Title 56, Insurance

(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 …

(1) 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 o…

(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 capi…

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, …

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 jurisdicti…

(a) The examination of a branch captive insurance company pursuant to § 56-13-109 shall be of branch business and branch operations only, if the branch captive insurance company provides annually to the commissioner a certificate of compliance, or its equivalent, issued by or fil…

In the case of a branch captive insurance company, the tax provided for in § 56-13-114 shall apply only to the branch business of such company.

This part provides for the creation of “special purpose financial captives” (SPFCs) exclusively to facilitate the securitization of one (1) or more risks, as a means of accessing alternative sources of capital and achieving the benefits of securitization. SPFCs are created for th…

(1) For purposes of this part:(1) “Affiliated company” means a company in the same corporate system as a parent, by virtue of common ownership, control, operation, or management;(2) “Control”, “controlling”, “controlled by”, and “under common control with” mean the possession, di…

(a) No provisions of this title, other than those expressly provided in this part, shall apply to an SPFC, and those provisions apply only as modified by this part. If a conflict occurs between this title and this part, this part shall control. (b) The commissioner, by rule, regu…

(a) An SPFC, when permitted by its organizational documents, may apply to the commissioner for a certificate of authority to transact insurance or reinsurance business as authorized by this part. An SPFC shall only insure or reinsure the risks of its counterparty. Notwithstanding…

(a) An SPFC may be established as a stock corporation, limited liability company, mutual, partnership, or other form of organization approved by the commissioner. (b) The SPFC's organizational documents shall limit the SPFC's authority to transact the business of insurance or rei…

(a) An SPFC shall initially possess and maintain, minimum capitalization of not less than two hundred and fifty thousand dollars ($250,000). All of the minimum initial capitalization shall be in cash. All other funds of the SPFC in excess of its minimum initial capitalization sha…

(a) An SPFC shall only insure the risks of a counterparty. (b) No SPFC shall issue a contract for assumption of risk or indemnification of loss other than an SPFC contract. However, the SPFC may cede risks assumed through an SPFC contract to third party reinsurers through the pur…

(a) This section and § 56-13-409 provide a basis for the creation and use of protected cells by an SPFC as a means of accessing alternative sources of capital, lowering formation and administrative expenses, and generally making insurance securitizations more efficient. If a conf…

(a) (1) The creation of a protected cell shall not create, with respect to that protected cell, a legal person separate from the SPFC.(2) Notwithstanding subdivision (a)(1), a protected cell shall have its own distinct name or designation that includes the words “protected cell”.…

(a) An SPFC may issue securities, including surplus notes and other forms of financial instruments, subject to and in accordance with applicable law, its approved plan of operation, and its organizational documents. (b) An SPFC, in connection with the issuance of securities, may …

An SPFC may enter into swap agreements, or other forms of asset management agreements, including guaranteed investment contracts, or other transactions that have the objective of leveling timing differences in funding of up-front or ongoing transaction expenses or managing asset,…

(a) An SPFC may reinsure only the risks of a ceding insurer, pursuant to a reinsurance contract. No SPFC shall issue a contract of insurance or a contract for assumption of risk or indemnification of loss other than such reinsurance contract. (b) Unless otherwise approved in adva…

No securities issued by an SPFC pursuant to an insurance securitization shall be considered to be insurance or reinsurance contracts. No investor in these securities or a holder of these securities, by sole means of this investment or holding, shall be considered to be transactin…

(a) The assets of an SPFC shall be preserved and administered by or on behalf of the SPFC to satisfy the liabilities and obligations of the SPFC incident to the reinsurance contract, the insurance securitization, and other related agreements. (b) In the insurance securitization, …

(a) No SPFC shall declare or pay dividends in any form to its owners other than in accordance with the insurance securitization transaction agreements, and in no extent shall the dividends decrease the capital of the SPFC below two hundred fifty thousand dollars ($250,000). After…

(a) Any material change of the SPFC's plan of operation, whether or not through an SPFC protected cell, shall require prior approval of the commissioner. The following transactions do not constitute material change for purposes of this section:(1) If initially approved in the pla…

At the cessation of business of an SPFC following termination or cancellation of an SPFC contract and the redemption of any related securities issued in connection with the SPFC contract, the authority granted by the commissioner expires or, in the case of retiring and surviving …

(a) Except as otherwise provided in this section, chapter 9 of this title shall apply in full to an SPFC. (b) Upon any order of supervision, rehabilitation, or liquidation of an SPFC, the receiver shall manage the assets and liabilities of the SPFC pursuant to this part. (c) Notw…

