Tenn. Code Ann. § 56-43-111 — TN Code / Title 56 / Chapter 43 / Section 56-43-111
Applicability of other laws
Status: in_force

(a) The Tennessee Consumer Protection Act, compiled in title 47, chapter 18, applies to persons transacting the business of legal insurance, except as is inconsistent with this chapter. (b) The Uniform Insurers Rehabilitation and Liquidation Act of this title, shall apply to a person transacting the business of legal insurance under this chapter. (c) Subject to this chapter, §§ 56-2-107 and 56-2-111 apply to persons transacting the business of legal insurance. (d) The insurance law applies generally to legal insurance offered by insurers licensed to write other kinds of insurance; provided, that legal insurance sold by the insurers under a certificate of authority obtained under this chapter shall be regulated by §§ 56-43-102 - 56-43-107, 56-43-112 and 56-43-116 instead of corresponding sections of the insurance code. (e) (1) Orders or rules or regulations of the commissioner issued under this chapter shall be subject to the general insurance laws and/or the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, relating to hearings and appeals. (2) Except as otherwise provided in this chapter, the general insurance law does not apply to insurers authorized under this chapter. Acts 1989, ch. 423, §§ 10, 14, 19-21.
(a) The Tennessee Consumer Protection Act, compiled in title 47, chapter 18, applies to persons transacting the business of legal insurance, except as is inconsistent with this chapter.
(b) The Uniform Insurers Rehabilitation and Liquidation Act of this title, shall apply to a person transacting the business of legal insurance under this chapter.
(c) Subject to this chapter, §§ 56-2-107 and 56-2-111 apply to persons transacting the business of legal insurance.
(d) The insurance law applies generally to legal insurance offered by insurers licensed to write other kinds of insurance; provided, that legal insurance sold by the insurers under a certificate of authority obtained under this chapter shall be regulated by §§ 56-43-102 - 56-43-107, 56-43-112 and 56-43-116 instead of corresponding sections of the insurance code.
(e) (1) Orders or rules or regulations of the commissioner issued under this chapter shall be subject to the general insurance laws and/or the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, relating to hearings and appeals. (2) Except as otherwise provided in this chapter, the general insurance law does not apply to insurers authorized under this chapter.
(1) Orders or rules or regulations of the commissioner issued under this chapter shall be subject to the general insurance laws and/or the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, relating to hearings and appeals.
(2) Except as otherwise provided in this chapter, the general insurance law does not apply to insurers authorized under this chapter.
Acts 1989, ch. 423, §§ 10, 14, 19-21.
Tenn. Code Ann. § 56-50-108 — TN Code / Title 56 / Chapter 50 / Section 56-50-108
Disclosure to viator
Status: in_force

(a) With each application for a viatical settlement, a viatical settlement provider or viatical settlement broker shall provide the viator with at least the following disclosures no later than the time the application for the viatical settlement contract is signed by all parties. The disclosures shall be provided in a separate document that is signed by the viator and the viatical settlement provider or viatical settlement broker, and shall provide the following information: (1) There are possible alternatives to viatical settlement contracts, including any accelerated death benefits or policy loans offered under the viator's life insurance policy; (2) That a viatical settlement broker represents exclusively the viator, and not the insurer or the viatical settlement provider, and owes a fiduciary duty to the viator, including a duty to act according to the viator's instructions and in the best interest of the viator; (3) Some or all of the proceeds of the viatical settlement may be taxable under federal income tax and state franchise and income taxes, and assistance should be sought from a professional tax advisor; (4) Proceeds of the viatical settlement could be subject to the claims of creditors; (5) Receipt of the proceeds of a viatical settlement may adversely affect the viator's eligibility for medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate government agencies; (6) The viator has the right to rescind a viatical settlement contract before the earlier of thirty (30) calendar days after the date upon which the viatical settlement contract is executed by all parties or fifteen (15) calendar days after the viatical settlement proceeds have been paid to the viator, as provided in § 56-50-110(f) . Rescission, if exercised by the viator, is effective only if both notice of the rescission is given and the viator repays all proceeds and any premiums, loans and loan interest paid on account of the viatical settlement within the rescission period. If the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded, subject to repayment by the viator or the viator's estate of all viatical settlement proceeds and any premiums, loans and loan interest paid on account of the viatical settlement within sixty (60) days of the insured's death; (7) Funds will be sent to the viator within three (3) business days after the viatical settlement provider has received the insurer's or group administrator's written acknowledgment that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated; (8) Entering into a viatical settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy or certificate, to be forfeited by the viator. Assistance should be sought from a financial adviser; (9) Disclosure to a viator shall include distribution of a brochure describing the process of viatical settlements. The National Association of Insurance Commissioners (NAIC) form for the brochure shall be used unless another form is developed or approved by the commissioner; (10) The disclosure document shall contain the following language: All medical, financial or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about an insured, including the insured's identity or the identity of family members, a spouse or a significant other may be disclosed as necessary to effect the viatical settlement between the viator and the viatical settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two (2) years. (11) Following execution of a viatical contract, the insured may be contacted for the purpose of determining the insured's health status and to confirm the insured's residential or business street address and telephone number, or as otherwise provided in this chapter. This contact shall be limited to once every three (3) months if the insured has a life expectancy of more than one (1) year, and no more than once per month if the insured has a life expectancy of one (1) year or less. All such contacts shall be made only by a viatical settlement provider licensed in the state in which the viator resided at the time of the viatical settlement and contract, or by the authorized representative of a duly licensed viatical settlement provider. (b) A viatical settlement provider shall provide the viator with at least the following disclosures no later than the date the viatical settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the viatical settlement contract or in a separate document signed by the viator and shall provide the following information: (1) The affiliation, if any, between the viatical settlement provider and the issuer of the insurance policy to be viaticated; (2) The document shall include the name, business address and telephone number of the viatical settlement provider; (3) If an insurance policy to be viaticated has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be viaticated, the viator shall be informed of the possible loss of coverage on the other lives under the policy and shall be advised to consult with the viator's insurance producer or the insurer issuing the policy for advice on the proposed viatical settlement; (4) State the dollar amount of the current death benefit payable to the viatical settlement provider under the policy or certificate. If known, the viatical settlement provider shall also disclose the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy or certificate and the extent to which the viator's interest in those benefits will be transferred as a result of the viatical settlement contract; and (5) State whether the funds will be escrowed with an independent third party during the transfer process, and if so, provide the name, business address and telephone number of the independent third party escrow agent, and the fact that the viator or owner may inspect or receive copies of the relevant escrow or trust agreements or documents. (c) A viatical settlement broker shall provide the viator with at least the following disclosures no later than the date the viatical settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the viatical settlement contract or in a separate document signed by the viator and shall provide the following information: (1) The name, business address and telephone number of the viatical settlement broker; (2) A full, complete and accurate description of all offers, counter-offers, acceptances and rejections relating to the proposed viatical settlement contract; (3) A written disclosure of any affiliations or contractual arrangements between the viatical settlement broker and any person making an offer in connection with the proposed viatical settlement contracts; and (4) The amount and method of calculating the broker's compensation. As used in this subdivision (c)(4), "compensation" includes anything of value paid or given to a viatical settlement broker for the placement of a policy. (d) If the viatical settlement provider transfers ownership or changes the beneficiary of the insurance policy, the provider shall communicate in writing the change in ownership or beneficiary to the insured within twenty (20) days after the change. (e) A viatical settlement provider or its viatical settlement investment agent shall provide the viatical settlement purchaser with at least the following disclosures prior to the date the viatical settlement purchase agreement is signed by all parties. The disclosures shall be conspicuously displayed in any viatical purchase contract or in a separate document signed by the viatical settlement purchaser and viatical settlement provider or viatical settlement investment agent, and shall make the following disclosure to the viatical settlement purchaser: (1) The purchaser will receive no returns, i.e., no dividends and interest, until the insured dies and a death claim payment is made; (2) The actual annual rate of return on a viatical settlement contract is dependent upon an accurate projection of the insured's life expectancy, and the actual date of the insured's death. An annual guaranteed rate of return is not determinable; (3) The viaticated life insurance contract should not be considered a liquid purchase since it is impossible to predict the exact timing of its maturity and the funds probably are not available until the death of the insured. There is no established secondary market for resale of these products by the purchaser; (4) The purchaser may lose all benefits or may receive substantially reduced benefits if the insurer goes out of business during the term of the viatical investment; (5) The purchaser is responsible for payment of the insurance premium or other costs related to the policy, if required by the terms of the viatical purchase agreement. These payments may reduce the purchaser's return. If a party other than the purchaser is responsible for the payment, the name and address of that party also shall be disclosed; (6) The purchaser is responsible for payment of the insurance premiums or other costs related to the policy if the insured returns to health. Disclose the amount of such premiums, if applicable; (7) State the name, business address and telephone number of the independent third party providing escrow services and the relationship to the broker; (8) The amount of any trust fees or other expenses to be charged to the viatical settlement purchaser; (9) State whether the purchaser is entitled to a refund of all or part of the purchaser's investment under the settlement contract if the policy is later determined to be null and void; (10) Disclose that group policies may contain limitations or caps in the conversion rights, additional premiums may have to be paid if the policy is converted, name the party responsible for the payment of the additional premiums and, if a group policy is terminated and replaced by another group policy, state that there may be no right to convert the original coverage; (11) Disclose the risks associated with policy contestability, including, but not limited to, the risk that the purchaser will have no claim or only a partial claim to death benefits should the insurer rescind the policy within the contestability period; (12) Disclose whether the purchaser will be the owner of the policy in addition to being the beneficiary, and if the purchaser is the beneficiary only and not also the owner, the special risks associated with that status, including, but not limited to, the risk that the beneficiary may be changed or the premium may not be paid; (13) Describe the experience and qualifications of the person who determines the life expectancy of the insured, i.e., in-house staff, independent physicians and specialty firms that weigh medical and actuarial data, the information this projection is based on, and the relationship of the projection maker to the viatical settlement provider, if any; and (14) Disclosure to an investor shall include distribution of a brochure describing the process of investment in viatical settlements. The NAIC's form for the brochure shall be used unless one is developed by the commissioner. (f) A viatical settlement provider or its viatical settlement investment agent shall provide the viatical settlement purchaser with at least the following disclosures no later than at the time of the assignment, transfer or sale of all or a portion of an insurance policy. The disclosures shall be contained in a document signed by the viatical settlement purchaser and viatical settlement provider or viatical settlement investment agent, and shall make the following disclosures to the viatical settlement purchaser: (1) Disclose all the life expectancy certifications obtained by the provider in the process of determining the price paid to the viator; (2) State whether premium payments or other costs related to the policy have been escrowed. If escrowed, state the date upon which the escrowed funds will be depleted and whether the purchaser will be responsible for payment of premiums thereafter and, if so, the amount of the premiums; (3) State whether premium payments or other costs related to the policy have been waived. If waived, disclose whether the investor will be responsible for payment of the premiums if the insurer that wrote the policy terminates the waiver after purchase and the amount of those premiums; (4) Disclose the type of policy offered or sold, i.e., whole life, term life, universal life or a group policy certificate, any additional benefits contained in the policy and the current status of the policy; (5) If the policy is term insurance, disclose the special risks associated with term insurance including, but not limited to, the purchaser's responsibility for additional premiums if the viator continues the term policy at the end of the current term; (6) State whether the policy is contestable; (7) State whether the insurer that wrote the policy has any additional rights that could negatively affect or extinguish the purchaser's rights under the viatical settlement contract, what these rights are and under what conditions these rights are activated; and (8) State the name and address of the person responsible for monitoring the insured's condition. Describe how often the monitoring of the insured's condition is done, how the date of death is determined and how and when this information will be transmitted to the purchaser. (g) The viatical settlement purchase agreement is voidable by the purchaser at any time within three (3) days after the disclosures mandated by subsections (e) and (f) are received by the purchaser. Acts 2009, ch. 604, § 9.
(a) With each application for a viatical settlement, a viatical settlement provider or viatical settlement broker shall provide the viator with at least the following disclosures no later than the time the application for the viatical settlement contract is signed by all parties. The disclosures shall be provided in a separate document that is signed by the viator and the viatical settlement provider or viatical settlement broker, and shall provide the following information: (1) There are possible alternatives to viatical settlement contracts, including any accelerated death benefits or policy loans offered under the viator's life insurance policy; (2) That a viatical settlement broker represents exclusively the viator, and not the insurer or the viatical settlement provider, and owes a fiduciary duty to the viator, including a duty to act according to the viator's instructions and in the best interest of the viator; (3) Some or all of the proceeds of the viatical settlement may be taxable under federal income tax and state franchise and income taxes, and assistance should be sought from a professional tax advisor; (4) Proceeds of the viatical settlement could be subject to the claims of creditors; (5) Receipt of the proceeds of a viatical settlement may adversely affect the viator's eligibility for medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate government agencies; (6) The viator has the right to rescind a viatical settlement contract before the earlier of thirty (30) calendar days after the date upon which the viatical settlement contract is executed by all parties or fifteen (15) calendar days after the viatical settlement proceeds have been paid to the viator, as provided in § 56-50-110(f) . Rescission, if exercised by the viator, is effective only if both notice of the rescission is given and the viator repays all proceeds and any premiums, loans and loan interest paid on account of the viatical settlement within the rescission period. If the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded, subject to repayment by the viator or the viator's estate of all viatical settlement proceeds and any premiums, loans and loan interest paid on account of the viatical settlement within sixty (60) days of the insured's death; (7) Funds will be sent to the viator within three (3) business days after the viatical settlement provider has received the insurer's or group administrator's written acknowledgment that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated; (8) Entering into a viatical settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy or certificate, to be forfeited by the viator. Assistance should be sought from a financial adviser; (9) Disclosure to a viator shall include distribution of a brochure describing the process of viatical settlements. The National Association of Insurance Commissioners (NAIC) form for the brochure shall be used unless another form is developed or approved by the commissioner; (10) The disclosure document shall contain the following language: All medical, financial or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about an insured, including the insured's identity or the identity of family members, a spouse or a significant other may be disclosed as necessary to effect the viatical settlement between the viator and the viatical settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two (2) years. (11) Following execution of a viatical contract, the insured may be contacted for the purpose of determining the insured's health status and to confirm the insured's residential or business street address and telephone number, or as otherwise provided in this chapter. This contact shall be limited to once every three (3) months if the insured has a life expectancy of more than one (1) year, and no more than once per month if the insured has a life expectancy of one (1) year or less. All such contacts shall be made only by a viatical settlement provider licensed in the state in which the viator resided at the time of the viatical settlement and contract, or by the authorized representative of a duly licensed viatical settlement provider.
