reglab/statecodes huggingface dataset:
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 12 - INSURANCE GUARANTY ASSOCIATIONS (§§ 56-12-101 — 56-12-220) › Part 2 - LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT (§§ 56-12-201 — 56-12-220) › Section 56-12-210 - Powers and duties of commissioner - Judicial review

(a)
In addition to the duties and powers enumerated elsewhere in this part, the commissioner shall:
(1)
Upon request of the board of directors, provide the association with a statement of the premiums in this and any other appropriate states for each member insurer;
(2)
When an impairment is declared and the amount of the impairment is determined, serve a demand upon the impaired insurer to make good the impairment within a reasonable time; notice to the impaired insurer shall constitute notice to its shareholders, if any; the failure of the insurer to promptly comply with such demand shall not excuse the association from the performance of its powers and duties under this part; and
(3)
In any liquidation or rehabilitation proceeding involving a domestic insurer, be appointed as the liquidator or rehabilitator.
(b)
The commissioner may suspend or revoke, after notice and hearing, the certificate of authority to transact insurance in this state of any member insurer who fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the commissioner may levy a forfeiture on any member insurer who fails to pay an assessment when due. Such forfeiture shall not exceed five percent (5%) of the unpaid assessment per month, but no forfeiture shall be less than one hundred dollars ($100) per month.
(c)
Any action of the board of directors or the association may be appealed to the commissioner by any member insurer, if such appeal is taken within sixty (60) days of the final action which is being appealed. If a member company is appealing an assessment, the amount assessed shall be paid to the association and be available to meet association obligations during the pendancy of an appeal. If the appeal on the assessment is upheld, the amount paid in error or excess shall be returned to the member company. Any final action or order of the commissioner shall be subject to judicial review in a court of competent jurisdiction.
(d)
The liquidator, rehabilitator or conservator of any impaired insurer may notify all interested persons of the effect of this part.
Acts 1988, ch. 1032, § 10.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 12 - INSURANCE GUARANTY ASSOCIATIONS (§§ 56-12-101 — 56-12-220) › Part 2 - LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT (§§ 56-12-201 — 56-12-220) › Section 56-12-212 - Right of offset

(a)
(1)
A member insurer may offset against any premium, franchise, excise or income tax liability or liabilities to this state an assessment described in §
56-12-208(h)
to the extent of the lesser of:
(A)
Ten percent (10%) of the amount of such assessment for each of the ten (10) calendar years following the year in which such assessment was paid; or
(B)
One tenth of one percent (0.10%) of all premiums written in this state by the member insurer for each calendar year until recovery of the assessment or assessments is made.
(2)
In the event a member insurer ceases doing business in this state, all uncredited assessments may be credited against any premium, franchise, excise, or income tax due for the year it ceases doing business.
(b)
A member insurer may transfer any offset right as described in this section to an affiliated member insurer. As used in this section:
(1)
"Affiliated member insurer" means an insurance company licensed or holding a certificate of authority to do business in this state that controls, is controlled by, or is under common control with, another member insurer; and
(2)
"Control" means holding, directly or indirectly, the ownership of, or power to vote, one hundred percent (100%) of the voting stock of another member insurer.
(c)
Any sums that are acquired by refund, pursuant to §
56-12-208(f)
, from the association by member insurers, and that have theretofore been offset against premium, franchise, excise, or income taxes as provided in subsection (a), shall be paid by such insurers to this state in such manner as the tax authorities may require. The association shall notify the commissioner that such refunds have been made.
Acts 1988, ch. 1032, § 12.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 12 - INSURANCE GUARANTY ASSOCIATIONS (§§ 56-12-101 — 56-12-220) › Part 2 - LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT (§§ 56-12-201 — 56-12-220) › Section 56-12-214 - Association subject to examination - Annual report

(a)
The association shall be subject to examination and regulation by the commissioner.
(b)
The board of directors shall submit to the commissioner each year, not later than one hundred twenty (120) days after the association's fiscal year, a financial report in a form approved by the commissioner and a report of its activities during the preceding fiscal year.
Acts 1988, ch. 1032, § 14.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 12 - INSURANCE GUARANTY ASSOCIATIONS (§§ 56-12-101 — 56-12-220) › Part 2 - LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT (§§ 56-12-201 — 56-12-220) › Section 56-12-215 - Tax and fee exemption

