness, injury or disease; and (iii) Not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury, or disease excluding any costs paid pursuant to subsection (j).
(i) In accordance with generally accepted standards of medical practice;
(ii) Clinically appropriate, in terms of type, frequency, extent, site and duration; and considered effective for the patient's illness, injury or disease; and
(iii) Not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury, or disease excluding any costs paid pursuant to subsection (j).
(3) This section does not require a health insurance entity to provide coverage for healthcare services delivered by means of telehealth if the applicable health insurance policy would not provide coverage for the same healthcare services if delivered by in-person means.
(4) This section does not require a health insurance entity to reimburse a healthcare services provider for healthcare services delivered by means of telehealth if the applicable health insurance policy would not reimburse that healthcare services provider if the same healthcare services had been delivered by in-person means.
Amended by 2020EX2 Tenn. Acts, ch. 4, Secs.s 1, s 2, s 3, s 4, s 5 eff. 8/20/2020.
Amended by 2017 Tenn. Acts, ch. 130, s 1, eff. 4/17/2017.
Amended by 2016 Tenn. Acts, ch. 990, Secs.s 2, s 3 eff. 1/1/2017.
Amended by 2016 Tenn. Acts, ch. 990, s 1, eff. 1/1/2017.
Amended by 2014 Tenn. Acts, ch. 675, s 1, eff. 1/1/2015.
Tenn. Code Ann. § 56-7-1701 — TN Code / Title 56 / Chapter 7 / Section 56-7-1701
Option to select alternative coverage
Status: in_force

If a prepaid dental plan after May 3, 1983, offers group prepaid dental service for sale in this state, and the plan limits the provider dentists to designated dentists or groups of designated dentists, whether through regular dental insurance coverage, dental service plan coverage, or through a health maintenance organization or any other service plan organization, the employer or other entity that provides the plan for the benefit of its employees or members shall also offer to the employees or members, including their eligible dependents, the option of selecting alternative coverage that permits the covered persons to obtain dental services from any licensed dentist of their choice. In providing the alternative coverage, the employer or other entity shall pay for the dental benefits to the same extent as provided in the plan, but in no event shall it be required to pay for or contribute towards the provision of alternative coverage an amount greater than the premium or cost it pays or contributes to under the plan. Acts 1983, ch. 228, § 1.
If a prepaid dental plan after May 3, 1983, offers group prepaid dental service for sale in this state, and the plan limits the provider dentists to designated dentists or groups of designated dentists, whether through regular dental insurance coverage, dental service plan coverage, or through a health maintenance organization or any other service plan organization, the employer or other entity that provides the plan for the benefit of its employees or members shall also offer to the employees or members, including their eligible dependents, the option of selecting alternative coverage that permits the covered persons to obtain dental services from any licensed dentist of their choice. In providing the alternative coverage, the employer or other entity shall pay for the dental benefits to the same extent as provided in the plan, but in no event shall it be required to pay for or contribute towards the provision of alternative coverage an amount greater than the premium or cost it pays or contributes to under the plan.
Acts 1983, ch. 228, § 1.