(1) There are possible alternatives to viatical settlement contracts, including any accelerated death benefits or policy loans offered under the viator's life insurance policy;
(2) That a viatical settlement broker represents exclusively the viator, and not the insurer or the viatical settlement provider, and owes a fiduciary duty to the viator, including a duty to act according to the viator's instructions and in the best interest of the viator;
(3) Some or all of the proceeds of the viatical settlement may be taxable under federal income tax and state franchise and income taxes, and assistance should be sought from a professional tax advisor;
(4) Proceeds of the viatical settlement could be subject to the claims of creditors;
(5) Receipt of the proceeds of a viatical settlement may adversely affect the viator's eligibility for medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate government agencies;
(6) The viator has the right to rescind a viatical settlement contract before the earlier of thirty (30) calendar days after the date upon which the viatical settlement contract is executed by all parties or fifteen (15) calendar days after the viatical settlement proceeds have been paid to the viator, as provided in § 56-50-110(f) . Rescission, if exercised by the viator, is effective only if both notice of the rescission is given and the viator repays all proceeds and any premiums, loans and loan interest paid on account of the viatical settlement within the rescission period. If the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded, subject to repayment by the viator or the viator's estate of all viatical settlement proceeds and any premiums, loans and loan interest paid on account of the viatical settlement within sixty (60) days of the insured's death;
(7) Funds will be sent to the viator within three (3) business days after the viatical settlement provider has received the insurer's or group administrator's written acknowledgment that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated;
(8) Entering into a viatical settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy or certificate, to be forfeited by the viator. Assistance should be sought from a financial adviser;
(9) Disclosure to a viator shall include distribution of a brochure describing the process of viatical settlements. The National Association of Insurance Commissioners (NAIC) form for the brochure shall be used unless another form is developed or approved by the commissioner;
(10) The disclosure document shall contain the following language: All medical, financial or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about an insured, including the insured's identity or the identity of family members, a spouse or a significant other may be disclosed as necessary to effect the viatical settlement between the viator and the viatical settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two (2) years.
All medical, financial or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about an insured, including the insured's identity or the identity of family members, a spouse or a significant other may be disclosed as necessary to effect the viatical settlement between the viator and the viatical settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two (2) years.
(11) Following execution of a viatical contract, the insured may be contacted for the purpose of determining the insured's health status and to confirm the insured's residential or business street address and telephone number, or as otherwise provided in this chapter. This contact shall be limited to once every three (3) months if the insured has a life expectancy of more than one (1) year, and no more than once per month if the insured has a life expectancy of one (1) year or less. All such contacts shall be made only by a viatical settlement provider licensed in the state in which the viator resided at the time of the viatical settlement and contract, or by the authorized representative of a duly licensed viatical settlement provider.
(b) A viatical settlement provider shall provide the viator with at least the following disclosures no later than the date the viatical settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the viatical settlement contract or in a separate document signed by the viator and shall provide the following information: (1) The affiliation, if any, between the viatical settlement provider and the issuer of the insurance policy to be viaticated; (2) The document shall include the name, business address and telephone number of the viatical settlement provider; (3) If an insurance policy to be viaticated has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be viaticated, the viator shall be informed of the possible loss of coverage on the other lives under the policy and shall be advised to consult with the viator's insurance producer or the insurer issuing the policy for advice on the proposed viatical settlement; (4) State the dollar amount of the current death benefit payable to the viatical settlement provider under the policy or certificate. If known, the viatical settlement provider shall also disclose the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy or certificate and the extent to which the viator's interest in those benefits will be transferred as a result of the viatical settlement contract; and (5) State whether the funds will be escrowed with an independent third party during the transfer process, and if so, provide the name, business address and telephone number of the independent third party escrow agent, and the fact that the viator or owner may inspect or receive copies of the relevant escrow or trust agreements or documents.
(1) The affiliation, if any, between the viatical settlement provider and the issuer of the insurance policy to be viaticated;
(2) The document shall include the name, business address and telephone number of the viatical settlement provider;
(3) If an insurance policy to be viaticated has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be viaticated, the viator shall be informed of the possible loss of coverage on the other lives under the policy and shall be advised to consult with the viator's insurance producer or the insurer issuing the policy for advice on the proposed viatical settlement;
(4) State the dollar amount of the current death benefit payable to the viatical settlement provider under the policy or certificate. If known, the viatical settlement provider shall also disclose the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy or certificate and the extent to which the viator's interest in those benefits will be transferred as a result of the viatical settlement contract; and
(5) State whether the funds will be escrowed with an independent third party during the transfer process, and if so, provide the name, business address and telephone number of the independent third party escrow agent, and the fact that the viator or owner may inspect or receive copies of the relevant escrow or trust agreements or documents.
(c) A viatical settlement broker shall provide the viator with at least the following disclosures no later than the date the viatical settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the viatical settlement contract or in a separate document signed by the viator and shall provide the following information: (1) The name, business address and telephone number of the viatical settlement broker; (2) A full, complete and accurate description of all offers, counter-offers, acceptances and rejections relating to the proposed viatical settlement contract; (3) A written disclosure of any affiliations or contractual arrangements between the viatical settlement broker and any person making an offer in connection with the proposed viatical settlement contracts; and (4) The amount and method of calculating the broker's compensation. As used in this subdivision (c)(4), "compensation" includes anything of value paid or given to a viatical settlement broker for the placement of a policy.
(1) The name, business address and telephone number of the viatical settlement broker;
(2) A full, complete and accurate description of all offers, counter-offers, acceptances and rejections relating to the proposed viatical settlement contract;
(3) A written disclosure of any affiliations or contractual arrangements between the viatical settlement broker and any person making an offer in connection with the proposed viatical settlement contracts; and
(4) The amount and method of calculating the broker's compensation. As used in this subdivision (c)(4), "compensation" includes anything of value paid or given to a viatical settlement broker for the placement of a policy.
(d) If the viatical settlement provider transfers ownership or changes the beneficiary of the insurance policy, the provider shall communicate in writing the change in ownership or beneficiary to the insured within twenty (20) days after the change.
(e) A viatical settlement provider or its viatical settlement investment agent shall provide the viatical settlement purchaser with at least the following disclosures prior to the date the viatical settlement purchase agreement is signed by all parties. The disclosures shall be conspicuously displayed in any viatical purchase contract or in a separate document signed by the viatical settlement purchaser and viatical settlement provider or viatical settlement investment agent, and shall make the following disclosure to the viatical settlement purchaser: (1) The purchaser will receive no returns, i.e., no dividends and interest, until the insured dies and a death claim payment is made; (2) The actual annual rate of return on a viatical settlement contract is dependent upon an accurate projection of the insured's life expectancy, and the actual date of the insured's death. An annual guaranteed rate of return is not determinable; (3) The viaticated life insurance contract should not be considered a liquid purchase since it is impossible to predict the exact timing of its maturity and the funds probably are not available until the death of the insured. There is no established secondary market for resale of these products by the purchaser; (4) The purchaser may lose all benefits or may receive substantially reduced benefits if the insurer goes out of business during the term of the viatical investment; (5) The purchaser is responsible for payment of the insurance premium or other costs related to the policy, if required by the terms of the viatical purchase agreement. These payments may reduce the purchaser's return. If a party other than the purchaser is responsible for the payment, the name and address of that party also shall be disclosed; (6) The purchaser is responsible for payment of the insurance premiums or other costs related to the policy if the insured returns to health. Disclose the amount of such premiums, if applicable; (7) State the name, business address and telephone number of the independent third party providing escrow services and the relationship to the broker; (8) The amount of any trust fees or other expenses to be charged to the viatical settlement purchaser; (9) State whether the purchaser is entitled to a refund of all or part of the purchaser's investment under the settlement contract if the policy is later determined to be null and void; (10) Disclose that group policies may contain limitations or caps in the conversion rights, additional premiums may have to be paid if the policy is converted, name the party responsible for the payment of the additional premiums and, if a group policy is terminated and replaced by another group policy, state that there may be no right to convert the original coverage; (11) Disclose the risks associated with policy contestability, including, but not limited to, the risk that the purchaser will have no claim or only a partial claim to death benefits should the insurer rescind the policy within the contestability period; (12) Disclose whether the purchaser will be the owner of the policy in addition to being the beneficiary, and if the purchaser is the beneficiary only and not also the owner, the special risks associated with that status, including, but not limited to, the risk that the beneficiary may be changed or the premium may not be paid; (13) Describe the experience and qualifications of the person who determines the life expectancy of the insured, i.e., in-house staff, independent physicians and specialty firms that weigh medical and actuarial data, the information this projection is based on, and the relationship of the projection maker to the viatical settlement provider, if any; and (14) Disclosure to an investor shall include distribution of a brochure describing the process of investment in viatical settlements. The NAIC's form for the brochure shall be used unless one is developed by the commissioner.
(1) The purchaser will receive no returns, i.e., no dividends and interest, until the insured dies and a death claim payment is made;
(2) The actual annual rate of return on a viatical settlement contract is dependent upon an accurate projection of the insured's life expectancy, and the actual date of the insured's death. An annual guaranteed rate of return is not determinable;
(3) The viaticated life insurance contract should not be considered a liquid purchase since it is impossible to predict the exact timing of its maturity and the funds probably are not available until the death of the insured. There is no established secondary market for resale of these products by the purchaser;
(4) The purchaser may lose all benefits or may receive substantially reduced benefits if the insurer goes out of business during the term of the viatical investment;
(5) The purchaser is responsible for payment of the insurance premium or other costs related to the policy, if required by the terms of the viatical purchase agreement. These payments may reduce the purchaser's return. If a party other than the purchaser is responsible for the payment, the name and address of that party also shall be disclosed;
(6) The purchaser is responsible for payment of the insurance premiums or other costs related to the policy if the insured returns to health. Disclose the amount of such premiums, if applicable;
(7) State the name, business address and telephone number of the independent third party providing escrow services and the relationship to the broker;
(8) The amount of any trust fees or other expenses to be charged to the viatical settlement purchaser;
(9) State whether the purchaser is entitled to a refund of all or part of the purchaser's investment under the settlement contract if the policy is later determined to be null and void;
(10) Disclose that group policies may contain limitations or caps in the conversion rights, additional premiums may have to be paid if the policy is converted, name the party responsible for the payment of the additional premiums and, if a group policy is terminated and replaced by another group policy, state that there may be no right to convert the original coverage;
(11) Disclose the risks associated with policy contestability, including, but not limited to, the risk that the purchaser will have no claim or only a partial claim to death benefits should the insurer rescind the policy within the contestability period;
(12) Disclose whether the purchaser will be the owner of the policy in addition to being the beneficiary, and if the purchaser is the beneficiary only and not also the owner, the special risks associated with that status, including, but not limited to, the risk that the beneficiary may be changed or the premium may not be paid;
(13) Describe the experience and qualifications of the person who determines the life expectancy of the insured, i.e., in-house staff, independent physicians and specialty firms that weigh medical and actuarial data, the information this projection is based on, and the relationship of the projection maker to the viatical settlement provider, if any; and
(14) Disclosure to an investor shall include distribution of a brochure describing the process of investment in viatical settlements. The NAIC's form for the brochure shall be used unless one is developed by the commissioner.
(f) A viatical settlement provider or its viatical settlement investment agent shall provide the viatical settlement purchaser with at least the following disclosures no later than at the time of the assignment, transfer or sale of all or a portion of an insurance policy. The disclosures shall be contained in a document signed by the viatical settlement purchaser and viatical settlement provider or viatical settlement investment agent, and shall make the following disclosures to the viatical settlement purchaser: (1) Disclose all the life expectancy certifications obtained by the provider in the process of determining the price paid to the viator; (2) State whether premium payments or other costs related to the policy have been escrowed. If escrowed, state the date upon which the escrowed funds will be depleted and whether the purchaser will be responsible for payment of premiums thereafter and, if so, the amount of the premiums; (3) State whether premium payments or other costs related to the policy have been waived. If waived, disclose whether the investor will be responsible for payment of the premiums if the insurer that wrote the policy terminates the waiver after purchase and the amount of those premiums; (4) Disclose the type of policy offered or sold, i.e., whole life, term life, universal life or a group policy certificate, any additional benefits contained in the policy and the current status of the policy; (5) If the policy is term insurance, disclose the special risks associated with term insurance including, but not limited to, the purchaser's responsibility for additional premiums if the viator continues the term policy at the end of the current term; (6) State whether the policy is contestable; (7) State whether the insurer that wrote the policy has any additional rights that could negatively affect or extinguish the purchaser's rights under the viatical settlement contract, what these rights are and under what conditions these rights are activated; and (8) State the name and address of the person responsible for monitoring the insured's condition. Describe how often the monitoring of the insured's condition is done, how the date of death is determined and how and when this information will be transmitted to the purchaser.
(1) Disclose all the life expectancy certifications obtained by the provider in the process of determining the price paid to the viator;
(2) State whether premium payments or other costs related to the policy have been escrowed. If escrowed, state the date upon which the escrowed funds will be depleted and whether the purchaser will be responsible for payment of premiums thereafter and, if so, the amount of the premiums;
(3) State whether premium payments or other costs related to the policy have been waived. If waived, disclose whether the investor will be responsible for payment of the premiums if the insurer that wrote the policy terminates the waiver after purchase and the amount of those premiums;
(4) Disclose the type of policy offered or sold, i.e., whole life, term life, universal life or a group policy certificate, any additional benefits contained in the policy and the current status of the policy;
(5) If the policy is term insurance, disclose the special risks associated with term insurance including, but not limited to, the purchaser's responsibility for additional premiums if the viator continues the term policy at the end of the current term;
(6) State whether the policy is contestable;
(7) State whether the insurer that wrote the policy has any additional rights that could negatively affect or extinguish the purchaser's rights under the viatical settlement contract, what these rights are and under what conditions these rights are activated; and
(8) State the name and address of the person responsible for monitoring the insured's condition. Describe how often the monitoring of the insured's condition is done, how the date of death is determined and how and when this information will be transmitted to the purchaser.
(g) The viatical settlement purchase agreement is voidable by the purchaser at any time within three (3) days after the disclosures mandated by subsections (e) and (f) are received by the purchaser.
Acts 2009, ch. 604, § 9.
Tenn. Code Ann. § 56-35-131 — TN Code / Title 56 / Chapter 35 / Section 56-35-131
Additional requirements for license or certificates - Violation of agreements
Status: in_force

(a) Except as provided by §§ 56-35-201 and 56-35-204 , the commissioner shall refuse to issue any new license or certificate to any title insurance company, title insurance agent, or title insurance agency, unless the applicant therefor shall agree to abide by any one (1) of the following terms and conditions: (1) The gross operating revenues for any fiscal year attributable to the placement or issuance of policies or contracts of title insurance derived from all sources of controlled business shall not exceed forty percent (40%) of the gross operating revenues of the company, agent or agency; (2) The company, agent or agency will be operated as a subsidiary of a financial institution with its primary business being that of accepting deposits and making real estate loans and subject to regulation, inspection, and supervision of the United States government or an agency of the United States; or (3) The title insurance agency or agent is to be operated by an attorney, a single partnership of attorneys, or a single professional corporation of attorneys as an ancillary part of the general practice of law. (b) Any violation of the terms and conditions of the agreement shall serve as grounds for the commissioner to suspend or revoke the license or certificate to which the agreement pertains and to assess a civil penalty as provided by § 56-35-127 . Acts 1980, ch. 857, § 15.