The association shall be exempt from payment of all fees and all taxes levied by this state or any of its subdivisions, except taxes levied on real property.
Acts 1988, ch. 1032, § 15.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 12 - INSURANCE GUARANTY ASSOCIATIONS (§§ 56-12-101 — 56-12-220) › Part 2 - LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT (§§ 56-12-201 — 56-12-220) › Section 56-12-216 - Immunity from liability

(a)
There shall be no liability on the part of, and no cause of action of any nature shall arise against, any member insurer or its agents or employees, the association or its agents or employees, members of the board of directors, or the commissioner or the commissioner's representatives, for any action or omission by them in the performance of their powers and duties under this part.
(b)
This immunity shall extend to the participation in any organization of one (1) or more other state associations of similar purposes and to any such organization and its agents or employees.
Acts 1988, ch. 1032, § 16.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 12 - INSURANCE GUARANTY ASSOCIATIONS (§§ 56-12-101 — 56-12-220) › Part 2 - LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT (§§ 56-12-201 — 56-12-220) › Section 56-12-217 - Stay of proceedings - Default judgments

(a)
All proceedings in which the insolvent insurer is a party in any court in this state shall be stayed sixty (60) days from the date an order of liquidation, rehabilitation, or conservation is final to permit proper legal action by the association on any matters relative to its powers or duties.
(b)
As to judgment under any decision, order, verdict, or finding based on default, the association may apply to have the judgment set aside by the same court that entered the judgment and shall be permitted to defend against the suit on the merits.
Acts 1988, ch. 1032, § 17.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 12 - INSURANCE GUARANTY ASSOCIATIONS (§§ 56-12-101 — 56-12-220) › Part 2 - LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT (§§ 56-12-201 — 56-12-220) › Section 56-12-219 - Insurers not covered

This part does not apply to any insurer that is insolvent or unable to fulfill its contractual obligations on July 1, 1989.
Acts 1988, ch. 1032, § 21.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 12 - INSURANCE GUARANTY ASSOCIATIONS (§§ 56-12-101 — 56-12-220) › Part 2 - LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT (§§ 56-12-201 — 56-12-220) › Section 56-12-220 - Rules and regulations

(a)
The commissioner is authorized to promulgate rules and regulations to effectuate the purposes of this part.
(b)
All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
Acts 1988, ch. 1032, § 19.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-101 - Short title - Purpose

(a)
This chapter shall be known and may be cited as the "Revised Tennessee Captive Insurance Act."
(b)
The purpose of this chapter is to establish the procedures for the organization and regulation of the operations of captive insurance companies within this state and thereby promote the general welfare of the people of this state.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-104 - Names of companies - "Certificate of Authority"

(a)
No captive insurance company shall adopt a name that is the same, deceptively similar, or likely to be confused with or mistaken for any other existing business name registered in this state, nor any name likely to mislead the public. Any name adopted by a captive insurance company shall comply with the requirements of titles 48 and 61.
(b)
A license issued pursuant to this chapter is a "Certificate of Authority".
Amended by 2019 Tenn. Acts, ch. 452,s 2, eff. 5/22/2019.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-105 - Capital and surplus requirements

(a)
No captive insurance company shall be issued a license unless it possesses and maintains unimpaired paid-in capital and surplus of:
(1)
In the case of a pure captive insurance company, not less than two hundred fifty thousand dollars ($250,000);
(2)
In the case of an association captive insurance company, not less than five hundred thousand dollars ($500,000);
(3)
In the case of an industrial insured captive insurance company, not less than five hundred thousand dollars ($500,000);
(4)
In the case of a risk retention group, not less than one million dollars ($1,000,000); and
(5)
In the case of a protected cell captive insurance company, not less than one hundred thousand dollars ($100,000).
(b)
The commissioner may prescribe additional capital and surplus based upon the type, volume, and nature of insurance business to be transacted.
(c)
(1)
Capital and surplus required under subsection (a) must be in the form of cash, cash equivalent, marketable securities, or an irrevocable letter of credit issued by a bank approved by the commissioner.
(2)
Marketable securities must consist 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, 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.
(3)
Captive insurance companies using marketable securities to meet the capital and surplus requirements of subsection (a) shall file with the commissioner a certificate of an official with whom the securities are deposited, stating the time and amount, and that the official is satisfied that they are worth the amount required under subsection (a) and that the deposit is made with the official by the company for the protection of all policyholders and creditors.
(4)
Notwithstanding subdivision (c)(1), 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.
(d)
Except as otherwise provided in this chapter, chapter 9 of this title shall apply to captive insurance companies formed under this chapter.
(e)
In the case of an agency captive insurance company, not less than two hundred fifty thousand dollars ($250,000).
Amended by 2024 Tenn. Acts, ch. 643,s 5, eff. 4/4/2024.
Amended by 2021 Tenn. Acts, ch. 537, s 13, eff. 7/1/2021.
Amended by 2019 Tenn. Acts, ch. 452, s 3, eff. 5/22/2019.
Amended by 2015 Tenn. Acts, ch. 156, s 4, eff. 4/17/2015.
Amended by 2013 Tenn. Acts, ch. 139, s 1, eff. 4/12/2013.
Acts 2011 , ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-106 - Restrictions on dividends on or distributions from capital or surplus