Tenn. Code Ann. § 56-7-2309 — TN Code / Title 56 / Chapter 7 / Section 56-7-2309
Loan provisions in life insurance policies
Status: in_force

(a) In the case of those policies issued prior to the operative date of § 56-7-401 , the Standard Nonforfeiture Law, the loan value referred to in § 56-7-2307(7) shall be the reserve at the end of the current policy year on the policy and on any dividend additions to the policy, less a sum not more than two and one half percent (2.5%) of the amount insured by the policy and of any dividend additions to the policy. The policy shall specify the mortality table and rate of interest adopted for computing the reserve and may provide that the loan may be deferred for not exceeding six (6) months after the application for the loan is made. (b) (1) In the case of policies issued on or after the operative date of § 56-7-401 , the Standard Nonforfeiture Law, the loan value referred to in §§ 56-7-702(b)(15) and 56-7-2307(7) shall be: (A) If there is no existing indebtedness to the company on the policy, the cash surrender value at the end of the current policy year; and (B) If there is existing indebtedness to the company on the policy, that amount that the cash surrender value at the end of the current policy year would be if no indebtedness existed, the cash surrender value in either case being that required by § 56-7-401 . (2) The company shall reserve the right to defer the loan, except when made to pay the premium, for six (6) months after application for the loan is made. (c) As used in this subsection (c) and subsections (d) and (e), the "published monthly average" means: (1) Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor publication; or (2) In the event that Moody's Corporate Bond Yield Average - Monthly Average Corporates is no longer published, a substantially similar average, established by regulation issued by the commissioner. (d) (1) (A) Policies issued on or after July 1, 1982, shall provide for policy loan interest rates as follows: (i) A provision permitting a specified rate of interest in accordance with § 56-7-2307(7) ; or (ii) A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law. (B) No life insurer shall be permitted to issue policies containing variable rates of interest on policy loans pursuant to subdivision (d)(1)(A)(ii) unless the insurer also makes available policies, which may or may not be on the same plan of insurance, with fixed rates of interest on policy loans pursuant to subdivision (d)(1)(A)(i). (2) The rate of interest charged on a policy loan made under subdivision (d)(1)(A)(ii) shall not exceed the higher of the following: (A) The published monthly average for the calendar month ending two (2) months before the date on which the rate is determined; or (B) The rate used to compute the cash surrender values under the policy during the applicable period, plus one percent (1%) a year. (3) If the maximum rate of interest is determined pursuant to subdivision (d)(1)(A)(ii), the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy. (4) The maximum rate for each policy must be determined at regular intervals but not more frequently than once every twelve (12) months. At the intervals specified in the policy: (A) The rate being charged may be increased whenever the increase as determined under subsection (d) would increase that rate by one half percent (0.5%) or more a year; and (B) The rate being charged shall be reduced whenever the reduction as determined under subsection (d) would decrease that rate by one half percent (0.5%) or more a year. (5) The life insurer shall: (A) Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan; (B) Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in subdivision (d)(5)(C); (C) Send to policyholders with loans reasonable advance notice of any increase in the rate; and (D) Include in the notices required in subdivision (d)(5)(C) the substance of the pertinent provisions of subdivisions (d)(1) and (3). (6) The loan value of the policy shall be determined in accordance with subsections (a) and (b), but no policy shall terminate in a policy year as the sole result of change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year. (7) The substance of the pertinent provisions of subdivisions (d)(1) and (3) shall be set forth in the policies to which they apply. (8) For the purposes of this subsection (d): (A) The rate of interest on policy loans permitted under this subsection (d) includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy; (B) "Policy" includes certificates issued by a fraternal benefit society and annuity contracts that provide for policy loans; (C) "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer; and (D) "Policy loan" includes any premium loan made under a policy to pay one (1) or more premiums that were not paid to the life insurer as they fell due. (9) The maximum effective rate of interest permitted for a policy loan shall not exceed the absolute ceiling set for the applicable formula rate in § 47-14-103(2) or any successor statute. (10) No other law shall apply to policy loan interest rates unless made specifically applicable to the rates. (e) Subsections (c) and (d) and this subsection (e) shall not apply to any insurance contract issued before July 1, 1982, unless the policyholder agrees in writing to the applicability of subsections (c) and (d) and this subsection (e); provided, that any offer made by an insurer to an insured to endorse the applicability of subsections (c) and (d) and this subsection (e) to any insurance contract issued before July 1, 1982, shall be filed with the commissioner prior to the making of the offer and shall be subject to the commissioner's approval. Acts 1945, ch. 56, § 7; C. Supp. 1950, § 6210.2; Acts 1979, ch. 398, § 7; T.C.A. (orig. ed.), § 56-1114; Acts 1982, ch. 727, §§ 2-4; 1992, ch. 984, § 1; T.C.A., § 56-7-303.
(a) In the case of those policies issued prior to the operative date of § 56-7-401 , the Standard Nonforfeiture Law, the loan value referred to in § 56-7-2307(7) shall be the reserve at the end of the current policy year on the policy and on any dividend additions to the policy, less a sum not more than two and one half percent (2.5%) of the amount insured by the policy and of any dividend additions to the policy. The policy shall specify the mortality table and rate of interest adopted for computing the reserve and may provide that the loan may be deferred for not exceeding six (6) months after the application for the loan is made.