(a) Except as provided by §§ 56-35-201 and 56-35-204 , the commissioner shall refuse to issue any new license or certificate to any title insurance company, title insurance agent, or title insurance agency, unless the applicant therefor shall agree to abide by any one (1) of the following terms and conditions: (1) The gross operating revenues for any fiscal year attributable to the placement or issuance of policies or contracts of title insurance derived from all sources of controlled business shall not exceed forty percent (40%) of the gross operating revenues of the company, agent or agency; (2) The company, agent or agency will be operated as a subsidiary of a financial institution with its primary business being that of accepting deposits and making real estate loans and subject to regulation, inspection, and supervision of the United States government or an agency of the United States; or (3) The title insurance agency or agent is to be operated by an attorney, a single partnership of attorneys, or a single professional corporation of attorneys as an ancillary part of the general practice of law.
(1) The gross operating revenues for any fiscal year attributable to the placement or issuance of policies or contracts of title insurance derived from all sources of controlled business shall not exceed forty percent (40%) of the gross operating revenues of the company, agent or agency;
(2) The company, agent or agency will be operated as a subsidiary of a financial institution with its primary business being that of accepting deposits and making real estate loans and subject to regulation, inspection, and supervision of the United States government or an agency of the United States; or
(3) The title insurance agency or agent is to be operated by an attorney, a single partnership of attorneys, or a single professional corporation of attorneys as an ancillary part of the general practice of law.
(b) Any violation of the terms and conditions of the agreement shall serve as grounds for the commissioner to suspend or revoke the license or certificate to which the agreement pertains and to assess a civil penalty as provided by § 56-35-127 .
Acts 1980, ch. 857, § 15.
Tenn. Code Ann. § 56-6-908 — TN Code / Title 56 / Chapter 6 / Section 56-6-908
Nonresident public adjuster license
Status: in_force

(a) Unless denied licensure pursuant to § 56-6-910 , a nonresident person shall receive a nonresident public adjuster license, if: (1) The person is currently licensed as a resident public adjuster and in good standing in the person's home state; (2) The person has submitted the proper request for licensure, has paid the fees required by the rule promulgated under § 56-6-905(a)(5) , and has provided proof of financial responsibility as required in § 56-6-911 ; (3) The person has submitted, or transmitted to the commissioner, the appropriate completed application for licensure; (4) The person's home state has adopted a public adjuster licensing act, that is substantially similar to this part; and (5) The nonresident public adjuster representing an insured in this state remains reasonably available for communications with the insured and the insurance carrier. (b) The commissioner may verify the public adjuster's licensing status through the producer database maintained by the NAIC, its affiliates or subsidiaries. (c) As a condition to continuation of a public adjuster license issued under this section, the licensee shall maintain a resident public adjuster license in the licensee's home state. The nonresident public adjuster license issued under this section shall terminate and be surrendered immediately to the commissioner, if the home state public adjuster license terminates for any reason, unless the public adjuster has been issued a license as a resident public adjuster in the adjuster's new home state. The licensed nonresident public adjuster shall provide prompt notification of the new home state license to the state or states that have issued the nonresident license. This notification shall include the licensee's new and old addresses. A new state resident license is required for nonresident licenses to remain valid. The new state resident license must have reciprocity with the licensing nonresident state or states, for the nonresident license not to terminate. Acts 2006, ch. 997, § 9.
(a) Unless denied licensure pursuant to § 56-6-910 , a nonresident person shall receive a nonresident public adjuster license, if: (1) The person is currently licensed as a resident public adjuster and in good standing in the person's home state; (2) The person has submitted the proper request for licensure, has paid the fees required by the rule promulgated under § 56-6-905(a)(5) , and has provided proof of financial responsibility as required in § 56-6-911 ; (3) The person has submitted, or transmitted to the commissioner, the appropriate completed application for licensure; (4) The person's home state has adopted a public adjuster licensing act, that is substantially similar to this part; and (5) The nonresident public adjuster representing an insured in this state remains reasonably available for communications with the insured and the insurance carrier.
(1) The person is currently licensed as a resident public adjuster and in good standing in the person's home state;
(2) The person has submitted the proper request for licensure, has paid the fees required by the rule promulgated under § 56-6-905(a)(5) , and has provided proof of financial responsibility as required in § 56-6-911 ;
(3) The person has submitted, or transmitted to the commissioner, the appropriate completed application for licensure;
(4) The person's home state has adopted a public adjuster licensing act, that is substantially similar to this part; and
(5) The nonresident public adjuster representing an insured in this state remains reasonably available for communications with the insured and the insurance carrier.
(b) The commissioner may verify the public adjuster's licensing status through the producer database maintained by the NAIC, its affiliates or subsidiaries.
(c) As a condition to continuation of a public adjuster license issued under this section, the licensee shall maintain a resident public adjuster license in the licensee's home state. The nonresident public adjuster license issued under this section shall terminate and be surrendered immediately to the commissioner, if the home state public adjuster license terminates for any reason, unless the public adjuster has been issued a license as a resident public adjuster in the adjuster's new home state. The licensed nonresident public adjuster shall provide prompt notification of the new home state license to the state or states that have issued the nonresident license. This notification shall include the licensee's new and old addresses. A new state resident license is required for nonresident licenses to remain valid. The new state resident license must have reciprocity with the licensing nonresident state or states, for the nonresident license not to terminate.
Acts 2006, ch. 997, § 9.
Tenn. Code Ann. § 56-53-111 — TN Code / Title 56 / Chapter 53 / Section 56-53-111
Regulatory requirements
Status: in_force

(a) Anti-Fraud Plans. (1) By January 1, 2002, every insurer with direct written premiums exceeding ten million dollars ($10,000,000) shall prepare, implement, and maintain an insurance anti-fraud plan. Each insurer's anti-fraud plan shall outline specific procedures, appropriate to the type of insurance the insurer writes in this state, to: (A) Prevent, detect and investigate all forms of insurance fraud, including fraud involving the insurer's employees or agents; fraud resulting from misrepresentations in the application, renewal or rating of insurance policies; claims fraud; and security of the insurer's data processing systems; (B) Educate appropriate employees on fraud detection and the insurer's anti-fraud plan; (C) Provide for the hiring of or contracting for fraud investigators; (D) Report insurance fraud to appropriate law enforcement and regulatory authorities in the investigation and prosecution of insurance fraud; and (E) Pursue restitution for financial loss caused by insurance fraud, where appropriate. (2) The commissioner may review each insurer's anti-fraud plan at the time of the insurance company's financial examination or market conduct examination or at any other time when requested by the commissioner. (3) The commissioner may require each insurer to file a summary of the insurer's anti-fraud activities and results. The anti-fraud plans and the summary of the insurer's anti-fraud activities and results are not public records and are exempt from the public records act, and shall be proprietary and not subject to public examination, and shall not be discoverable or admissible in civil litigation. (4) This subsection (a) confers no private rights of action. (b) Fraud Warnings. (1) (A) By January 1, 2002, all applications for insurance, and all claim forms regardless of the form of transmission provided and required by an insurer or required by law as a condition of payment of a claim, shall contain a statement, permanently affixed to the application or claim form, that clearly states in substance the following, or words to that effect: "It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits." (B) The lack of a statement required in this subsection (b) does not constitute a defense in any criminal prosecution under § 56-53-102 nor in any civil action under § 56-53-102 or § 56-53-103 . (2) The warning required by subdivision (b)(1) shall not be required on forms relating to reinsurance. (c) Enforcement. Notwithstanding any other law, the following are the exclusive monetary penalties for violation of this section. Insurers that fail to prepare, implement, and maintain an insurance anti-fraud plan are subject to a penalty of five hundred dollars ($500) per day, not to exceed twenty-five thousand dollars ($25,000). Acts 2001, ch. 356, § 12.
(a) Anti-Fraud Plans. (1) By January 1, 2002, every insurer with direct written premiums exceeding ten million dollars ($10,000,000) shall prepare, implement, and maintain an insurance anti-fraud plan. Each insurer's anti-fraud plan shall outline specific procedures, appropriate to the type of insurance the insurer writes in this state, to: (A) Prevent, detect and investigate all forms of insurance fraud, including fraud involving the insurer's employees or agents; fraud resulting from misrepresentations in the application, renewal or rating of insurance policies; claims fraud; and security of the insurer's data processing systems; (B) Educate appropriate employees on fraud detection and the insurer's anti-fraud plan; (C) Provide for the hiring of or contracting for fraud investigators; (D) Report insurance fraud to appropriate law enforcement and regulatory authorities in the investigation and prosecution of insurance fraud; and (E) Pursue restitution for financial loss caused by insurance fraud, where appropriate. (2) The commissioner may review each insurer's anti-fraud plan at the time of the insurance company's financial examination or market conduct examination or at any other time when requested by the commissioner. (3) The commissioner may require each insurer to file a summary of the insurer's anti-fraud activities and results. The anti-fraud plans and the summary of the insurer's anti-fraud activities and results are not public records and are exempt from the public records act, and shall be proprietary and not subject to public examination, and shall not be discoverable or admissible in civil litigation. (4) This subsection (a) confers no private rights of action.
(1) By January 1, 2002, every insurer with direct written premiums exceeding ten million dollars ($10,000,000) shall prepare, implement, and maintain an insurance anti-fraud plan. Each insurer's anti-fraud plan shall outline specific procedures, appropriate to the type of insurance the insurer writes in this state, to: (A) Prevent, detect and investigate all forms of insurance fraud, including fraud involving the insurer's employees or agents; fraud resulting from misrepresentations in the application, renewal or rating of insurance policies; claims fraud; and security of the insurer's data processing systems; (B) Educate appropriate employees on fraud detection and the insurer's anti-fraud plan; (C) Provide for the hiring of or contracting for fraud investigators; (D) Report insurance fraud to appropriate law enforcement and regulatory authorities in the investigation and prosecution of insurance fraud; and (E) Pursue restitution for financial loss caused by insurance fraud, where appropriate.
(A) Prevent, detect and investigate all forms of insurance fraud, including fraud involving the insurer's employees or agents; fraud resulting from misrepresentations in the application, renewal or rating of insurance policies; claims fraud; and security of the insurer's data processing systems;
(B) Educate appropriate employees on fraud detection and the insurer's anti-fraud plan;
(C) Provide for the hiring of or contracting for fraud investigators;
(D) Report insurance fraud to appropriate law enforcement and regulatory authorities in the investigation and prosecution of insurance fraud; and
(E) Pursue restitution for financial loss caused by insurance fraud, where appropriate.
(2) The commissioner may review each insurer's anti-fraud plan at the time of the insurance company's financial examination or market conduct examination or at any other time when requested by the commissioner.
(3) The commissioner may require each insurer to file a summary of the insurer's anti-fraud activities and results. The anti-fraud plans and the summary of the insurer's anti-fraud activities and results are not public records and are exempt from the public records act, and shall be proprietary and not subject to public examination, and shall not be discoverable or admissible in civil litigation.
(4) This subsection (a) confers no private rights of action.
(b) Fraud Warnings. (1) (A) By January 1, 2002, all applications for insurance, and all claim forms regardless of the form of transmission provided and required by an insurer or required by law as a condition of payment of a claim, shall contain a statement, permanently affixed to the application or claim form, that clearly states in substance the following, or words to that effect: "It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits." (B) The lack of a statement required in this subsection (b) does not constitute a defense in any criminal prosecution under § 56-53-102 nor in any civil action under § 56-53-102 or § 56-53-103 . (2) The warning required by subdivision (b)(1) shall not be required on forms relating to reinsurance.
(1) (A) By January 1, 2002, all applications for insurance, and all claim forms regardless of the form of transmission provided and required by an insurer or required by law as a condition of payment of a claim, shall contain a statement, permanently affixed to the application or claim form, that clearly states in substance the following, or words to that effect: "It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits." (B) The lack of a statement required in this subsection (b) does not constitute a defense in any criminal prosecution under § 56-53-102 nor in any civil action under § 56-53-102 or § 56-53-103 .
(A) By January 1, 2002, all applications for insurance, and all claim forms regardless of the form of transmission provided and required by an insurer or required by law as a condition of payment of a claim, shall contain a statement, permanently affixed to the application or claim form, that clearly states in substance the following, or words to that effect: "It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits."
"It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits."
(B) The lack of a statement required in this subsection (b) does not constitute a defense in any criminal prosecution under § 56-53-102 nor in any civil action under § 56-53-102 or § 56-53-103 .
(2) The warning required by subdivision (b)(1) shall not be required on forms relating to reinsurance.
(c) Enforcement. Notwithstanding any other law, the following are the exclusive monetary penalties for violation of this section. Insurers that fail to prepare, implement, and maintain an insurance anti-fraud plan are subject to a penalty of five hundred dollars ($500) per day, not to exceed twenty-five thousand dollars ($25,000).
Acts 2001, ch. 356, § 12.
Tenn. Code Ann. § 56-46-202 — TN Code / Title 56 / Chapter 46 / Section 56-46-202
Annual report of RBC levels - Filing requirements - Determination of RBC - Adjustment of report
Status: in_force

(a) A domestic health organization shall, on or prior to March 1 of each year (the "filing date"), prepare and submit to the commissioner a report of its RBC levels as of the end of the previous calendar year, in a form and containing such information as is required by the RBC instructions. In addition, a domestic health organization shall file its RBC report: (1) With the NAIC in accordance with the RBC instructions; and (2) With the insurance commissioner in any state in which the health organization is authorized to do business, if the insurance commissioner has notified the health organization of its request in writing, in which case the health organization shall file its RBC report by the later of: (A) Fifteen (15) days from the receipt of notice to file its RBC report with that state; or (B) The filing date. (b) A health organization's RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take the following into account (and may adjust for the covariance between) determined in each case by applying the factors in the manner set forth in the RBC instructions: (1) Asset risk; (2) Credit risk; (3) Underwriting risk; and (4) All other business risks and such other relevant risks as are set forth in the RBC instructions. (c) An excess of capital, also known as net worth, over the amount produced by the risk-based capital requirements contained in this part and the formulas, schedules and instructions referenced in this part is desirable in the business of health insurance. Accordingly, health organizations should seek to maintain capital above the RBC levels required by this part. Additional capital is used in the insurance business and helps to secure a health organization against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the risk-based capital requirements contained in this part. (d) If a domestic health organization files an RBC report that in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the health organization of the adjustment. The notice shall contain a statement of the reason for the adjustment. An RBC report as so adjusted is referred to as an "adjusted RBC report." Acts 2014, ch. 559, § 7.
(a) A domestic health organization shall, on or prior to March 1 of each year (the "filing date"), prepare and submit to the commissioner a report of its RBC levels as of the end of the previous calendar year, in a form and containing such information as is required by the RBC instructions. In addition, a domestic health organization shall file its RBC report: (1) With the NAIC in accordance with the RBC instructions; and (2) With the insurance commissioner in any state in which the health organization is authorized to do business, if the insurance commissioner has notified the health organization of its request in writing, in which case the health organization shall file its RBC report by the later of: (A) Fifteen (15) days from the receipt of notice to file its RBC report with that state; or (B) The filing date.