No captive insurance company shall pay a dividend out of, or other distribution with respect to, capital or surplus without the prior approval of the commissioner. Approval of an ongoing plan for the payment of dividends or other distributions shall be conditioned upon the retention, at the time of each payment, of capital or surplus in excess of amounts specified by, or determined in accordance with formulas approved by the commissioner. A captive insurance company may otherwise make such distributions as are in conformity with its purposes and approved by the commissioner.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-108 - Annual reports

(a)
No captive insurance companies shall be required to make any annual report except as provided in this chapter and as required by title 48 and title 61.
(b)
Prior to March 15 of each year, each captive insurance company shall submit to the commissioner a report of its financial condition, verified by oath of two (2) of its executive officers; provided, however, that a captive insurance company organized as a risk retention group shall instead submit to the commissioner a report of its financial condition prior to March 1 of each year, verified by oath of two (2) of its executive officers. Each captive insurance company, including risk retention groups organized under this chapter, shall report using generally accepted accounting principles, unless the commissioner requires, approves, or accepts the use of statutory accounting principles or other comprehensive basis of accounting. The commissioner may require, approve, or accept any appropriate or necessary modifications of the statutory accounting principles or other comprehensive basis of accounting for the type of insurance and kinds of insurers to be reported upon. The commissioner may require additional information to supplement such report. Except as otherwise provided, each risk retention group shall file its report in the form required by this title, and each risk retention group shall comply with the requirements set forth in this title. The commissioner shall by rule propose the forms in which pure captive insurance companies and industrial insured captive insurance companies shall report. Section
56-13-103(c)(3)
shall apply to each report filed pursuant to this section; provided, that §
56-13-103(c)(3)
shall not apply to reports filed by risk retention groups.
(c)
A captive insurance company, except for a risk retention group, may make written application to the commissioner for filing the required report on a fiscal year-end. If an alternative reporting date is granted by the commissioner, then:
(1)
The annual report is due seventy-five (75) days after the fiscal year-end; and
(2)
In order to provide sufficient detail to support the premium tax return, the pure captive insurance company or industrial insured captive insurance company shall file, prior to March 15 of each year for each calendar year-end, such information as may be required on a form approved by the commissioner, verified by oath of two (2) of its executive officers, unless the commissioner approves an alternative date for filing and paying the premium tax.
Amended by 2024 Tenn. Acts, ch. 643,s 8, eff. 4/4/2024.
Amended by 2021 Tenn. Acts, ch. 537, s 15, eff. 7/1/2021.
Amended by 2021 Tenn. Acts, ch. 537, s 14, eff. 7/1/2021.
Amended by 2016 Tenn. Acts, ch. 1018, Secs.s 6, s 7 eff. 4/28/2016.
Amended by 2015 Tenn. Acts, ch. 156, s 7, eff. 4/17/2015.
Acts 2011 , ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-110 - License suspension or revocation

(a)
The license of a captive insurance company may be suspended or revoked by the commissioner for any of the following reasons:
(1)
Insolvency or impairment of capital or surplus;
(2)
Failure to meet the requirements of §
56-13-105
;
(3)
Refusal or failure to submit an annual report, as required by this chapter, or any other report or statement required by law or by lawful order of the commissioner;
(4)
Failure to comply with its own charter, bylaws or other organizational document;
(5)
Failure to submit to or pay the cost of examination or any legal obligation relative to an examination, as required by this chapter;
(6)
Use of methods that, although not otherwise specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public or to its policyholders; or
(7)
Failure otherwise to comply with the laws of this state.
(b)
If the commissioner finds, upon examination, hearing, or other evidence, that any captive insurance company has violated subsection (a), then the commissioner may suspend or revoke such company's license if the commissioner deems it in the best interest of the public and the policyholders of such captive insurance company, notwithstanding any other provision of this title.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-112 - Reinsurance