(b) (1) In the case of policies issued on or after the operative date of § 56-7-401 , the Standard Nonforfeiture Law, the loan value referred to in §§ 56-7-702(b)(15) and 56-7-2307(7) shall be: (A) If there is no existing indebtedness to the company on the policy, the cash surrender value at the end of the current policy year; and (B) If there is existing indebtedness to the company on the policy, that amount that the cash surrender value at the end of the current policy year would be if no indebtedness existed, the cash surrender value in either case being that required by § 56-7-401 . (2) The company shall reserve the right to defer the loan, except when made to pay the premium, for six (6) months after application for the loan is made.
(1) In the case of policies issued on or after the operative date of § 56-7-401 , the Standard Nonforfeiture Law, the loan value referred to in §§ 56-7-702(b)(15) and 56-7-2307(7) shall be: (A) If there is no existing indebtedness to the company on the policy, the cash surrender value at the end of the current policy year; and (B) If there is existing indebtedness to the company on the policy, that amount that the cash surrender value at the end of the current policy year would be if no indebtedness existed, the cash surrender value in either case being that required by § 56-7-401 .
(A) If there is no existing indebtedness to the company on the policy, the cash surrender value at the end of the current policy year; and
(B) If there is existing indebtedness to the company on the policy, that amount that the cash surrender value at the end of the current policy year would be if no indebtedness existed, the cash surrender value in either case being that required by § 56-7-401 .
(2) The company shall reserve the right to defer the loan, except when made to pay the premium, for six (6) months after application for the loan is made.
(c) As used in this subsection (c) and subsections (d) and (e), the "published monthly average" means: (1) Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor publication; or (2) In the event that Moody's Corporate Bond Yield Average - Monthly Average Corporates is no longer published, a substantially similar average, established by regulation issued by the commissioner.
(1) Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor publication; or
(2) In the event that Moody's Corporate Bond Yield Average - Monthly Average Corporates is no longer published, a substantially similar average, established by regulation issued by the commissioner.
(d) (1) (A) Policies issued on or after July 1, 1982, shall provide for policy loan interest rates as follows: (i) A provision permitting a specified rate of interest in accordance with § 56-7-2307(7) ; or (ii) A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law. (B) No life insurer shall be permitted to issue policies containing variable rates of interest on policy loans pursuant to subdivision (d)(1)(A)(ii) unless the insurer also makes available policies, which may or may not be on the same plan of insurance, with fixed rates of interest on policy loans pursuant to subdivision (d)(1)(A)(i). (2) The rate of interest charged on a policy loan made under subdivision (d)(1)(A)(ii) shall not exceed the higher of the following: (A) The published monthly average for the calendar month ending two (2) months before the date on which the rate is determined; or (B) The rate used to compute the cash surrender values under the policy during the applicable period, plus one percent (1%) a year. (3) If the maximum rate of interest is determined pursuant to subdivision (d)(1)(A)(ii), the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy. (4) The maximum rate for each policy must be determined at regular intervals but not more frequently than once every twelve (12) months. At the intervals specified in the policy: (A) The rate being charged may be increased whenever the increase as determined under subsection (d) would increase that rate by one half percent (0.5%) or more a year; and (B) The rate being charged shall be reduced whenever the reduction as determined under subsection (d) would decrease that rate by one half percent (0.5%) or more a year. (5) The life insurer shall: (A) Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan; (B) Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in subdivision (d)(5)(C); (C) Send to policyholders with loans reasonable advance notice of any increase in the rate; and (D) Include in the notices required in subdivision (d)(5)(C) the substance of the pertinent provisions of subdivisions (d)(1) and (3). (6) The loan value of the policy shall be determined in accordance with subsections (a) and (b), but no policy shall terminate in a policy year as the sole result of change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year. (7) The substance of the pertinent provisions of subdivisions (d)(1) and (3) shall be set forth in the policies to which they apply. (8) For the purposes of this subsection (d): (A) The rate of interest on policy loans permitted under this subsection (d) includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy; (B) "Policy" includes certificates issued by a fraternal benefit society and annuity contracts that provide for policy loans; (C) "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer; and (D) "Policy loan" includes any premium loan made under a policy to pay one (1) or more premiums that were not paid to the life insurer as they fell due. (9) The maximum effective rate of interest permitted for a policy loan shall not exceed the absolute ceiling set for the applicable formula rate in § 47-14-103(2) or any successor statute. (10) No other law shall apply to policy loan interest rates unless made specifically applicable to the rates.