(1) With the NAIC in accordance with the RBC instructions; and
(2) With the insurance commissioner in any state in which the health organization is authorized to do business, if the insurance commissioner has notified the health organization of its request in writing, in which case the health organization shall file its RBC report by the later of: (A) Fifteen (15) days from the receipt of notice to file its RBC report with that state; or (B) The filing date.
(A) Fifteen (15) days from the receipt of notice to file its RBC report with that state; or
(B) The filing date.
(b) A health organization's RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take the following into account (and may adjust for the covariance between) determined in each case by applying the factors in the manner set forth in the RBC instructions: (1) Asset risk; (2) Credit risk; (3) Underwriting risk; and (4) All other business risks and such other relevant risks as are set forth in the RBC instructions.
(1) Asset risk;
(2) Credit risk;
(3) Underwriting risk; and
(4) All other business risks and such other relevant risks as are set forth in the RBC instructions.
(c) An excess of capital, also known as net worth, over the amount produced by the risk-based capital requirements contained in this part and the formulas, schedules and instructions referenced in this part is desirable in the business of health insurance. Accordingly, health organizations should seek to maintain capital above the RBC levels required by this part. Additional capital is used in the insurance business and helps to secure a health organization against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the risk-based capital requirements contained in this part.
(d) If a domestic health organization files an RBC report that in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the health organization of the adjustment. The notice shall contain a statement of the reason for the adjustment. An RBC report as so adjusted is referred to as an "adjusted RBC report."
Acts 2014, ch. 559, § 7.
Tenn. Code Ann. § 56-12-209 — TN Code / Title 56 / Chapter 12 / Section 56-12-209
Plan of operation
Status: in_force

(a) (1) The association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon the commissioner's written approval or within thirty (30) days if the commissioner has not disapproved it during such thirty-day period. (2) If an association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate this part. Such rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner. (b) All member insurers shall comply with the plan of operation. (c) The plan of operation shall, in addition to requirements enumerated elsewhere in this part: (1) Establish procedures for handling the assets of the association; (2) Establish the amount and method of reimbursing members of the board of directors under § 56-12-206 ; (3) Establish regular places and times for meetings including telephone conference calls of the board of directors; (4) Establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors; (5) Establish the procedures whereby selections for the board of directors will be made and submitted to the commissioner; (6) Establish any additional procedures for assessments pursuant to § 56-12-208 ; and (7) Contain additional provisions necessary or proper for the execution of the powers and duties of the association. (d) The plan of operation may provide that any or all powers and duties of the association, except those set forth in §§ 56-12-207(k)(3) and 56-12-208 , are delegated to a corporation, association, or other organization that performs or will perform functions similar to those of this association, or its equivalent, in two (2) or more states. Such a corporation, association, or organization shall be reimbursed for any payments made on behalf of the association and shall be paid for its performance of any function of the association. A delegation under this subsection (d) shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association, or organization that extends protection not substantially less favorable and effective than that provided by this part. Acts 1988, ch. 1032, § 9.
(a) (1) The association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon the commissioner's written approval or within thirty (30) days if the commissioner has not disapproved it during such thirty-day period. (2) If an association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate this part. Such rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner.
(1) The association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon the commissioner's written approval or within thirty (30) days if the commissioner has not disapproved it during such thirty-day period.
(2) If an association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate this part. Such rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner.
(b) All member insurers shall comply with the plan of operation.
(c) The plan of operation shall, in addition to requirements enumerated elsewhere in this part: (1) Establish procedures for handling the assets of the association; (2) Establish the amount and method of reimbursing members of the board of directors under § 56-12-206 ; (3) Establish regular places and times for meetings including telephone conference calls of the board of directors; (4) Establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors; (5) Establish the procedures whereby selections for the board of directors will be made and submitted to the commissioner; (6) Establish any additional procedures for assessments pursuant to § 56-12-208 ; and (7) Contain additional provisions necessary or proper for the execution of the powers and duties of the association.
(1) Establish procedures for handling the assets of the association;
(2) Establish the amount and method of reimbursing members of the board of directors under § 56-12-206 ;
(3) Establish regular places and times for meetings including telephone conference calls of the board of directors;
(4) Establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors;
(5) Establish the procedures whereby selections for the board of directors will be made and submitted to the commissioner;
(6) Establish any additional procedures for assessments pursuant to § 56-12-208 ; and
(7) Contain additional provisions necessary or proper for the execution of the powers and duties of the association.
(d) The plan of operation may provide that any or all powers and duties of the association, except those set forth in §§ 56-12-207(k)(3) and 56-12-208 , are delegated to a corporation, association, or other organization that performs or will perform functions similar to those of this association, or its equivalent, in two (2) or more states. Such a corporation, association, or organization shall be reimbursed for any payments made on behalf of the association and shall be paid for its performance of any function of the association. A delegation under this subsection (d) shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association, or organization that extends protection not substantially less favorable and effective than that provided by this part.
Acts 1988, ch. 1032, § 9.
Tenn. Code Ann. § 56-7-2326 — TN Code / Title 56 / Chapter 7 / Section 56-7-2326
Coverage for prescription eye drops - Refills
Status: in_force

A policy or contract for a health benefit plan, as defined in § 56-7-2203 , that is issued, renewed, or entered into on or after January 1, 2018, and provides coverage for prescription eye drops shall not deny coverage for a refill of a prescription that is a covered benefit under the policy or contract of the insured and is otherwise eligible for a refill if: (1) The renewal is requested by the insured for a thirty-day supply of the drug at least twenty-three (23) days from: (A) The original date the prescription was dispensed to the insured; or (B) The date the most recent refill was dispensed to the insured; (2) The renewal is requested by the insured for a sixty-day supply of the drug at least forty-five (45) days from: (A) The original date the prescription was dispensed to the insured; or (B) The date the most recent refill was dispensed to the insured; or (3) The renewal is requested by the insured for a ninety-day supply of the drug at least sixty-eight (68) days from: (A) The original date the prescription was dispensed to the insured; or (B) The date the most recent refill was dispensed to the insured. Added by 2017 Tenn. Acts, ch. 232,s 1, eff. 4/28/2017.
A policy or contract for a health benefit plan, as defined in § 56-7-2203 , that is issued, renewed, or entered into on or after January 1, 2018, and provides coverage for prescription eye drops shall not deny coverage for a refill of a prescription that is a covered benefit under the policy or contract of the insured and is otherwise eligible for a refill if:
(1) The renewal is requested by the insured for a thirty-day supply of the drug at least twenty-three (23) days from: (A) The original date the prescription was dispensed to the insured; or (B) The date the most recent refill was dispensed to the insured;
(A) The original date the prescription was dispensed to the insured; or
(B) The date the most recent refill was dispensed to the insured;
(2) The renewal is requested by the insured for a sixty-day supply of the drug at least forty-five (45) days from: (A) The original date the prescription was dispensed to the insured; or (B) The date the most recent refill was dispensed to the insured; or
(A) The original date the prescription was dispensed to the insured; or
(B) The date the most recent refill was dispensed to the insured; or
(3) The renewal is requested by the insured for a ninety-day supply of the drug at least sixty-eight (68) days from: (A) The original date the prescription was dispensed to the insured; or (B) The date the most recent refill was dispensed to the insured.
(A) The original date the prescription was dispensed to the insured; or
(B) The date the most recent refill was dispensed to the insured.
Added by 2017 Tenn. Acts, ch. 232,s 1, eff. 4/28/2017.
Tenn. Code Ann. § 56-59-104 — TN Code / Title 56 / Chapter 59 / Section 56-59-104
Coverage under contractual liability or other insurance policy - Cancellation
Status: in_force

(a) Contractual liability or other insurance policies insuring GAP waivers must state the obligations of the insurer to reimburse or pay to the creditor any sums the creditor is legally obligated to waive under the GAP waivers issued by the creditor and purchased or held by the borrower. (b) Coverage under a contractual liability or other insurance policy insuring a GAP waiver must also cover any subsequent assignee upon the assignment, sale or transfer of the finance agreements. (c) Coverage under a contractual liability or other insurance policy insuring a GAP waiver must also remain in effect unless canceled or terminated in compliance with applicable insurance laws of this state. (d) The cancellation or termination of a contractual liability or other insurance policy must not reduce the insurer's responsibility for GAP waivers issued by the creditor prior to the date of cancellation or termination and for which premium has been received by the insurer. Acts 2008, ch. 1055, § 5.
(a) Contractual liability or other insurance policies insuring GAP waivers must state the obligations of the insurer to reimburse or pay to the creditor any sums the creditor is legally obligated to waive under the GAP waivers issued by the creditor and purchased or held by the borrower.
(b) Coverage under a contractual liability or other insurance policy insuring a GAP waiver must also cover any subsequent assignee upon the assignment, sale or transfer of the finance agreements.
(c) Coverage under a contractual liability or other insurance policy insuring a GAP waiver must also remain in effect unless canceled or terminated in compliance with applicable insurance laws of this state.
(d) The cancellation or termination of a contractual liability or other insurance policy must not reduce the insurer's responsibility for GAP waivers issued by the creditor prior to the date of cancellation or termination and for which premium has been received by the insurer.
Acts 2008, ch. 1055, § 5.
Tenn. Code Ann. § 56-11-104 — TN Code / Title 56 / Chapter 11 / Section 56-11-104
Acquisitions resulting in change in control of insurer
Status: in_force

(a) Definitions. As used in this section only: (1) "Acquisition" means any agreement, arrangement or activity, the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes, but is not limited to, the acquisition of voting securities, the acquisition of assets, bulk reinsurance and mergers; and (2) "Involved insurer" includes an insurer that either acquires or is acquired, is affiliated with an acquirer or acquired, or is the result of a merger. (b) Scope. (1) Except as exempted in subdivision (b)(2), this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this state. (2) This section does not apply to the following: (A) A purchase of securities solely for investment purposes so long as the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under § 56-11-101(b)(3) , it is not solely for investment purposes unless the commissioner of insurance of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and the disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the commissioner of commerce and insurance of this state; (B) The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if pre-acquisition notification is filed with the commissioner of commerce and insurance in accordance with subdivision (c)(1) thirty (30) days prior to the proposed effective date of the acquisition. However, the pre-acquisition notification is not required for exclusion from this section if the acquisition would otherwise be excluded from this section by any other subdivision of this subdivision (b)(2); (C) The acquisition of already affiliated persons; (D) An acquisition if, as an immediate result of the acquisition: (i) In no market would the combined market share of the involved insurers exceed five percent (5%) of the total market; (ii) There would be no increase in any market share; or (iii) In no market would the combined market share of the involved insurers exceed twelve percent (12%) of the total market, and the market share increases by more than two percent (2%) of the total market. For the purpose of this subdivision (b)(2)(D), "market" means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state; (E) An acquisition for which a pre-acquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business; or (F) An acquisition of an insurer whose domiciliary commissioner affirmatively finds that the insurer is in failing condition; there is a lack of feasible alternative to improving the condition; the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and the findings are communicated by the domiciliary commissioner of insurance to the commissioner of commerce and insurance of this state. (c) Pre-acquisition Notification, Waiting Period. An acquisition covered by subsection (b) may be subject to an order pursuant to subsection (e) unless the acquiring person files a pre-acquisition notification and the waiting period has expired. The acquired person may file a pre-acquisition notification. The commissioner shall give confidential treatment to information submitted under this subsection (c) in the same manner as provided in § 56-11-108 . (1) The pre-acquisition notification shall be in the form and contain the information as prescribed by the National Association of Insurance Commissioners relating to those markets that, under subdivision (b)(2)(D), cause the acquisition not to be exempted from this section. The commissioner may require additional material and information deemed necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subsection (d). The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of the person indicating the person's ability to render an informed opinion. (2) The waiting period required shall begin on the date of receipt of the commissioner of a pre-acquisition notification and shall end on the earlier of the thirtieth day after the date of the receipt, or termination of the waiting period by the commissioner. Prior to the end of the waiting period, the commissioner, on a one-time basis, may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the thirtieth day after receipt of the additional information by the commissioner, or termination of the waiting period by the commissioner. (d) Competitive Standard. (1) The commissioner may enter an order under subdivision (e)(1) with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this state or tend to create a monopoly therein, or if the insurer fails to file adequate information in compliance with subsection (c). (2) In determining whether a proposed acquisition would violate the competitive standard of subdivision (d)(1), the commissioner shall consider the following: (A) Any acquisition covered under subsection (b) involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standards: (i) If the market is highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 4% 4% or more 10% 2% or more 15% 1% or more (ii) If the market is not highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 5% 5% or more 10% 4% or more 15% 3% or more 19% 1% or more A highly concentrated market is one in which the share of the four (4) largest insurers is seventy-five percent (75%) or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two (2) insurers are involved, exceeding the total of the two (2) columns in the table is prima facie evidence of violation of the competitive standard in subdivision (d)(1). For the purpose of this subdivision (d)(2)(A), the insurer with the largest share of the market shall be deemed to be Insurer A. (B) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market from the two (2) largest to the eight (8) largest has increased by seven percent (7%) or more of the market over a period of time extending from any base year five (5) to ten (10) years prior to the acquisition up to the time of the acquisition. Any acquisition or merger covered under subsection (b) involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in subdivision (d)(1) if: (i) There is a significant trend toward increased concentration in the market; (ii) One (1) of the insurers involved is one (1) of the insurers in a grouping of the large insurers showing the requisite increase in the market share; and (iii) Another involved insurer's market is two percent (2%) or more. (C) As used in this subdivision (d)(2): (i) "Insurer" includes any company or group of companies under common management, ownership or control; (ii) "Market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, the line being that used in the annual statement required to be filed by insurers doing business in this state and the relevant geographical market is assumed to be this state; and (iii) The burden of showing prima facie evidence of violation of the competitive standard rests upon the commissioner. (D) Even though an acquisition is not prima facie violative of the competitive standard under subdivisions (d)(2)(A) and (B), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subdivisions (d)(2)(A) and (B), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this subdivision (d)(2)(D) include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market. (3) An order may not be entered under subdivision (e)(1) if: (A) The acquisition will yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits that would arise from the economies exceed the public benefits that would arise from not lessening competition; or (B) The acquisition will substantially increase the availability of insurance, and the public benefits of the increase exceed the public benefits that would arise from not lessening competition. (e) Orders and Penalties. (1) If an acquisition violates the standards of this section, the commissioner may enter an order requiring an involved insurer to cease and desist from doing business in this state with respect to the line or lines of insurance involved in the violation. (2) The commissioner may also issue an order denying the application of an acquired or acquiring insurer for a license to do business in this state. (3) An order shall not be entered unless there is a hearing, notice of the hearing is issued prior to the end of the waiting period and not less than fifteen (15) days prior to the hearing, and the hearing is concluded and the order is issued no later than sixty (60) days after the date of the filing of the pre-acquisition notification with the commissioner. Every order shall be accompanied by a written decision of the commissioner setting forth the commissioner's findings of fact and conclusions of law. (4) An order pursuant to this subsection (e) shall not apply if the acquisition is not consummated. (5) Any person who violates a cease and desist order of the commissioner under this section and while the order is in effect may, after notice and hearing, and upon order of the commissioner, be subject to any one (1) or more of the following at the discretion of the commissioner: (A) A monetary penalty of not more than ten thousand dollars ($10,000) for every day of violation; or (B) Suspension or revocation of the person's license. (6) Any insurer or other person who fails to make any filing required by this section and who also fails to demonstrate a good faith effort to comply with any filing requirement shall be subject to a fine of not more than fifty thousand dollars ($50,000). (f) Inapplicable Provisions. Sections 56-11-110(b) and (c) and 56-11-112 do not apply to acquisitions covered under subsection (b). Amended by 2014 Tenn. Acts, ch. 583, Secs.s 10, s 11, s 12 eff. 3/28/2014. Acts 1986, ch. 572, § 4; T.C.A. § 56-11-204 .