(a)
Any captive insurance company may provide reinsurance as authorized by this title on risks ceded by any other insurer.
(b)
Any captive insurance company may take credit for the reinsurance of risks or portions of risks ceded to reinsurers complying with this title. If the reinsurer is licensed as a risk retention group, then the ceding risk retention group or its members must qualify for membership with the reinsurer. The commissioner shall have the discretion to allow a captive insurance company to take credit for the reinsurance of risks or portions of risks ceded to an unauthorized reinsurer, after review, on a case by case basis. The commissioner may require any documents, financial information or other evidence that such an unauthorized reinsurer will be able to demonstrate adequate security for its financial obligations.
(c)
In addition to reinsurers authorized by this title, a captive insurance company may take credit for the reinsurance of risks or portions of risks ceded to a pool, exchange or association to the extent authorized by the commissioner. The commissioner may require any documents, financial information or other evidence that such a pool, exchange or association will be able to provide adequate security for its financial obligations. The commissioner may deny authorization or impose any limitations on the activities of a reinsurance pool, exchange or association that, in the commissioner's judgment, are necessary and proper to provide adequate security for the ceding captive insurance company and for the protection and consequent benefit of the public at large.
(d)
Except where specifically provided otherwise, insurance by a captive insurance company of any workers' compensation or accident and health qualified self-insured plan of its parent and affiliates, and the assumption of risk by a captive insurance company under any service contract, is deemed to be reinsurance.
Amended by 2024 Tenn. Acts, ch. 643,s 10, eff. 4/4/2024.
Amended by 2019 Tenn. Acts, ch. 452, s 4, eff. 5/22/2019.
Acts 2011 , ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-113 - Membership in rating organizations - Exemption from compulsory associations

(a)
No captive insurance company shall be required to join a rating organization.
(b)
No captive insurance company shall be permitted to join or contribute financially to any plan, pool, association, or guaranty or insolvency fund in this state, nor shall any such captive insurance company, or any insured or affiliate thereof, receive any benefit from any such plan, pool, association, or guaranty or insolvency fund for claims arising out of the operations of such captive insurance company.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-115 - Adoption and amendment of rules by commissioner

The commissioner may adopt and, from time to time, amend such rules relating to captive insurance companies as are necessary to enable the commissioner to carry out the provisions of this chapter.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-116 - Applicable provisions

No provisions of this title, other than those contained in this chapter or expressly provided in this chapter, shall apply to captive insurance companies. Risk retention groups shall have the privileges and be subject to chapter 45 of this title in addition to the applicable provisions of this chapter. Section
56-2-801
applies to this chapter.
Amended by 2015 Tenn. Acts, ch. 156,s 12, eff. 4/17/2015.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-117 - Establishment of standards regarding risk management

The commissioner may adopt rules establishing standards to ensure that a parent or its affiliated company, or an industrial insured or its affiliated company, is able to exercise control of the risk management function of any controlled unaffiliated business to be insured by a pure captive insurance company or an industrial insured captive insurance company, respectively; provided, however, that, until such time as rules under this section are adopted, the commissioner may approve the coverage of such risks by a pure captive insurance company or an industrial insured captive insurance company.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-118 - Approval of material change of plan of operation - Filing of change of information

(a)
No captive insurance company shall make any material change or changes to its plan of operation until the department has approved the change or changes.
(b)
Each subsequent material change of plan of operation filed during each year is subject to the fee described in §
56-4-101(a)(8)
.
(c)
For purposes of this section and §
56-4-101(a)(8)
, the "plan of operation" and "business plan" have the same meaning.
(d)
(1)
A change in any information filed with the application that does not constitute a material change, or a change otherwise requiring commissioner approval, must be filed with the commissioner within thirty (30) days, but does not require prior approval under this section.
(2)
For purposes of this chapter, a material change does not include adding an additional line of coverage or increasing or decreasing premiums for a line of coverage, provided such increase or decrease is less than fifteen percent (15%).
Amended by 2024 Tenn. Acts, ch. 643,s 12, eff. 4/4/2024.
Added by 2019 Tenn. Acts, ch. 452, s 5, eff. 5/22/2019.
Prior version repealed by 2017 Tenn. Acts, ch. 354, s 2, eff. 5/11/2017.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-119 - Authority for expenditure of public funds