(1) (A) Policies issued on or after July 1, 1982, shall provide for policy loan interest rates as follows: (i) A provision permitting a specified rate of interest in accordance with § 56-7-2307(7) ; or (ii) A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law. (B) No life insurer shall be permitted to issue policies containing variable rates of interest on policy loans pursuant to subdivision (d)(1)(A)(ii) unless the insurer also makes available policies, which may or may not be on the same plan of insurance, with fixed rates of interest on policy loans pursuant to subdivision (d)(1)(A)(i).
(A) Policies issued on or after July 1, 1982, shall provide for policy loan interest rates as follows: (i) A provision permitting a specified rate of interest in accordance with § 56-7-2307(7) ; or (ii) A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law.
(i) A provision permitting a specified rate of interest in accordance with § 56-7-2307(7) ; or
(ii) A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law.
(B) No life insurer shall be permitted to issue policies containing variable rates of interest on policy loans pursuant to subdivision (d)(1)(A)(ii) unless the insurer also makes available policies, which may or may not be on the same plan of insurance, with fixed rates of interest on policy loans pursuant to subdivision (d)(1)(A)(i).
(2) The rate of interest charged on a policy loan made under subdivision (d)(1)(A)(ii) shall not exceed the higher of the following: (A) The published monthly average for the calendar month ending two (2) months before the date on which the rate is determined; or (B) The rate used to compute the cash surrender values under the policy during the applicable period, plus one percent (1%) a year.
(A) The published monthly average for the calendar month ending two (2) months before the date on which the rate is determined; or
(B) The rate used to compute the cash surrender values under the policy during the applicable period, plus one percent (1%) a year.
(3) If the maximum rate of interest is determined pursuant to subdivision (d)(1)(A)(ii), the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.
(4) The maximum rate for each policy must be determined at regular intervals but not more frequently than once every twelve (12) months. At the intervals specified in the policy: (A) The rate being charged may be increased whenever the increase as determined under subsection (d) would increase that rate by one half percent (0.5%) or more a year; and (B) The rate being charged shall be reduced whenever the reduction as determined under subsection (d) would decrease that rate by one half percent (0.5%) or more a year.
(A) The rate being charged may be increased whenever the increase as determined under subsection (d) would increase that rate by one half percent (0.5%) or more a year; and
(B) The rate being charged shall be reduced whenever the reduction as determined under subsection (d) would decrease that rate by one half percent (0.5%) or more a year.
(5) The life insurer shall: (A) Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan; (B) Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in subdivision (d)(5)(C); (C) Send to policyholders with loans reasonable advance notice of any increase in the rate; and (D) Include in the notices required in subdivision (d)(5)(C) the substance of the pertinent provisions of subdivisions (d)(1) and (3).
(A) Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;
(B) Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in subdivision (d)(5)(C);
(C) Send to policyholders with loans reasonable advance notice of any increase in the rate; and
(D) Include in the notices required in subdivision (d)(5)(C) the substance of the pertinent provisions of subdivisions (d)(1) and (3).
(6) The loan value of the policy shall be determined in accordance with subsections (a) and (b), but no policy shall terminate in a policy year as the sole result of change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year.
(7) The substance of the pertinent provisions of subdivisions (d)(1) and (3) shall be set forth in the policies to which they apply.
(8) For the purposes of this subsection (d): (A) The rate of interest on policy loans permitted under this subsection (d) includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy; (B) "Policy" includes certificates issued by a fraternal benefit society and annuity contracts that provide for policy loans; (C) "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer; and (D) "Policy loan" includes any premium loan made under a policy to pay one (1) or more premiums that were not paid to the life insurer as they fell due.