(a) Definitions. As used in this section only: (1) "Acquisition" means any agreement, arrangement or activity, the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes, but is not limited to, the acquisition of voting securities, the acquisition of assets, bulk reinsurance and mergers; and (2) "Involved insurer" includes an insurer that either acquires or is acquired, is affiliated with an acquirer or acquired, or is the result of a merger.
(1) "Acquisition" means any agreement, arrangement or activity, the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes, but is not limited to, the acquisition of voting securities, the acquisition of assets, bulk reinsurance and mergers; and
(2) "Involved insurer" includes an insurer that either acquires or is acquired, is affiliated with an acquirer or acquired, or is the result of a merger.
(b) Scope. (1) Except as exempted in subdivision (b)(2), this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this state. (2) This section does not apply to the following: (A) A purchase of securities solely for investment purposes so long as the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under § 56-11-101(b)(3) , it is not solely for investment purposes unless the commissioner of insurance of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and the disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the commissioner of commerce and insurance of this state; (B) The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if pre-acquisition notification is filed with the commissioner of commerce and insurance in accordance with subdivision (c)(1) thirty (30) days prior to the proposed effective date of the acquisition. However, the pre-acquisition notification is not required for exclusion from this section if the acquisition would otherwise be excluded from this section by any other subdivision of this subdivision (b)(2); (C) The acquisition of already affiliated persons; (D) An acquisition if, as an immediate result of the acquisition: (i) In no market would the combined market share of the involved insurers exceed five percent (5%) of the total market; (ii) There would be no increase in any market share; or (iii) In no market would the combined market share of the involved insurers exceed twelve percent (12%) of the total market, and the market share increases by more than two percent (2%) of the total market. For the purpose of this subdivision (b)(2)(D), "market" means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state; (E) An acquisition for which a pre-acquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business; or (F) An acquisition of an insurer whose domiciliary commissioner affirmatively finds that the insurer is in failing condition; there is a lack of feasible alternative to improving the condition; the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and the findings are communicated by the domiciliary commissioner of insurance to the commissioner of commerce and insurance of this state.
(1) Except as exempted in subdivision (b)(2), this section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this state.
(2) This section does not apply to the following: (A) A purchase of securities solely for investment purposes so long as the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under § 56-11-101(b)(3) , it is not solely for investment purposes unless the commissioner of insurance of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and the disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the commissioner of commerce and insurance of this state; (B) The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if pre-acquisition notification is filed with the commissioner of commerce and insurance in accordance with subdivision (c)(1) thirty (30) days prior to the proposed effective date of the acquisition. However, the pre-acquisition notification is not required for exclusion from this section if the acquisition would otherwise be excluded from this section by any other subdivision of this subdivision (b)(2); (C) The acquisition of already affiliated persons; (D) An acquisition if, as an immediate result of the acquisition: (i) In no market would the combined market share of the involved insurers exceed five percent (5%) of the total market; (ii) There would be no increase in any market share; or (iii) In no market would the combined market share of the involved insurers exceed twelve percent (12%) of the total market, and the market share increases by more than two percent (2%) of the total market. For the purpose of this subdivision (b)(2)(D), "market" means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state; (E) An acquisition for which a pre-acquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business; or (F) An acquisition of an insurer whose domiciliary commissioner affirmatively finds that the insurer is in failing condition; there is a lack of feasible alternative to improving the condition; the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and the findings are communicated by the domiciliary commissioner of insurance to the commissioner of commerce and insurance of this state.
(A) A purchase of securities solely for investment purposes so long as the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under § 56-11-101(b)(3) , it is not solely for investment purposes unless the commissioner of insurance of the insurer's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and the disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the commissioner of commerce and insurance of this state;
(B) The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if pre-acquisition notification is filed with the commissioner of commerce and insurance in accordance with subdivision (c)(1) thirty (30) days prior to the proposed effective date of the acquisition. However, the pre-acquisition notification is not required for exclusion from this section if the acquisition would otherwise be excluded from this section by any other subdivision of this subdivision (b)(2);
(C) The acquisition of already affiliated persons;
(D) An acquisition if, as an immediate result of the acquisition: (i) In no market would the combined market share of the involved insurers exceed five percent (5%) of the total market; (ii) There would be no increase in any market share; or (iii) In no market would the combined market share of the involved insurers exceed twelve percent (12%) of the total market, and the market share increases by more than two percent (2%) of the total market. For the purpose of this subdivision (b)(2)(D), "market" means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state;
(i) In no market would the combined market share of the involved insurers exceed five percent (5%) of the total market;
(ii) There would be no increase in any market share; or
(iii) In no market would the combined market share of the involved insurers exceed twelve percent (12%) of the total market, and the market share increases by more than two percent (2%) of the total market. For the purpose of this subdivision (b)(2)(D), "market" means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state;
(E) An acquisition for which a pre-acquisition notification would be required pursuant to this section due solely to the resulting effect on the ocean marine insurance line of business; or
(F) An acquisition of an insurer whose domiciliary commissioner affirmatively finds that the insurer is in failing condition; there is a lack of feasible alternative to improving the condition; the public benefits of improving the insurer's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and the findings are communicated by the domiciliary commissioner of insurance to the commissioner of commerce and insurance of this state.
(c) Pre-acquisition Notification, Waiting Period. An acquisition covered by subsection (b) may be subject to an order pursuant to subsection (e) unless the acquiring person files a pre-acquisition notification and the waiting period has expired. The acquired person may file a pre-acquisition notification. The commissioner shall give confidential treatment to information submitted under this subsection (c) in the same manner as provided in § 56-11-108 . (1) The pre-acquisition notification shall be in the form and contain the information as prescribed by the National Association of Insurance Commissioners relating to those markets that, under subdivision (b)(2)(D), cause the acquisition not to be exempted from this section. The commissioner may require additional material and information deemed necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subsection (d). The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of the person indicating the person's ability to render an informed opinion. (2) The waiting period required shall begin on the date of receipt of the commissioner of a pre-acquisition notification and shall end on the earlier of the thirtieth day after the date of the receipt, or termination of the waiting period by the commissioner. Prior to the end of the waiting period, the commissioner, on a one-time basis, may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the thirtieth day after receipt of the additional information by the commissioner, or termination of the waiting period by the commissioner.
(1) The pre-acquisition notification shall be in the form and contain the information as prescribed by the National Association of Insurance Commissioners relating to those markets that, under subdivision (b)(2)(D), cause the acquisition not to be exempted from this section. The commissioner may require additional material and information deemed necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subsection (d). The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of the person indicating the person's ability to render an informed opinion.
(2) The waiting period required shall begin on the date of receipt of the commissioner of a pre-acquisition notification and shall end on the earlier of the thirtieth day after the date of the receipt, or termination of the waiting period by the commissioner. Prior to the end of the waiting period, the commissioner, on a one-time basis, may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the thirtieth day after receipt of the additional information by the commissioner, or termination of the waiting period by the commissioner.
(d) Competitive Standard. (1) The commissioner may enter an order under subdivision (e)(1) with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this state or tend to create a monopoly therein, or if the insurer fails to file adequate information in compliance with subsection (c). (2) In determining whether a proposed acquisition would violate the competitive standard of subdivision (d)(1), the commissioner shall consider the following: (A) Any acquisition covered under subsection (b) involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standards: (i) If the market is highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 4% 4% or more 10% 2% or more 15% 1% or more (ii) If the market is not highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 5% 5% or more 10% 4% or more 15% 3% or more 19% 1% or more A highly concentrated market is one in which the share of the four (4) largest insurers is seventy-five percent (75%) or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two (2) insurers are involved, exceeding the total of the two (2) columns in the table is prima facie evidence of violation of the competitive standard in subdivision (d)(1). For the purpose of this subdivision (d)(2)(A), the insurer with the largest share of the market shall be deemed to be Insurer A. (B) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market from the two (2) largest to the eight (8) largest has increased by seven percent (7%) or more of the market over a period of time extending from any base year five (5) to ten (10) years prior to the acquisition up to the time of the acquisition. Any acquisition or merger covered under subsection (b) involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in subdivision (d)(1) if: (i) There is a significant trend toward increased concentration in the market; (ii) One (1) of the insurers involved is one (1) of the insurers in a grouping of the large insurers showing the requisite increase in the market share; and (iii) Another involved insurer's market is two percent (2%) or more. (C) As used in this subdivision (d)(2): (i) "Insurer" includes any company or group of companies under common management, ownership or control; (ii) "Market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, the line being that used in the annual statement required to be filed by insurers doing business in this state and the relevant geographical market is assumed to be this state; and (iii) The burden of showing prima facie evidence of violation of the competitive standard rests upon the commissioner. (D) Even though an acquisition is not prima facie violative of the competitive standard under subdivisions (d)(2)(A) and (B), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subdivisions (d)(2)(A) and (B), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this subdivision (d)(2)(D) include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market. (3) An order may not be entered under subdivision (e)(1) if: (A) The acquisition will yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits that would arise from the economies exceed the public benefits that would arise from not lessening competition; or (B) The acquisition will substantially increase the availability of insurance, and the public benefits of the increase exceed the public benefits that would arise from not lessening competition.
(1) The commissioner may enter an order under subdivision (e)(1) with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this state or tend to create a monopoly therein, or if the insurer fails to file adequate information in compliance with subsection (c).
(2) In determining whether a proposed acquisition would violate the competitive standard of subdivision (d)(1), the commissioner shall consider the following: (A) Any acquisition covered under subsection (b) involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standards: (i) If the market is highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 4% 4% or more 10% 2% or more 15% 1% or more (ii) If the market is not highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 5% 5% or more 10% 4% or more 15% 3% or more 19% 1% or more A highly concentrated market is one in which the share of the four (4) largest insurers is seventy-five percent (75%) or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two (2) insurers are involved, exceeding the total of the two (2) columns in the table is prima facie evidence of violation of the competitive standard in subdivision (d)(1). For the purpose of this subdivision (d)(2)(A), the insurer with the largest share of the market shall be deemed to be Insurer A. (B) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market from the two (2) largest to the eight (8) largest has increased by seven percent (7%) or more of the market over a period of time extending from any base year five (5) to ten (10) years prior to the acquisition up to the time of the acquisition. Any acquisition or merger covered under subsection (b) involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in subdivision (d)(1) if: (i) There is a significant trend toward increased concentration in the market; (ii) One (1) of the insurers involved is one (1) of the insurers in a grouping of the large insurers showing the requisite increase in the market share; and (iii) Another involved insurer's market is two percent (2%) or more. (C) As used in this subdivision (d)(2): (i) "Insurer" includes any company or group of companies under common management, ownership or control; (ii) "Market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, the line being that used in the annual statement required to be filed by insurers doing business in this state and the relevant geographical market is assumed to be this state; and (iii) The burden of showing prima facie evidence of violation of the competitive standard rests upon the commissioner. (D) Even though an acquisition is not prima facie violative of the competitive standard under subdivisions (d)(2)(A) and (B), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subdivisions (d)(2)(A) and (B), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this subdivision (d)(2)(D) include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market.
(A) Any acquisition covered under subsection (b) involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standards: (i) If the market is highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 4% 4% or more 10% 2% or more 15% 1% or more (ii) If the market is not highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 5% 5% or more 10% 4% or more 15% 3% or more 19% 1% or more A highly concentrated market is one in which the share of the four (4) largest insurers is seventy-five percent (75%) or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two (2) insurers are involved, exceeding the total of the two (2) columns in the table is prima facie evidence of violation of the competitive standard in subdivision (d)(1). For the purpose of this subdivision (d)(2)(A), the insurer with the largest share of the market shall be deemed to be Insurer A.
(i) If the market is highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 4% 4% or more 10% 2% or more 15% 1% or more
Insurer A Insurer B 4% 4% or more 10% 2% or more 15% 1% or more
Insurer A
Insurer B
4%
4% or more
10%
2% or more
15%
1% or more
(ii) If the market is not highly concentrated and the involved insurers possess the following shares of the market: Insurer A Insurer B 5% 5% or more 10% 4% or more 15% 3% or more 19% 1% or more A highly concentrated market is one in which the share of the four (4) largest insurers is seventy-five percent (75%) or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two (2) insurers are involved, exceeding the total of the two (2) columns in the table is prima facie evidence of violation of the competitive standard in subdivision (d)(1). For the purpose of this subdivision (d)(2)(A), the insurer with the largest share of the market shall be deemed to be Insurer A.
Insurer A Insurer B 5% 5% or more 10% 4% or more 15% 3% or more 19% 1% or more
Insurer A
Insurer B
5%
5% or more
10%
4% or more
15%
3% or more
19%
1% or more
A highly concentrated market is one in which the share of the four (4) largest insurers is seventy-five percent (75%) or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two (2) insurers are involved, exceeding the total of the two (2) columns in the table is prima facie evidence of violation of the competitive standard in subdivision (d)(1). For the purpose of this subdivision (d)(2)(A), the insurer with the largest share of the market shall be deemed to be Insurer A.
(B) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market from the two (2) largest to the eight (8) largest has increased by seven percent (7%) or more of the market over a period of time extending from any base year five (5) to ten (10) years prior to the acquisition up to the time of the acquisition. Any acquisition or merger covered under subsection (b) involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in subdivision (d)(1) if: (i) There is a significant trend toward increased concentration in the market; (ii) One (1) of the insurers involved is one (1) of the insurers in a grouping of the large insurers showing the requisite increase in the market share; and (iii) Another involved insurer's market is two percent (2%) or more.
(i) There is a significant trend toward increased concentration in the market;
(ii) One (1) of the insurers involved is one (1) of the insurers in a grouping of the large insurers showing the requisite increase in the market share; and
(iii) Another involved insurer's market is two percent (2%) or more.
(C) As used in this subdivision (d)(2): (i) "Insurer" includes any company or group of companies under common management, ownership or control; (ii) "Market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, the line being that used in the annual statement required to be filed by insurers doing business in this state and the relevant geographical market is assumed to be this state; and (iii) The burden of showing prima facie evidence of violation of the competitive standard rests upon the commissioner.