Any municipality, metropolitan government, county, authority, utility district, or other public body generally classified as a governmental body or governmental entity, whether organized by private act or public act of the general assembly, or otherwise, or any agency, board, or commission of any municipality, metropolitan government, county, authority, utility district, or other public body generally classified as a governmental body or governmental entity, may expend public funds other than local tax revenues for the purchase of capital stock in a captive insurance company or to provide guaranty capital in a mutual captive insurance company; provided, that at the time of authorization of expenditure of public funds adequate insurance markets in the United States are not available to cover the risks, hazards and liabilities of the public body or that the needed coverage is only available at excessive rates or with unreasonable deductibles.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-120 - Violations and penalties

(a)
If, after providing notice consistent with the process established by §
4-5-320(c)
and providing the opportunity for a contested case hearing held in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, part 3, the commissioner finds that any insurer, person, or entity required to be licensed, permitted, or authorized to transact the business of insurance under this chapter has violated any provision of this chapter or any rule or regulation authorized by this chapter, the commissioner may order:
(1)
The insurer, person, or entity to cease and desist from engaging in the act or practice giving rise to the violation;
(2)
Payment of a monetary penalty of not more than one thousand dollars ($1,000) for each violation, but not to exceed an aggregate penalty of one hundred thousand dollars ($100,000), unless the insurer, person, or entity knowingly violates a statute, rule or order, in which case the penalty shall not be more than twenty-five thousand dollars ($25,000) for each violation, not to exceed an aggregate penalty of two hundred fifty thousand dollars ($250,000). This subdivision (a)(2) shall not apply where a statute or rule specifically provides for other civil penalties for the violation. For purposes of this subdivision (a)(2), each day of continued violation shall constitute a separate violation; and
(3)
The suspension or revocation of the insurer's, person's, or entity's license.
(b)
Section
56-13-103(c)(3)
applies to any action taken by the commissioner pursuant to this section.
Amended by 2019 Tenn. Acts, ch. 452,s 6, eff. 5/22/2019.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-121 - Rules and regulations

The commissioner is authorized to promulgate rules and regulations necessary to effectuate the purposes of this chapter; provided, that, no rule promulgated pursuant to this chapter shall affect a special purpose financial captive (SPFC) insurance securitization, as defined and authorized by part 4 of this chapter, in effect at the time of the promulgation. All such rules and regulations shall be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-122 - Audit by the comptroller of the treasury - Annual reports

(a)
The regulation of captive insurance companies as authorized by this chapter is subject to audit by the comptroller of the treasury as otherwise provided by state law. Information submitted to the department by captive insurance companies subject to this chapter shall, without written request, be open to inspection by, or disclosure to, the comptroller of the treasury or the comptroller's designated representative for purposes of audit.
(b)
The commissioner shall annually report to the commerce and labor committee of the senate, and the insurance committee of the house of representatives regarding the captive insurance company program. Such report shall include, but not be limited to, the number and types of captive insurance companies authorized by the commissioner to conduct business in this state, the amount of premium tax and fee revenues generated pursuant to the program, and any recommendations for legislative action to improve the captive insurance company program.
Amended by 2019 Tenn. Acts, ch. 345,s 128, eff. 5/10/2019.
Amended by 2013 Tenn. Acts, ch. 236,s 19, eff. 4/19/2013.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 1 - GENERAL PROVISIONS (§§ 56-13-101 — 56-13-125) › Section 56-13-125 - Payment of premiums and claims in foreign currency or foreign securities