(a) This chapter is known and may be cited as the “Surplus Lines Insurance Act.” This part shall apply to surplus lines transactions where the insured's home state, as defined by § 56-14-102, is this state. (b) This chapter shall apply to surplus lines transactions where the insu…

(1) As used in this chapter, unless the context otherwise requires:(1) “Admitted company” or “authorized company” means an insurance company qualified and licensed to transact business under this title;(2) “Affiliate” means, with respect to an insured, any entity that controls th…

(a) If insurance coverages of insureds, whose home state is this state, cannot be procured from admitted companies after diligent effort, except if an exempt commercial purchaser, the coverages, designated as surplus lines insurance, may be procured from unauthorized companies, s…

(a) The commissioner may issue a surplus lines license to any agent licensed pursuant to chapter 6 of this title. Such license shall grant the agent authority to procure the kinds of insurance provided for in this chapter from unauthorized companies in this state under the condit…

(a) No insurance coverage shall be eligible for surplus lines insurance unless the full amount of insurance required is not procurable, after a diligent effort has been made to do so, from among the authorized companies licensed to transact and actually writing such kind and clas…

(a) On a quarterly basis, the surplus lines agent shall promptly file with the commissioner on or before February 15 for the quarter ending the preceding December 31, on or before May 15 for the quarter ending the preceding March 31, on or before August 15 for the quarter ending …

(a) For each insured whose home state is Tennessee, every new or renewed insurance contract certificate, cover note or other confirmation of insurance procured and delivered as a surplus line insurance coverage pursuant to this chapter shall bear the name and address of the writi…

(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 sh…

(a) No surplus lines agent shall place any coverage with a unauthorized insurer that is not an eligible surplus lines insurer as provided under this section. (b) No unauthorized insurer shall be or become an eligible surplus lines insurer, unless:(1) The unauthorized insurer is a…

(a) Insurance contracts procured as surplus line insurance coverage from unauthorized companies in accordance with this chapter shall be fully valid and enforceable as to all parties, and shall be given recognition in all matters and respects to the same effect and extent as like…

(a) If an unauthorized company has assumed the risk in accordance with this chapter, and if the premium for the insurance has been received by the surplus lines agent who placed the insurance, then in all questions thereafter arising under the coverage as between the insurance co…

(a) An unauthorized company may be sued upon any cause of action arising in this state under any surplus lines insurance contract issued by it or certificate, cover note or other confirmation of the insurance issued by the surplus lines agent, pursuant to the same procedure as is…

(a) The premiums charged for surplus lines insurance are subject to a gross premium tax in an amount to be determined by subsection (b). (b) (1) In addition to the full amount of gross premiums charged by the insurer for the insurance, every person licensed pursuant to § 56-14-10…

Any agent who is granted a surplus lines license in accordance with this chapter may bring announcements or statements before the public in respect to the agent's ability to place surplus lines insurance as may be permitted by this chapter.

Agents licensed in accordance with this chapter shall not pay the whole or any part of the commission on surplus lines insurance to any person, except that the commissions may be shared or divided with any other person licensed by the commissioner as a surplus lines agent or lice…

(a) Each surplus lines agent shall keep in the agent's office in this state a full and true record of each surplus lines contract procured by the agent for or on behalf of an insured whose home state is the state of Tennessee, including a copy of the daily report, if any, and sho…

Any violation of this part shall subject the agent to the revocation or suspension of the surplus lines agent's license for a period of not less than one (1) year and a fine of not more than five hundred dollars ($500).

(1) Fidelity or bonding corporations have the power to execute as surety, and guarantee the performance of:(1) All bonds, stipulations, or undertakings conditioned for the faithful performance of any duty, public or private, including the bonds and obligations of such a character…

Whenever any recognizance, stipulation, bond or undertaking, conditioned for the faithful performance of any duty, or for doing or refraining from doing anything in the recognizance, stipulation, bond or undertaking specified, is by law required or permitted to be given with one …

No such company, organized under the laws of any sovereignty other than this state, shall do business under this chapter until it has appointed the commissioner its true and lawful attorney as required and provided by § 56-2-103, upon whom may be served all lawful process against…

(a) Every company, before transacting any business under this chapter, shall deposit with the commissioner a copy of its charter, or articles of incorporation, and a statement, signed and sworn to by its president and secretary, showing its assets and liabilities. (b) If the comm…