(i) "Insurer" includes any company or group of companies under common management, ownership or control;
(ii) "Market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the commissioner shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, the line being that used in the annual statement required to be filed by insurers doing business in this state and the relevant geographical market is assumed to be this state; and
(iii) The burden of showing prima facie evidence of violation of the competitive standard rests upon the commissioner.
(D) Even though an acquisition is not prima facie violative of the competitive standard under subdivisions (d)(2)(A) and (B), the commissioner may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subdivisions (d)(2)(A) and (B), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this subdivision (d)(2)(D) include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market.
(3) An order may not be entered under subdivision (e)(1) if: (A) The acquisition will yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits that would arise from the economies exceed the public benefits that would arise from not lessening competition; or (B) The acquisition will substantially increase the availability of insurance, and the public benefits of the increase exceed the public benefits that would arise from not lessening competition.
(A) The acquisition will yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits that would arise from the economies exceed the public benefits that would arise from not lessening competition; or
(B) The acquisition will substantially increase the availability of insurance, and the public benefits of the increase exceed the public benefits that would arise from not lessening competition.
(e) Orders and Penalties. (1) If an acquisition violates the standards of this section, the commissioner may enter an order requiring an involved insurer to cease and desist from doing business in this state with respect to the line or lines of insurance involved in the violation. (2) The commissioner may also issue an order denying the application of an acquired or acquiring insurer for a license to do business in this state. (3) An order shall not be entered unless there is a hearing, notice of the hearing is issued prior to the end of the waiting period and not less than fifteen (15) days prior to the hearing, and the hearing is concluded and the order is issued no later than sixty (60) days after the date of the filing of the pre-acquisition notification with the commissioner. Every order shall be accompanied by a written decision of the commissioner setting forth the commissioner's findings of fact and conclusions of law. (4) An order pursuant to this subsection (e) shall not apply if the acquisition is not consummated. (5) Any person who violates a cease and desist order of the commissioner under this section and while the order is in effect may, after notice and hearing, and upon order of the commissioner, be subject to any one (1) or more of the following at the discretion of the commissioner: (A) A monetary penalty of not more than ten thousand dollars ($10,000) for every day of violation; or (B) Suspension or revocation of the person's license. (6) Any insurer or other person who fails to make any filing required by this section and who also fails to demonstrate a good faith effort to comply with any filing requirement shall be subject to a fine of not more than fifty thousand dollars ($50,000).
(1) If an acquisition violates the standards of this section, the commissioner may enter an order requiring an involved insurer to cease and desist from doing business in this state with respect to the line or lines of insurance involved in the violation.
(2) The commissioner may also issue an order denying the application of an acquired or acquiring insurer for a license to do business in this state.
(3) An order shall not be entered unless there is a hearing, notice of the hearing is issued prior to the end of the waiting period and not less than fifteen (15) days prior to the hearing, and the hearing is concluded and the order is issued no later than sixty (60) days after the date of the filing of the pre-acquisition notification with the commissioner. Every order shall be accompanied by a written decision of the commissioner setting forth the commissioner's findings of fact and conclusions of law.
(4) An order pursuant to this subsection (e) shall not apply if the acquisition is not consummated.
(5) Any person who violates a cease and desist order of the commissioner under this section and while the order is in effect may, after notice and hearing, and upon order of the commissioner, be subject to any one (1) or more of the following at the discretion of the commissioner: (A) A monetary penalty of not more than ten thousand dollars ($10,000) for every day of violation; or (B) Suspension or revocation of the person's license.
(A) A monetary penalty of not more than ten thousand dollars ($10,000) for every day of violation; or
(B) Suspension or revocation of the person's license.
(6) Any insurer or other person who fails to make any filing required by this section and who also fails to demonstrate a good faith effort to comply with any filing requirement shall be subject to a fine of not more than fifty thousand dollars ($50,000).
(f) Inapplicable Provisions. Sections 56-11-110(b) and (c) and 56-11-112 do not apply to acquisitions covered under subsection (b).
Amended by 2014 Tenn. Acts, ch. 583, Secs.s 10, s 11, s 12 eff. 3/28/2014.
Acts 1986, ch. 572, § 4; T.C.A. § 56-11-204 .
Tenn. Code Ann. § 56-20-113 — TN Code / Title 56 / Chapter 20 / Section 56-20-113
Annual statement to commissioner
Status: in_force

The president and secretary of every corporation doing business under this chapter shall make a statement, under oath, to the commissioner showing the condition of the corporation on December 31 in each year, which shall contain the amount and kind of property insured, the number of policies issued from the time of organization of the corporation up to the time of making the statement, the number insured during the year last past, the amount of insurance accepted and amount withdrawn, expired, and cancelled during the year, the whole amount of insurance in force on December 31, the amount of money received during the year by the corporation, the amount of disbursements, specifying the amount paid for fees, salaries, commissions, and all other matters of interest to the corporation or member that the commissioner may require on or before February 1 next following. Acts 1895, ch. 220, § 9; Shan., § 3367; Code 1932, § 6249; impl. am. Acts 1971, ch. 137, § 2; T.C.A. (orig. ed.), § 56-1913.
The president and secretary of every corporation doing business under this chapter shall make a statement, under oath, to the commissioner showing the condition of the corporation on December 31 in each year, which shall contain the amount and kind of property insured, the number of policies issued from the time of organization of the corporation up to the time of making the statement, the number insured during the year last past, the amount of insurance accepted and amount withdrawn, expired, and cancelled during the year, the whole amount of insurance in force on December 31, the amount of money received during the year by the corporation, the amount of disbursements, specifying the amount paid for fees, salaries, commissions, and all other matters of interest to the corporation or member that the commissioner may require on or before February 1 next following.
Acts 1895, ch. 220, § 9; Shan., § 3367; Code 1932, § 6249; impl. am. Acts 1971, ch. 137, § 2; T.C.A. (orig. ed.), § 56-1913.
Tenn. Code Ann. § 56-7-3103 — TN Code / Title 56 / Chapter 7 / Section 56-7-3103
Audit of records of pharmacist or pharmacy
Status: in_force

(a) When an audit of records of a pharmacist or pharmacy is conducted by a covered entity, a pharmacy benefits manager, the state or its political subdivisions, or any other entity representing the same, it shall be conducted in the following manner: (1) Written notice shall be given to the pharmacist or pharmacy at least two (2) weeks prior to conducting the initial on-site audit for each audit cycle; (2) Any audit performed under this section that involves clinical or professional judgment shall be conducted in consultation with a pharmacist who has knowledge of the Tennessee Pharmacy Practice Act, compiled in title 63, chapter 10, parts 2-4; (3) Any clerical or recordkeeping error identified during an audit, such as a typographical error, scrivener's error, omission, or computer error, does not, in and of itself, constitute fraud or intentional misrepresentation and must not be the basis of a recoupment unless the error results in an actual overpayment to the pharmacy or the wrong medication being dispensed to the patient. Notwithstanding any other law to the contrary, no such claim is subject to criminal penalties without proof of intent to commit fraud; (4) A pharmacist or pharmacy may use the records of a hospital, physician, or other authorized practitioner of the healing arts for drugs or medical supplies written or transmitted by any means of communication for purposes of validating pharmacy records with respect to orders or refills of a legend or narcotic drug; (5) A finding of overpayment or underpayment may be a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs; however, recoupment of claims must be based on the actual overpayment or underpayment, unless the projection for overpayment or underpayment is part of a settlement as agreed to by the pharmacist or pharmacy; (6) Each pharmacist or pharmacy shall be audited under the standards and parameters as other similarly situated pharmacists or pharmacies audited by a covered entity, a pharmacy benefits manager, the state or its political subdivisions, or any other entity representing the same; (7) A pharmacist or pharmacy must be allowed the length of time described in the pharmacist's or pharmacy's contract or provider manual, whichever is applicable, which must not be less than thirty (30) days, following receipt of the preliminary audit report in which to produce documentation to address any discrepancy found during an audit. A pharmacist or pharmacy may correct a clerical or recordkeeping error by submitting an amended claim during the designated time frame if the prescription was dispensed according to the requirements of state and federal law. If the pharmacist's or pharmacy's contract or provider manual does not specify the allowed length of time for the pharmacist or pharmacy to address any discrepancy found in the audit following receipt of the preliminary report, then that pharmacist or pharmacy must be allowed no less than thirty (30) days following receipt of the preliminary audit report to respond and produce documentation; (8) The period covered by an audit may not exceed two (2) years from the date the claim was submitted to or adjudicated by a covered entity, a pharmacy benefits manager, the state or its political subdivisions, or any other entity representing the same, except this subdivision (a)(8) shall not apply where a longer period is required by any federal rule or law; (9) An audit shall not be initiated or scheduled during the first seven (7) calendar days of any month due to the high volume of prescriptions filled during that time, unless otherwise consented to by the pharmacist or pharmacy; (10) The preliminary audit report must be delivered to the pharmacist or pharmacy within one hundred twenty (120) days after conclusion of the audit. A final audit report shall be delivered to the pharmacist or pharmacy within six (6) months after receipt of the preliminary audit report or final appeal, whichever is later; (11) Notwithstanding any other law to the contrary, any audit of a pharmacist or pharmacy shall not use the accounting practice of extrapolation in calculating recoupments or penalties for audits; and (12) Any recoupment related to clerical or recordkeeping errors must not include the cost of the drug or dispensed product, except in cases of the following: (A) Fraud or other intentional and willful misrepresentation; (B) Dispensing in excess of the pharmacy benefits contract established by the plan sponsor; or (C) Prescriptions not filled in accordance with the prescriber's order. (b) Recoupments of any disputed funds shall only occur after final internal disposition of the audit, including the appeal process as set forth in subsection (c). (c) Each pharmacy benefits manager, as defined in § 56-7-3102 , conducting an audit shall establish an appeals process under which a pharmacist or pharmacy may appeal an unfavorable preliminary audit report to the pharmacy benefits manager on whose behalf the audit was conducted. The pharmacy benefits manager conducting any audit shall provide to the pharmacist or pharmacy, before or at the time of delivery of the preliminary audit report, a written explanation of the appeals process, including the name, address and telephone number of the person to whom an appeal should be addressed. If, following the appeal, it is determined that an unfavorable audit report or any portion of the audit report is unsubstantiated, the audit report or the portion shall be dismissed without the necessity of further proceedings. (d) A pharmacy provider may use any prescription that meets the requirements of being a legal prescription as defined by applicable Tennessee law to validate claims submitted for reimbursement for dispensing of original and refill prescriptions, or changes made to prescriptions. (e) Auditors are permitted to enter the prescription department when accompanied by or authorized by a member of the pharmacy staff. During the auditing process, auditors shall not disrupt the provision of services to the pharmacy's customers. (f) A demand for recoupment, repayment or offset against future reimbursement for an overpayment on a claim for dispensing of an original or refill prescription shall not include the dispensing fee, unless the prescription that is the subject of the claim was not actually dispensed, was not valid, was fraudulent, or was outside the contract. This subsection (f) shall not apply where a pharmacy is requested, pursuant to a contractual provision or to § 56-7-2362(b) or § 56-32-138(b) , to correct an error in a claim submitted in good faith. (g) Audit information from an audit conducted by one pharmacy benefits manager shall not be shared with or utilized by another pharmacy benefits manager. This subsection (g) shall not apply to an investigative audit that is believed by the pharmacy benefits manager to involve fraud or willful misrepresentation. (h) Unless otherwise agreed to by contract, no audit finding or demand for recoupment, repayment or offset against future reimbursement shall be made for any claim for dispensing of an original or refill prescription for the reason of information missing from a prescription or for information not placed in a particular location on a prescription when the information or location of the information is not required or specified by federal or state law. (i) In the event the actual quantity dispensed on a valid prescription for a covered beneficiary exceeds the allowable maximum days supply of the product as defined in the applicable pharmacy benefit provider agreement, the amount allowed to be recouped, repaid or offset against future reimbursement shall be limited to an amount that is calculated based on the quantity of the product dispensed found to be in excess of the allowed days supply quantity and using the cost of the product as reflected on the original claim. (j) A pharmacy provider shall be allowed to dispense and shall be reimbursed for the full quantity of the smallest available commercially packaged product, including, but not limited to, eye drops, insulin, and topical products, which contains the total amount that is required to be dispensed to meet the days supply ordered by the prescriber, even if the full quantity of the commercially prepared package exceeds the maximum days supply allowed. (k) The highest daily total dose which may be utilized by the patient pursuant to the prescriber's directions shall be used to make a determination of the days supply. For prescriptions having a titrated dose schedule, the schedule shall be used to determine the days supply. (l) Subsections (d)-(k) shall not apply to any investigative audit that involves allegations of fraud or willful misrepresentation. Amended by 2019 Tenn. Acts, ch. 470,Secs.s2, s3 eff. 7/1/2019. Amended by 2019 Tenn. Acts, ch. 470,s 1, eff. 7/1/2019. Acts 2007, ch. 224, § 1; 2011, ch. 289, § 2.
(a) When an audit of records of a pharmacist or pharmacy is conducted by a covered entity, a pharmacy benefits manager, the state or its political subdivisions, or any other entity representing the same, it shall be conducted in the following manner: (1) Written notice shall be given to the pharmacist or pharmacy at least two (2) weeks prior to conducting the initial on-site audit for each audit cycle; (2) Any audit performed under this section that involves clinical or professional judgment shall be conducted in consultation with a pharmacist who has knowledge of the Tennessee Pharmacy Practice Act, compiled in title 63, chapter 10, parts 2-4; (3) Any clerical or recordkeeping error identified during an audit, such as a typographical error, scrivener's error, omission, or computer error, does not, in and of itself, constitute fraud or intentional misrepresentation and must not be the basis of a recoupment unless the error results in an actual overpayment to the pharmacy or the wrong medication being dispensed to the patient. Notwithstanding any other law to the contrary, no such claim is subject to criminal penalties without proof of intent to commit fraud; (4) A pharmacist or pharmacy may use the records of a hospital, physician, or other authorized practitioner of the healing arts for drugs or medical supplies written or transmitted by any means of communication for purposes of validating pharmacy records with respect to orders or refills of a legend or narcotic drug; (5) A finding of overpayment or underpayment may be a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs; however, recoupment of claims must be based on the actual overpayment or underpayment, unless the projection for overpayment or underpayment is part of a settlement as agreed to by the pharmacist or pharmacy; (6) Each pharmacist or pharmacy shall be audited under the standards and parameters as other similarly situated pharmacists or pharmacies audited by a covered entity, a pharmacy benefits manager, the state or its political subdivisions, or any other entity representing the same; (7) A pharmacist or pharmacy must be allowed the length of time described in the pharmacist's or pharmacy's contract or provider manual, whichever is applicable, which must not be less than thirty (30) days, following receipt of the preliminary audit report in which to produce documentation to address any discrepancy found during an audit. A pharmacist or pharmacy may correct a clerical or recordkeeping error by submitting an amended claim during the designated time frame if the prescription was dispensed according to the requirements of state and federal law. If the pharmacist's or pharmacy's contract or provider manual does not specify the allowed length of time for the pharmacist or pharmacy to address any discrepancy found in the audit following receipt of the preliminary report, then that pharmacist or pharmacy must be allowed no less than thirty (30) days following receipt of the preliminary audit report to respond and produce documentation; (8) The period covered by an audit may not exceed two (2) years from the date the claim was submitted to or adjudicated by a covered entity, a pharmacy benefits manager, the state or its political subdivisions, or any other entity representing the same, except this subdivision (a)(8) shall not apply where a longer period is required by any federal rule or law; (9) An audit shall not be initiated or scheduled during the first seven (7) calendar days of any month due to the high volume of prescriptions filled during that time, unless otherwise consented to by the pharmacist or pharmacy; (10) The preliminary audit report must be delivered to the pharmacist or pharmacy within one hundred twenty (120) days after conclusion of the audit. A final audit report shall be delivered to the pharmacist or pharmacy within six (6) months after receipt of the preliminary audit report or final appeal, whichever is later; (11) Notwithstanding any other law to the contrary, any audit of a pharmacist or pharmacy shall not use the accounting practice of extrapolation in calculating recoupments or penalties for audits; and (12) Any recoupment related to clerical or recordkeeping errors must not include the cost of the drug or dispensed product, except in cases of the following: (A) Fraud or other intentional and willful misrepresentation; (B) Dispensing in excess of the pharmacy benefits contract established by the plan sponsor; or (C) Prescriptions not filled in accordance with the prescriber's order.