(a)
For purposes of this section:
(1)
"Foreign" means outside the United States, its territories, or possessions;
(2)
"Foreign currency" means currency issued by a government outside the United States that is recognized by the United States as a legitimate government-issued currency and freely exchangeable with United States currency; and
(3)
"Foreign securities" means securities that are ordinarily traded on an exchange outside the United States.
(b)
A captive insurance company or an individual cell of a captive insurance company may, with the approval of the commissioner, include within its plan of operation that the company will:
(1)
Receive payments of premium in a specified foreign currency or foreign securities and will pay claims on insured losses in a specified currency or foreign securities;
(2)
Authorize the payment of claims in a specified foreign currency or foreign securities; and
(3)
Hold foreign currency or foreign securities as surplus for the payment of future claims.
(c)
In determining the exchange rate between United States currency and the foreign currency or foreign securities, the captive insurance company shall identify in its approved plan of operation a publicly available and reliable exchange rate index. If the exchange rate index identified in the plan of operation is not available, then the commissioner must determine the appropriate exchange rate for the purpose of calculating the amount of premium tax due.
(d)
For the purpose of calculating the amount of premium tax due under §
56-13-114
, a policy issued by a captive insurance company payable in foreign currency or foreign securities is deemed to be of an equivalent value in United States currency as of the date that coverage is bound and is payable in United States currency when due under §
56-13-114
.
(e)
For captive insurance companies and protected cells that have received permission pursuant to subsection (b), all reports required to be filed pursuant to §
56-13-108
must be converted to United States currency for the reporting period covered by the annual report.
Added by 2019 Tenn. Acts, ch. 452,s 7, eff. 5/22/2019.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 2 - PROTECTED CELL CAPTIVE INSURANCE COMPANIES (§§ 56-13-201 — 56-13-209) › Section 56-13-201 - Forming a protective cell captive insurance company

(a)
One (1) or more sponsors may form a protected cell captive insurance company under this chapter. In addition to part 1 of this chapter, this part shall apply to protected cell captive insurance companies.
(b)
A protected cell captive insurance company shall be incorporated as a stock insurer with its capital divided into shares and held by the stockholders, as a mutual corporation, as a nonprofit corporation with one (1) or more members, or as a limited liability company.
Amended by 2015 Tenn. Acts, ch. 156,s 13, eff. 4/17/2015.
Amended by 2013 Tenn. Acts, ch. 139,s 3, eff. 4/12/2013.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 2 - PROTECTED CELL CAPTIVE INSURANCE COMPANIES (§§ 56-13-201 — 56-13-209) › Section 56-13-202 - Part definitions

As used in this part, unless the context requires otherwise:
(1)
"General account" means all assets and liabilities of a protected cell captive insurance company not attributable to a protected cell;
(2)
"Participant" means a person or an entity, authorized to be a participant by §
56-13-205
, and any affiliate of a participant, that is insured by a protected cell captive insurance company, if the losses of the participant are limited through a participant contract;
(3)
"Participant contract" means a contract by which a protected cell captive insurance company insures the risks of a participant and limits the losses of each such participant to its pro rata share of the assets of one (1) or more protected cells identified in such participant contract;
(4)
"Protected cell" means a separate account established by a protected cell captive insurance company formed or licensed under this chapter, in which an identified pool of assets and liabilities are segregated and insulated by means of this chapter from the remainder of the protected cell captive insurance company's assets and liabilities in accordance with the terms of one (1) or more participant contracts to fund the liability of the protected cell captive insurance company with respect to the participants as set forth in the participant contracts;
(5)
"Protected cell assets" means all assets, contract rights, and general intangibles identified with and attributable to a specific protected cell of a protected cell captive insurance company;
(6)
"Protected cell captive insurance company" means any captive insurance company:
(A)
In which the minimum capital and surplus required by this chapter are provided by one (1) or more sponsors;
(B)
That is formed or licensed under this chapter;
(C)
That insures the risks of separate participants through participant contracts; and
(D)
That funds its liability to each participant through one (1) or more protected cells and segregates the assets of each protected cell from the assets of other protected cells and from the assets of the protected cell captive insurance company's general account;
(7)
"Protected cell liabilities" means all liabilities and other obligations identified with and attributed to a specific protected cell of a protected cell captive insurance company; and
(8)
"Sponsor" means any person or entity that is approved by the commissioner to provide all or part of the capital and surplus required by this chapter and to organize and operate a protected cell captive insurance company.
Amended by 2013 Tenn. Acts, ch. 139,Secs.s4, s5, s6, s7, s8 eff. 4/12/2013.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 2 - PROTECTED CELL CAPTIVE INSURANCE COMPANIES (§§ 56-13-201 — 56-13-209) › Section 56-13-203 - Required filings