(A) The rate of interest on policy loans permitted under this subsection (d) includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy;
(B) "Policy" includes certificates issued by a fraternal benefit society and annuity contracts that provide for policy loans;
(C) "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer; and
(D) "Policy loan" includes any premium loan made under a policy to pay one (1) or more premiums that were not paid to the life insurer as they fell due.
(9) The maximum effective rate of interest permitted for a policy loan shall not exceed the absolute ceiling set for the applicable formula rate in § 47-14-103(2) or any successor statute.
(10) No other law shall apply to policy loan interest rates unless made specifically applicable to the rates.
(e) Subsections (c) and (d) and this subsection (e) shall not apply to any insurance contract issued before July 1, 1982, unless the policyholder agrees in writing to the applicability of subsections (c) and (d) and this subsection (e); provided, that any offer made by an insurer to an insured to endorse the applicability of subsections (c) and (d) and this subsection (e) to any insurance contract issued before July 1, 1982, shall be filed with the commissioner prior to the making of the offer and shall be subject to the commissioner's approval.
Acts 1945, ch. 56, § 7; C. Supp. 1950, § 6210.2; Acts 1979, ch. 398, § 7; T.C.A. (orig. ed.), § 56-1114; Acts 1982, ch. 727, §§ 2-4; 1992, ch. 984, § 1; T.C.A., § 56-7-303.
Tenn. Code Ann. § 56-22-111 — TN Code / Title 56 / Chapter 22 / Section 56-22-111
Insolvency - Assessments by other county mutual insurance companies
Status: in_force

(a) If the assets of a county mutual insurance company are insufficient to pay its existing liabilities, including those liabilities incurred but not reported and other obligations, as well as maintain the reserves required under this chapter, the county mutual insurance company shall notify the commissioner immediately. (b) Upon notice or determination by the commissioner of a county mutual insurance company's insolvency under subsection (a), the commissioner shall promptly institute appropriate action under § 56-22-118 . (c) (1) After the institution of action under § 56-22-118 , the commissioner, as early as is practicable, shall determine the amount of the insolvency and shall order the remaining county mutual insurance companies to pay an assessment in the amount of the insolvency, as well as any additional costs anticipated to be incurred by the commissioner for conducting the assessment. (2) The assessment paid by each county mutual insurance company shall be based on a pro rata formula whereby the share that each county mutual insurance company pays is in proportion to the total insurance in force of all the county mutual insurance companies combined for the year in which the insolvency occurs. However, the commissioner shall not assess a county mutual insurance company in excess of that county mutual insurance company's gross premium reported for the previous year. (3) In the event that the amount assessed by the commissioner exceeds the amount of the insolvency, the commissioner shall refund the excess amount to the assessed county mutual insurance companies. (4) The commissioner shall have the authority to contract with experts, actuaries, examiners, legal counsel and other persons for the purpose of assisting in the assessment. All costs incurred by the commissioner in conducting the assessment shall be assessed to the county mutual insurance companies that are subject to the assessment. (d) (1) Any county mutual insurance company failing to pay an assessment under subsection (c) when it is made due by the commissioner shall forfeit and pay to the state, in addition to the amount of the assessment, an amount equal to five percent (5%) per month, or fractional part thereof, of the delinquency. All delinquencies shall bear interest at the rate of ten percent (10%) per annum from the date the assessment was due until paid. The penalty and interest shall apply to any part of the assessment unpaid by the due date and no penalty or interest may be waived. (2) Any county mutual insurance company that fails to pay an assessment ordered by the commissioner under this chapter within thirty (30) days of the date when the assessment is made due by the commissioner shall be summarily suspended from transacting any business in this state until the assessment is paid. (e) Assessments made by the commissioner shall be allowed as a credit against premium taxes imposed on a county mutual insurance company, up to twenty-five percent (25%) of the net premium taxes due in any one (1) calendar year, until the aggregate of all assessments paid by the county mutual insurance company have been offset by the premium tax credit. (f) The commissioner may bring action in the chancery court for Davidson County to recover any uncollected assessment against a county mutual insurance company. Acts 2006, ch. 689, §§ 3, 14.
(a) If the assets of a county mutual insurance company are insufficient to pay its existing liabilities, including those liabilities incurred but not reported and other obligations, as well as maintain the reserves required under this chapter, the county mutual insurance company shall notify the commissioner immediately.