(1) Written notice shall be given to the pharmacist or pharmacy at least two (2) weeks prior to conducting the initial on-site audit for each audit cycle;
(2) Any audit performed under this section that involves clinical or professional judgment shall be conducted in consultation with a pharmacist who has knowledge of the Tennessee Pharmacy Practice Act, compiled in title 63, chapter 10, parts 2-4;
(3) Any clerical or recordkeeping error identified during an audit, such as a typographical error, scrivener's error, omission, or computer error, does not, in and of itself, constitute fraud or intentional misrepresentation and must not be the basis of a recoupment unless the error results in an actual overpayment to the pharmacy or the wrong medication being dispensed to the patient. Notwithstanding any other law to the contrary, no such claim is subject to criminal penalties without proof of intent to commit fraud;
(4) A pharmacist or pharmacy may use the records of a hospital, physician, or other authorized practitioner of the healing arts for drugs or medical supplies written or transmitted by any means of communication for purposes of validating pharmacy records with respect to orders or refills of a legend or narcotic drug;
(5) A finding of overpayment or underpayment may be a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs; however, recoupment of claims must be based on the actual overpayment or underpayment, unless the projection for overpayment or underpayment is part of a settlement as agreed to by the pharmacist or pharmacy;
(6) Each pharmacist or pharmacy shall be audited under the standards and parameters as other similarly situated pharmacists or pharmacies audited by a covered entity, a pharmacy benefits manager, the state or its political subdivisions, or any other entity representing the same;
(7) A pharmacist or pharmacy must be allowed the length of time described in the pharmacist's or pharmacy's contract or provider manual, whichever is applicable, which must not be less than thirty (30) days, following receipt of the preliminary audit report in which to produce documentation to address any discrepancy found during an audit. A pharmacist or pharmacy may correct a clerical or recordkeeping error by submitting an amended claim during the designated time frame if the prescription was dispensed according to the requirements of state and federal law. If the pharmacist's or pharmacy's contract or provider manual does not specify the allowed length of time for the pharmacist or pharmacy to address any discrepancy found in the audit following receipt of the preliminary report, then that pharmacist or pharmacy must be allowed no less than thirty (30) days following receipt of the preliminary audit report to respond and produce documentation;
(8) The period covered by an audit may not exceed two (2) years from the date the claim was submitted to or adjudicated by a covered entity, a pharmacy benefits manager, the state or its political subdivisions, or any other entity representing the same, except this subdivision (a)(8) shall not apply where a longer period is required by any federal rule or law;
(9) An audit shall not be initiated or scheduled during the first seven (7) calendar days of any month due to the high volume of prescriptions filled during that time, unless otherwise consented to by the pharmacist or pharmacy;
(10) The preliminary audit report must be delivered to the pharmacist or pharmacy within one hundred twenty (120) days after conclusion of the audit. A final audit report shall be delivered to the pharmacist or pharmacy within six (6) months after receipt of the preliminary audit report or final appeal, whichever is later;
(11) Notwithstanding any other law to the contrary, any audit of a pharmacist or pharmacy shall not use the accounting practice of extrapolation in calculating recoupments or penalties for audits; and
(12) Any recoupment related to clerical or recordkeeping errors must not include the cost of the drug or dispensed product, except in cases of the following: (A) Fraud or other intentional and willful misrepresentation; (B) Dispensing in excess of the pharmacy benefits contract established by the plan sponsor; or (C) Prescriptions not filled in accordance with the prescriber's order.
(A) Fraud or other intentional and willful misrepresentation;
(B) Dispensing in excess of the pharmacy benefits contract established by the plan sponsor; or
(C) Prescriptions not filled in accordance with the prescriber's order.
(b) Recoupments of any disputed funds shall only occur after final internal disposition of the audit, including the appeal process as set forth in subsection (c).
(c) Each pharmacy benefits manager, as defined in § 56-7-3102 , conducting an audit shall establish an appeals process under which a pharmacist or pharmacy may appeal an unfavorable preliminary audit report to the pharmacy benefits manager on whose behalf the audit was conducted. The pharmacy benefits manager conducting any audit shall provide to the pharmacist or pharmacy, before or at the time of delivery of the preliminary audit report, a written explanation of the appeals process, including the name, address and telephone number of the person to whom an appeal should be addressed. If, following the appeal, it is determined that an unfavorable audit report or any portion of the audit report is unsubstantiated, the audit report or the portion shall be dismissed without the necessity of further proceedings.
(d) A pharmacy provider may use any prescription that meets the requirements of being a legal prescription as defined by applicable Tennessee law to validate claims submitted for reimbursement for dispensing of original and refill prescriptions, or changes made to prescriptions.
(e) Auditors are permitted to enter the prescription department when accompanied by or authorized by a member of the pharmacy staff. During the auditing process, auditors shall not disrupt the provision of services to the pharmacy's customers.
(f) A demand for recoupment, repayment or offset against future reimbursement for an overpayment on a claim for dispensing of an original or refill prescription shall not include the dispensing fee, unless the prescription that is the subject of the claim was not actually dispensed, was not valid, was fraudulent, or was outside the contract. This subsection (f) shall not apply where a pharmacy is requested, pursuant to a contractual provision or to § 56-7-2362(b) or § 56-32-138(b) , to correct an error in a claim submitted in good faith.
(g) Audit information from an audit conducted by one pharmacy benefits manager shall not be shared with or utilized by another pharmacy benefits manager. This subsection (g) shall not apply to an investigative audit that is believed by the pharmacy benefits manager to involve fraud or willful misrepresentation.
(h) Unless otherwise agreed to by contract, no audit finding or demand for recoupment, repayment or offset against future reimbursement shall be made for any claim for dispensing of an original or refill prescription for the reason of information missing from a prescription or for information not placed in a particular location on a prescription when the information or location of the information is not required or specified by federal or state law.
(i) In the event the actual quantity dispensed on a valid prescription for a covered beneficiary exceeds the allowable maximum days supply of the product as defined in the applicable pharmacy benefit provider agreement, the amount allowed to be recouped, repaid or offset against future reimbursement shall be limited to an amount that is calculated based on the quantity of the product dispensed found to be in excess of the allowed days supply quantity and using the cost of the product as reflected on the original claim.
(j) A pharmacy provider shall be allowed to dispense and shall be reimbursed for the full quantity of the smallest available commercially packaged product, including, but not limited to, eye drops, insulin, and topical products, which contains the total amount that is required to be dispensed to meet the days supply ordered by the prescriber, even if the full quantity of the commercially prepared package exceeds the maximum days supply allowed.
(k) The highest daily total dose which may be utilized by the patient pursuant to the prescriber's directions shall be used to make a determination of the days supply. For prescriptions having a titrated dose schedule, the schedule shall be used to determine the days supply.
(l) Subsections (d)-(k) shall not apply to any investigative audit that involves allegations of fraud or willful misrepresentation.
Amended by 2019 Tenn. Acts, ch. 470,Secs.s2, s3 eff. 7/1/2019.
Amended by 2019 Tenn. Acts, ch. 470,s 1, eff. 7/1/2019.
Acts 2007, ch. 224, § 1; 2011, ch. 289, § 2.
Tenn. Code Ann. § 56-2-103 — TN Code / Title 56 / Chapter 2 / Section 56-2-103
Qualifications necessary to do business - Commissioner to accept process - Deposit of securities
Status: in_force

(a) No domestic or foreign insurance company shall be qualified and authorized to do business in this state until: (1) It files or deposits with the commissioner a properly certified copy of its charter or deed of settlement and, if a foreign insurance company, a statement of its financial condition and business on December 31 preceding the date on which it applies for permission to transact business, in the form and detail the commissioner requires, signed and sworn to by its president and secretary, or other proper officers, and pays for the filing of the copy and statement the sum of one hundred dollars ($100). If it is a foreign insurance corporation, it shall also file and deposit with the commissioner a certified statement of the secretary of state to the effect that its name complies with the requirements of title 48, chapter 14 or title 48, chapter 54, as applicable; (2) It satisfies the commissioner that it is fully and legally organized under the laws of the state or foreign nation of its incorporation, and that it possesses and maintains the amount of capital, if a stock company, or surplus funds, if a mutual, reciprocal or Lloyd's plan insurer, required by § 56-2-114 and the amount of additional surplus required by § 56-2-115 , to do the kind or kinds of business it proposes to transact; (3) It, by duly executed instrument filed in the commissioner's office, constitutes and appoints the commissioner, the commissioner's chief deputy, or their successors, its true and lawful attorneys upon either of whom all lawful process in any action or legal proceeding against it may be served, and in the instrument agrees that any lawful process against it, which may be served upon its attorney, shall be of the same force and validity as if served on the company, and that the authority of the instrument shall continue in force, irrevocably, as long as any liability of the company remains outstanding in this state. Any process issued by any court of record in this state and served upon the commissioner or the commissioner's chief deputy by the proper officer of the county in which the commissioner or the chief deputy may have an office shall be deemed a sufficient process on the company, and it is the duty of the commissioner or the chief deputy, promptly, after service of process by any claimant, to forward, by registered mail, an exact copy of the notice to the company. Service of process from any county in this state upon the commissioner or the chief deputy by the proper officer of the county in which the commissioner or the chief deputy may have an office shall establish proper venue in the county from which the process was issued, if the plaintiff resides in that county, whether the insurance company has an office or agency located in one (1) or more other counties of this state or not; (4) (A) If it is a foreign stock or mutual life insurance company, it satisfies the commissioner that it has and shall maintain on deposit with the state treasurer, or with the proper officer of some other state, securities in the actual cash value of at least two hundred thousand dollars ($200,000) consisting of bonds of the United States, or any agency or instrumentality of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, bonds of this state, bonds of the state of domicile, or bonds publicly issued by any solvent institution created or existing under the laws of the United States or any state of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, and the company files with the commissioner the certificate of the official with whom the securities are deposited, stating the time and amount, and that the official is satisfied that they are worth two hundred thousand dollars ($200,000) and that the deposit is made with the official by the company for the protection of all policyholders and creditors in the United States; (B) Notwithstanding subdivision (a)(4)(A), the commissioner may decline to accept as a deposit any specific issue of securities that the commissioner has determined may not provide the necessary protection to policyholders and creditors in the United States; (5) If it is a foreign insurance company, it files a report of its real estate holdings, if required by the commissioner in the commissioner's discretion, so as to give the information required concerning domestic life insurance companies in § 56-3-305 . The commissioner may refuse to admit and authorize a foreign insurance company to do business in this state in the event its land and the building or buildings on the land in which it has its principal office, and its other real property used in the transaction of insurance business, exceeds the maximum percentage of its admitted assets prescribed for domestic life insurance companies in § 56-3-305 ; and (6) The commissioner shall not approve any articles of incorporation or issue a certificate of authority to any company until finding that: (A) The company has submitted a plan of operation; and (B) The incorporators, directors and proposed officers are of known good character and there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts, reinsurance, or any matter inimical to the business of insurance. (b) The commissioner is authorized to promulgate rules and regulations the commissioner deems reasonable and necessary requiring the furnishing of information relative to election or appointment of new officers and directors by insurance companies licensed to do business in this state. If, after a hearing afforded the officer or director and the insurance company, the commissioner finds that the officer or director is incompetent, untrustworthy, or of known bad character, the commissioner may order the removal of the person as an officer or director of the insurance company. If the insurance company does not comply with the removal order within thirty (30) days after its receipt of the order, the commissioner may suspend the insurance company's certificate of authority to do business in this state until such time as the company is in compliance with the order. Acts 1895, ch. 160, § 9; 1901, ch. 131, § 1; 1907, ch. 493, § 1; Shan., § 3292; Code 1932, § 6107; Acts 1947, ch. 223, § 1; C. Supp. 1950, § 6107; Acts 1951, ch. 212, § 1; T.C.A. (orig. ed.), §§ 56-302, 56-303, 56-307, 56-308; Acts 1955, ch. 13, § 1; 1957, ch. 5, § 1; 1957, ch. 8, § 1; 1967, ch. 24, § 1; 1967, ch. 31, §§ 3, 4; 1967, ch. 130, § 1; 1967, ch. 352, § 1; 1968, ch. 523, § 1(17.05); impl. am. Acts 1971, ch. 137, § 2; T.C.A., § 56-203; Acts 1984, ch. 617, § 1.