In addition to the information required by §
56-13-103(c)(1)
, each applicant-protected cell captive insurance company shall file with the commissioner the following:
(1)
Materials demonstrating how the applicant will account for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the commissioner, and how it will report such experience to the commissioner;
(2)
A statement acknowledging that all financial records of the applicant, including records pertaining to any protected cells, shall be made available for inspection or examination by the commissioner or the commissioner's designated agent;
(3)
All contracts or sample contracts between the applicant and any participants; and
(4)
Evidence that expenses shall be allocated to each protected cell in a fair and equitable manner.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 2 - PROTECTED CELL CAPTIVE INSURANCE COMPANIES (§§ 56-13-201 — 56-13-209) › Section 56-13-205 - Participation in a protected cell captive insurance company

(a)
Associations, corporations, limited liability companies, partnerships, trusts, and other business entities may be participants in any protected cell captive insurance company formed or licensed under this chapter.
(b)
A sponsor may be a participant in a protected cell captive insurance company.
(c)
A participant need not be a shareholder of the protected cell captive insurance company or any affiliate thereof.
(d)
A participant shall insure only its own risks through a protected cell captive insurance company, unless otherwise approved by the commissioner.
Amended by 2013 Tenn. Acts, ch. 139,Secs.s13, s14 eff. 4/12/2013.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 2 - PROTECTED CELL CAPTIVE INSURANCE COMPANIES (§§ 56-13-201 — 56-13-209) › Section 56-13-206 - Combining assets

Notwithstanding §
56-13-204
, the assets of two (2) or more protected cells may be combined for purposes of investment, and such combination shall not be construed as defeating the segregation of such assets for accounting or other purposes. Notwithstanding any other provision of this title, the commissioner may approve the use of alternative reliable methods of valuation and rating.
Amended by 2015 Tenn. Acts, ch. 156,s 16, eff. 4/17/2015.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 2 - PROTECTED CELL CAPTIVE INSURANCE COMPANIES (§§ 56-13-201 — 56-13-209) › Section 56-13-207 - Application of rehabilitation and liquidation provisions

(a)
Except as otherwise provided in this section, chapter 9 of this title shall apply to a protected cell captive insurance company.
(b)
Upon any order of supervision, rehabilitation, or liquidation of a protected cell captive insurance company, the receiver shall manage the assets and liabilities of the protected cell captive insurance company pursuant to this part.
(c)
Notwithstanding chapter 9 of this title:
(1)
No assets of a protected cell shall be used to pay any expenses or claims other than those attributable to such protected cell; and
(2)
A protected cell captive insurance company's capital and surplus shall at all times be available to pay any expenses of or claims against the protected cell captive insurance company.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 2 - PROTECTED CELL CAPTIVE INSURANCE COMPANIES (§§ 56-13-201 — 56-13-209) › Section 56-13-208 - Pleadings against protected cell captive insurance company

(a)
The pleadings in any legal action brought by or against a protected cell captive insurance company shall specify which protected cell or cells are or should be named a party to the suit. If the general account is party to this suit, it likewise shall be separately identified in the pleadings as if it were a protected cell.
(b)
A legal action brought against a protected cell captive insurance company that does not specify one (1) or more protected cells shall be deemed to have been brought against the general account only.
(c)
Any protected cell that is not named in the pleadings of the legal action shall not be deemed to be a party to the legal action. Any protected cell that is erroneously named as a party or named without proper cause shall be entitled to prompt dismissal from the legal action.
(d)
Unless specified by the plan of operation, participant contract, or other prior contractual agreement, the assets of one (1) protected cell may not be encumbered or seized to satisfy the obligations of or a judgment against any other protected cell. No protected cell has a duty to defend the rights and obligations of any other protected cell.
(e)
In any legal action involving a protected cell captive insurance company or a protected cell, any papers, documents, or property of a nonparty protected cell shall be afforded the same status during discovery as the documents or property of any other unrelated third party. A nonparty protected cell shall have standing to appear and petition for any appropriate relief to protect the confidentiality of its papers or documents.
Added by 2016 Tenn. Acts, ch. 1018,s 2, eff. 4/28/2016.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 3 - BRANCH CAPTIVE INSURANCE COMPANIES (§§ 56-13-301 — 56-13-307) › Section 56-13-301 - Establishment of branch captive insurance companies