(b) Upon notice or determination by the commissioner of a county mutual insurance company's insolvency under subsection (a), the commissioner shall promptly institute appropriate action under § 56-22-118 .
(c) (1) After the institution of action under § 56-22-118 , the commissioner, as early as is practicable, shall determine the amount of the insolvency and shall order the remaining county mutual insurance companies to pay an assessment in the amount of the insolvency, as well as any additional costs anticipated to be incurred by the commissioner for conducting the assessment. (2) The assessment paid by each county mutual insurance company shall be based on a pro rata formula whereby the share that each county mutual insurance company pays is in proportion to the total insurance in force of all the county mutual insurance companies combined for the year in which the insolvency occurs. However, the commissioner shall not assess a county mutual insurance company in excess of that county mutual insurance company's gross premium reported for the previous year. (3) In the event that the amount assessed by the commissioner exceeds the amount of the insolvency, the commissioner shall refund the excess amount to the assessed county mutual insurance companies. (4) The commissioner shall have the authority to contract with experts, actuaries, examiners, legal counsel and other persons for the purpose of assisting in the assessment. All costs incurred by the commissioner in conducting the assessment shall be assessed to the county mutual insurance companies that are subject to the assessment.
(1) After the institution of action under § 56-22-118 , the commissioner, as early as is practicable, shall determine the amount of the insolvency and shall order the remaining county mutual insurance companies to pay an assessment in the amount of the insolvency, as well as any additional costs anticipated to be incurred by the commissioner for conducting the assessment.
(2) The assessment paid by each county mutual insurance company shall be based on a pro rata formula whereby the share that each county mutual insurance company pays is in proportion to the total insurance in force of all the county mutual insurance companies combined for the year in which the insolvency occurs. However, the commissioner shall not assess a county mutual insurance company in excess of that county mutual insurance company's gross premium reported for the previous year.
(3) In the event that the amount assessed by the commissioner exceeds the amount of the insolvency, the commissioner shall refund the excess amount to the assessed county mutual insurance companies.
(4) The commissioner shall have the authority to contract with experts, actuaries, examiners, legal counsel and other persons for the purpose of assisting in the assessment. All costs incurred by the commissioner in conducting the assessment shall be assessed to the county mutual insurance companies that are subject to the assessment.
(d) (1) Any county mutual insurance company failing to pay an assessment under subsection (c) when it is made due by the commissioner shall forfeit and pay to the state, in addition to the amount of the assessment, an amount equal to five percent (5%) per month, or fractional part thereof, of the delinquency. All delinquencies shall bear interest at the rate of ten percent (10%) per annum from the date the assessment was due until paid. The penalty and interest shall apply to any part of the assessment unpaid by the due date and no penalty or interest may be waived. (2) Any county mutual insurance company that fails to pay an assessment ordered by the commissioner under this chapter within thirty (30) days of the date when the assessment is made due by the commissioner shall be summarily suspended from transacting any business in this state until the assessment is paid.
(1) Any county mutual insurance company failing to pay an assessment under subsection (c) when it is made due by the commissioner shall forfeit and pay to the state, in addition to the amount of the assessment, an amount equal to five percent (5%) per month, or fractional part thereof, of the delinquency. All delinquencies shall bear interest at the rate of ten percent (10%) per annum from the date the assessment was due until paid. The penalty and interest shall apply to any part of the assessment unpaid by the due date and no penalty or interest may be waived.
(2) Any county mutual insurance company that fails to pay an assessment ordered by the commissioner under this chapter within thirty (30) days of the date when the assessment is made due by the commissioner shall be summarily suspended from transacting any business in this state until the assessment is paid.
(e) Assessments made by the commissioner shall be allowed as a credit against premium taxes imposed on a county mutual insurance company, up to twenty-five percent (25%) of the net premium taxes due in any one (1) calendar year, until the aggregate of all assessments paid by the county mutual insurance company have been offset by the premium tax credit.
(f) The commissioner may bring action in the chancery court for Davidson County to recover any uncollected assessment against a county mutual insurance company.
Acts 2006, ch. 689, §§ 3, 14.