(a) No domestic or foreign insurance company shall be qualified and authorized to do business in this state until: (1) It files or deposits with the commissioner a properly certified copy of its charter or deed of settlement and, if a foreign insurance company, a statement of its financial condition and business on December 31 preceding the date on which it applies for permission to transact business, in the form and detail the commissioner requires, signed and sworn to by its president and secretary, or other proper officers, and pays for the filing of the copy and statement the sum of one hundred dollars ($100). If it is a foreign insurance corporation, it shall also file and deposit with the commissioner a certified statement of the secretary of state to the effect that its name complies with the requirements of title 48, chapter 14 or title 48, chapter 54, as applicable; (2) It satisfies the commissioner that it is fully and legally organized under the laws of the state or foreign nation of its incorporation, and that it possesses and maintains the amount of capital, if a stock company, or surplus funds, if a mutual, reciprocal or Lloyd's plan insurer, required by § 56-2-114 and the amount of additional surplus required by § 56-2-115 , to do the kind or kinds of business it proposes to transact; (3) It, by duly executed instrument filed in the commissioner's office, constitutes and appoints the commissioner, the commissioner's chief deputy, or their successors, its true and lawful attorneys upon either of whom all lawful process in any action or legal proceeding against it may be served, and in the instrument agrees that any lawful process against it, which may be served upon its attorney, shall be of the same force and validity as if served on the company, and that the authority of the instrument shall continue in force, irrevocably, as long as any liability of the company remains outstanding in this state. Any process issued by any court of record in this state and served upon the commissioner or the commissioner's chief deputy by the proper officer of the county in which the commissioner or the chief deputy may have an office shall be deemed a sufficient process on the company, and it is the duty of the commissioner or the chief deputy, promptly, after service of process by any claimant, to forward, by registered mail, an exact copy of the notice to the company. Service of process from any county in this state upon the commissioner or the chief deputy by the proper officer of the county in which the commissioner or the chief deputy may have an office shall establish proper venue in the county from which the process was issued, if the plaintiff resides in that county, whether the insurance company has an office or agency located in one (1) or more other counties of this state or not; (4) (A) If it is a foreign stock or mutual life insurance company, it satisfies the commissioner that it has and shall maintain on deposit with the state treasurer, or with the proper officer of some other state, securities in the actual cash value of at least two hundred thousand dollars ($200,000) consisting of bonds of the United States, or any agency or instrumentality of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, bonds of this state, bonds of the state of domicile, or bonds publicly issued by any solvent institution created or existing under the laws of the United States or any state of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, and the company files with the commissioner the certificate of the official with whom the securities are deposited, stating the time and amount, and that the official is satisfied that they are worth two hundred thousand dollars ($200,000) and that the deposit is made with the official by the company for the protection of all policyholders and creditors in the United States; (B) Notwithstanding subdivision (a)(4)(A), the commissioner may decline to accept as a deposit any specific issue of securities that the commissioner has determined may not provide the necessary protection to policyholders and creditors in the United States; (5) If it is a foreign insurance company, it files a report of its real estate holdings, if required by the commissioner in the commissioner's discretion, so as to give the information required concerning domestic life insurance companies in § 56-3-305 . The commissioner may refuse to admit and authorize a foreign insurance company to do business in this state in the event its land and the building or buildings on the land in which it has its principal office, and its other real property used in the transaction of insurance business, exceeds the maximum percentage of its admitted assets prescribed for domestic life insurance companies in § 56-3-305 ; and (6) The commissioner shall not approve any articles of incorporation or issue a certificate of authority to any company until finding that: (A) The company has submitted a plan of operation; and (B) The incorporators, directors and proposed officers are of known good character and there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts, reinsurance, or any matter inimical to the business of insurance.
(1) It files or deposits with the commissioner a properly certified copy of its charter or deed of settlement and, if a foreign insurance company, a statement of its financial condition and business on December 31 preceding the date on which it applies for permission to transact business, in the form and detail the commissioner requires, signed and sworn to by its president and secretary, or other proper officers, and pays for the filing of the copy and statement the sum of one hundred dollars ($100). If it is a foreign insurance corporation, it shall also file and deposit with the commissioner a certified statement of the secretary of state to the effect that its name complies with the requirements of title 48, chapter 14 or title 48, chapter 54, as applicable;
(2) It satisfies the commissioner that it is fully and legally organized under the laws of the state or foreign nation of its incorporation, and that it possesses and maintains the amount of capital, if a stock company, or surplus funds, if a mutual, reciprocal or Lloyd's plan insurer, required by § 56-2-114 and the amount of additional surplus required by § 56-2-115 , to do the kind or kinds of business it proposes to transact;
(3) It, by duly executed instrument filed in the commissioner's office, constitutes and appoints the commissioner, the commissioner's chief deputy, or their successors, its true and lawful attorneys upon either of whom all lawful process in any action or legal proceeding against it may be served, and in the instrument agrees that any lawful process against it, which may be served upon its attorney, shall be of the same force and validity as if served on the company, and that the authority of the instrument shall continue in force, irrevocably, as long as any liability of the company remains outstanding in this state. Any process issued by any court of record in this state and served upon the commissioner or the commissioner's chief deputy by the proper officer of the county in which the commissioner or the chief deputy may have an office shall be deemed a sufficient process on the company, and it is the duty of the commissioner or the chief deputy, promptly, after service of process by any claimant, to forward, by registered mail, an exact copy of the notice to the company. Service of process from any county in this state upon the commissioner or the chief deputy by the proper officer of the county in which the commissioner or the chief deputy may have an office shall establish proper venue in the county from which the process was issued, if the plaintiff resides in that county, whether the insurance company has an office or agency located in one (1) or more other counties of this state or not;
(4) (A) If it is a foreign stock or mutual life insurance company, it satisfies the commissioner that it has and shall maintain on deposit with the state treasurer, or with the proper officer of some other state, securities in the actual cash value of at least two hundred thousand dollars ($200,000) consisting of bonds of the United States, or any agency or instrumentality of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, bonds of this state, bonds of the state of domicile, or bonds publicly issued by any solvent institution created or existing under the laws of the United States or any state of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, and the company files with the commissioner the certificate of the official with whom the securities are deposited, stating the time and amount, and that the official is satisfied that they are worth two hundred thousand dollars ($200,000) and that the deposit is made with the official by the company for the protection of all policyholders and creditors in the United States; (B) Notwithstanding subdivision (a)(4)(A), the commissioner may decline to accept as a deposit any specific issue of securities that the commissioner has determined may not provide the necessary protection to policyholders and creditors in the United States;
(A) If it is a foreign stock or mutual life insurance company, it satisfies the commissioner that it has and shall maintain on deposit with the state treasurer, or with the proper officer of some other state, securities in the actual cash value of at least two hundred thousand dollars ($200,000) consisting of bonds of the United States, or any agency or instrumentality of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, bonds of this state, bonds of the state of domicile, or bonds publicly issued by any solvent institution created or existing under the laws of the United States or any state of the United States, which have been included in the three (3) highest grades by any of the recognized securities rating firms, and the company files with the commissioner the certificate of the official with whom the securities are deposited, stating the time and amount, and that the official is satisfied that they are worth two hundred thousand dollars ($200,000) and that the deposit is made with the official by the company for the protection of all policyholders and creditors in the United States;
(B) Notwithstanding subdivision (a)(4)(A), the commissioner may decline to accept as a deposit any specific issue of securities that the commissioner has determined may not provide the necessary protection to policyholders and creditors in the United States;
(5) If it is a foreign insurance company, it files a report of its real estate holdings, if required by the commissioner in the commissioner's discretion, so as to give the information required concerning domestic life insurance companies in § 56-3-305 . The commissioner may refuse to admit and authorize a foreign insurance company to do business in this state in the event its land and the building or buildings on the land in which it has its principal office, and its other real property used in the transaction of insurance business, exceeds the maximum percentage of its admitted assets prescribed for domestic life insurance companies in § 56-3-305 ; and
(6) The commissioner shall not approve any articles of incorporation or issue a certificate of authority to any company until finding that: (A) The company has submitted a plan of operation; and (B) The incorporators, directors and proposed officers are of known good character and there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts, reinsurance, or any matter inimical to the business of insurance.
(A) The company has submitted a plan of operation; and
(B) The incorporators, directors and proposed officers are of known good character and there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts, reinsurance, or any matter inimical to the business of insurance.
(b) The commissioner is authorized to promulgate rules and regulations the commissioner deems reasonable and necessary requiring the furnishing of information relative to election or appointment of new officers and directors by insurance companies licensed to do business in this state. If, after a hearing afforded the officer or director and the insurance company, the commissioner finds that the officer or director is incompetent, untrustworthy, or of known bad character, the commissioner may order the removal of the person as an officer or director of the insurance company. If the insurance company does not comply with the removal order within thirty (30) days after its receipt of the order, the commissioner may suspend the insurance company's certificate of authority to do business in this state until such time as the company is in compliance with the order.
Acts 1895, ch. 160, § 9; 1901, ch. 131, § 1; 1907, ch. 493, § 1; Shan., § 3292; Code 1932, § 6107; Acts 1947, ch. 223, § 1; C. Supp. 1950, § 6107; Acts 1951, ch. 212, § 1; T.C.A. (orig. ed.), §§ 56-302, 56-303, 56-307, 56-308; Acts 1955, ch. 13, § 1; 1957, ch. 5, § 1; 1957, ch. 8, § 1; 1967, ch. 24, § 1; 1967, ch. 31, §§ 3, 4; 1967, ch. 130, § 1; 1967, ch. 352, § 1; 1968, ch. 523, § 1(17.05); impl. am. Acts 1971, ch. 137, § 2; T.C.A., § 56-203; Acts 1984, ch. 617, § 1.
Tenn. Code Ann. § 56-14-108 — TN Code / Title 56 / Chapter 14 / Section 56-14-108
Eligibility of surplus lines insurers
Status: in_force

(a) An insurer shall not engage in the transaction of insurance unless authorized to do so pursuant to a valid license, exempted by this chapter or otherwise exempted by the insurance laws of this state. (b) A person who does not have a valid license as required by § 56-14-104 shall not engage in the transaction of insurance or act in this state directly as an agent for a nonadmitted insurer in the procurement of insurance, or renewals of insurance. (c) A person who represents or aids a nonadmitted insurer in violation of this section shall be subject to the penalties set forth in § 56-14-117 . No insurance contract entered into in violation of this section shall preclude the insured from enforcing the insured's rights under the contract in accordance with the terms and provisions of the contract of insurance and the laws of this state, to the same degree those rights would have been enforceable had the contract been lawfully procured. (d) This section shall not apply to a person, properly licensed as an agent or broker in this state who, for a fee and pursuant to a written agreement, is engaged solely to offer the insured advice, counsel or opinion, or service with respect to the benefits, advantages or disadvantages promised under any proposed or in-force policy of insurance if the person does not, directly or indirectly, participate in the solicitation, negotiation, or procurement of insurance on behalf of the insured. (e) This section shall not apply to a person acting in material compliance with the insurance laws of this state in the placement of the types of insurance identified in subdivisions (e)(1)-(5): (1) Surplus lines insurance as provided in § 56-14-103 . For the purposes of this subsection (e), a license shall be deemed to be in material compliance with the insurance laws of this state, unless the licensee committed a violation of § 56-14-103 that proximately caused loss to the insured; (2) Transactions for which a certificate of authority to do business is not required of an insurer under the insurance laws of this state; (3) Reinsurance, unless the commissioner waives the requirements of this subdivision (e)(3): (A) The assuming insurer is authorized to engage in an insurance or reinsurance business by its domiciliary jurisdiction and is authorized to write the type of reinsurance in its domiciliary jurisdiction; and (B) The assuming insurer satisfies all legal requirements for such reinsurance in the state of domicile of the ceding insurer; (4) The property and operation of railroads or aircraft engaged in interstate or foreign commerce, wet marine, and transportation insurance; and (5) Transactions subsequent to issuance of a policy not covering properties risks or exposures located, or to be performed in this state at the time of issuance, and lawfully solicited, written or delivered outside this state. Amended by 2018 Tenn. Acts, ch. 580, s 2, eff. 3/16/2018. Acts 1969, ch. 270, § 8; 1973, ch. 108, § 1; T.C.A., § 56-3808; Acts 1980, ch. 708, § 1; 2011 , ch. 446, § 1.
(a) An insurer shall not engage in the transaction of insurance unless authorized to do so pursuant to a valid license, exempted by this chapter or otherwise exempted by the insurance laws of this state.
(b) A person who does not have a valid license as required by § 56-14-104 shall not engage in the transaction of insurance or act in this state directly as an agent for a nonadmitted insurer in the procurement of insurance, or renewals of insurance.
(c) A person who represents or aids a nonadmitted insurer in violation of this section shall be subject to the penalties set forth in § 56-14-117 . No insurance contract entered into in violation of this section shall preclude the insured from enforcing the insured's rights under the contract in accordance with the terms and provisions of the contract of insurance and the laws of this state, to the same degree those rights would have been enforceable had the contract been lawfully procured.
(d) This section shall not apply to a person, properly licensed as an agent or broker in this state who, for a fee and pursuant to a written agreement, is engaged solely to offer the insured advice, counsel or opinion, or service with respect to the benefits, advantages or disadvantages promised under any proposed or in-force policy of insurance if the person does not, directly or indirectly, participate in the solicitation, negotiation, or procurement of insurance on behalf of the insured.
(e) This section shall not apply to a person acting in material compliance with the insurance laws of this state in the placement of the types of insurance identified in subdivisions (e)(1)-(5): (1) Surplus lines insurance as provided in § 56-14-103 . For the purposes of this subsection (e), a license shall be deemed to be in material compliance with the insurance laws of this state, unless the licensee committed a violation of § 56-14-103 that proximately caused loss to the insured; (2) Transactions for which a certificate of authority to do business is not required of an insurer under the insurance laws of this state; (3) Reinsurance, unless the commissioner waives the requirements of this subdivision (e)(3): (A) The assuming insurer is authorized to engage in an insurance or reinsurance business by its domiciliary jurisdiction and is authorized to write the type of reinsurance in its domiciliary jurisdiction; and (B) The assuming insurer satisfies all legal requirements for such reinsurance in the state of domicile of the ceding insurer; (4) The property and operation of railroads or aircraft engaged in interstate or foreign commerce, wet marine, and transportation insurance; and (5) Transactions subsequent to issuance of a policy not covering properties risks or exposures located, or to be performed in this state at the time of issuance, and lawfully solicited, written or delivered outside this state.
(1) Surplus lines insurance as provided in § 56-14-103 . For the purposes of this subsection (e), a license shall be deemed to be in material compliance with the insurance laws of this state, unless the licensee committed a violation of § 56-14-103 that proximately caused loss to the insured;
(2) Transactions for which a certificate of authority to do business is not required of an insurer under the insurance laws of this state;
(3) Reinsurance, unless the commissioner waives the requirements of this subdivision (e)(3): (A) The assuming insurer is authorized to engage in an insurance or reinsurance business by its domiciliary jurisdiction and is authorized to write the type of reinsurance in its domiciliary jurisdiction; and (B) The assuming insurer satisfies all legal requirements for such reinsurance in the state of domicile of the ceding insurer;
(A) The assuming insurer is authorized to engage in an insurance or reinsurance business by its domiciliary jurisdiction and is authorized to write the type of reinsurance in its domiciliary jurisdiction; and
(B) The assuming insurer satisfies all legal requirements for such reinsurance in the state of domicile of the ceding insurer;
(4) The property and operation of railroads or aircraft engaged in interstate or foreign commerce, wet marine, and transportation insurance; and
(5) Transactions subsequent to issuance of a policy not covering properties risks or exposures located, or to be performed in this state at the time of issuance, and lawfully solicited, written or delivered outside this state.
Amended by 2018 Tenn. Acts, ch. 580, s 2, eff. 3/16/2018.
Acts 1969, ch. 270, § 8; 1973, ch. 108, § 1; T.C.A., § 56-3808; Acts 1980, ch. 708, § 1; 2011 , ch. 446, § 1.