(a)
A branch captive insurance company may be established in this state, in accordance with this chapter, to write in this state any insurance or reinsurance of the employee benefit business of its parent and affiliated companies that is subject to the Employee Retirement Income Security Act of 1974, as amended, or any insurance or reinsurance permitted to be written by captive insurance companies pursuant to this chapter. In addition to any applicable provisions of this chapter, this part shall apply to branch captive insurance companies.
(b)
No branch captive insurance company shall do any insurance business in this state unless it maintains the principal place of business for its branch operations in this state.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 3 - BRANCH CAPTIVE INSURANCE COMPANIES (§§ 56-13-301 — 56-13-307) › Section 56-13-302 - Part definitions

As used in this part, unless the context requires otherwise:
(1)
"Alien captive insurance company" means any insurance company formed to write insurance business for its parents and affiliates and licensed pursuant to the laws of an alien jurisdiction which imposes statutory or regulatory standards in a form acceptable to the commissioner on companies transacting the business of insurance in such jurisdiction;
(2)
"Branch business" means any insurance business transacted by a branch captive insurance company in this state;
(3)
"Branch captive insurance company" means any alien captive insurance company licensed by the commissioner to transact the business of insurance in this state through a business unit with a principal place of business in this state. A branch captive insurance company is a pure captive insurance company with respect to operations in this state, unless otherwise permitted by the commissioner; and
(4)
"Branch operations" means any business operations of a branch captive insurance company in this state.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 3 - BRANCH CAPTIVE INSURANCE COMPANIES (§§ 56-13-301 — 56-13-307) › Section 56-13-303 - Security for payment of liabilities

(a)
No branch captive insurance company shall be issued a license by the commissioner unless it possesses and maintains, as security for the payment of liabilities attributable to the branch operations:
(1)
An amount equal to the amount set forth in §
56-13-105
as the minimum capital requirement for a pure captive insurance company; and
(2)
Reserves on such insurance policies or such reinsurance contracts as may be issued or assumed by the branch captive insurance company through its branch operations, including reserves for losses, allocated loss adjustment expenses, incurred but not reported losses, and unearned premiums with regard to business written through the branch operations; provided, however, that, the commissioner may permit a branch captive insurance company to credit against any such reserve requirement any security for loss reserves that the branch captive insurance company may post with a ceding insurer or that may be posted by a reinsurer with the branch captive insurance company, and in either case if such security remains posted.
(b)
Subject to the prior approval of the commissioner, the amounts required in subsection (a) may be held in the form of:
(1)
A trust formed under a trust agreement and funded by assets acceptable to the commissioner;
(2)
An irrevocable letter of credit issued or confirmed by a bank approved by the commissioner;
(3)
With respect to the amounts required in subdivision (a)(1) only, cash on deposit with the commissioner; or
(4)
Any combination of subdivisions (b)(1)-(3).
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 3 - BRANCH CAPTIVE INSURANCE COMPANIES (§§ 56-13-301 — 56-13-307) › Section 56-13-304 - Petition for certificate of authority

In the case of a captive insurance company seeking to become licensed as a branch captive insurance company, the alien captive insurance company shall petition the commissioner to issue a certificate setting forth the commissioner's finding that, after considering the character, reputation, financial responsibility, insurance experience, and business qualifications of the officers and directors of the alien captive insurance company, the licensing and maintenance of the branch operations will promote the general good of this state. The alien captive insurance company in this state after the commissioner's certificate of authority is issued shall also comply with titles 48 and 61.
Acts 2011, ch. 468, § 1.
2023 Tennessee Code › Title 56 - INSURANCE (§§ 56-1-101 — 56-61-125) › Chapter 13 - REVISED TENNESSEE CAPTIVE INSURANCE ACT (§§ 56-13-101 — 56-13-418) › Part 3 - BRANCH CAPTIVE INSURANCE COMPANIES (§§ 56-13-301 — 56-13-307) › Section 56-13-305 - Filing of reports and statements

Prior to March 1 of each year, or with the approval of the commissioner within sixty (60) days after its fiscal year-end, a branch captive insurance company shall file with the commissioner a copy of all reports and statements required to be filed under the laws of the jurisdiction in which the alien captive insurance company is formed, verified by oath of two (2) of its executive officers. If the commissioner is satisfied that the annual report filed by the alien captive insurance company in its domiciliary jurisdiction provides adequate information concerning the financial condition of the alien captive insurance company, the commissioner may waive the requirement for completion of the captive annual statement for business written in the alien jurisdiction.
Acts 2011, ch. 468, § 1.