Tennessee Insurance Laws and Rules (Core)

Licensing-Resident Application Process;-For Health Insurance License:

CIC; CEBS; Registered Health Underwriter (RHU; Registered Employee Benefit Consultant (REBC); Health Insurance Advisor (HIA).

Licensing-Resident Application Process;-Property, Casualty and Personal Lines Licenses:

CIC; Chartered Property and Casualty Underwriter (CPCU); Accredited Advisor insurance (AAI); Associate in Risk Management (ARM).

Licensing-Continuing Education to be Approved it must be:

A formal program designed to contribute to professional competency, if it requires attendance, it must be: At least one credit hour (50 minutes) in length; Conducted by a qualified instructor, leader or lecturer.

Licensing-License Renewal

A license is valid for Two Years. It expires on: the last day of an individual licensee's birth month; March 1st for a business entity; A license may renew his license by submitting: a completed renewal form with a renewal fee of $60 ($30 for a limited lines producer); certification of satisfactory completion of any required continuing education.

Licensing-Appointments continued

A licensee may secure insurance for an excess or rejected risk with an insurer with whom he does not have an agency contract or appointment so long as: only the excess portion of the risk is placed with the insurer; and An insurer with whom the producer does have an agency agreement writes the insurance but has deemed it to be in excess of its underwriting standards. An excess risk policy supplements a primary policy. When the primary policy's coverage limits have been reached, the excess policy's coverage is triggered.

Licensing-unauthorized insurer

A licensee who markets insurance on behalf of an unauthorized insurer (i.e. one who does not have a certificate of authority from the Division to sell insurance in TN) is committing a fraudulent insurance act and is personally liable for premiums paid for and claims made against those policies sold. Additionally, an insurer or licensee cannot pay a commission or other valuable consideration to an unlicensed person for performing activities in an insurance transaction requiring a license, nor can an unlicensed person accept valuable consideration for transacting insurance. However, if the unlicensed person was licensed at the time he performed the activities, he may be paid a renewal commission or other deferred compensation. An insurer or licensee may also assign his commission or compensation to an insurance agency or other persons who do not perform activities requiring a license unless it is a rebate.

Termination of Appointment--

A licensee's appointment can be terminated for cause (i.e. violation of an insurance law or rule or order of the Commissioner) or without cause for sanctions by the Commissioner. In either case, the insurer must notify the Commissioner within 30 days of the termination and pay a $15 termination fee. The insurer must also: within 15 days after notifying the Commissioner, send by certified mail a copy of the notification to the producer. continue to provide the Commissioner with any additional information relating to a cause for which the Commissioner may impose sanctions. A terminated license has 30 days from receipt of the notification in which to file his written comments about the cause of termination with the Commissioner and send a copy to the insurer. A person cannot be held liable in a civil matter for any statement made or information provided pertaining to the termination of an appointment, unless the statement or provision of information was of malicious intent. Neither the Commissioner nor an employee of the Department can be required to testify in a civil matter arising from an appointment termination, and documents and information received by the Department pertaining to a termination: are confidential, are not subject to subpoena or discovery in a private civil suit. The Commissioner may exchange documents and information with other government, insurance or law enforcement agencies provided required confidentiality is maintained. Once a decision is final, the Commissioner may release selected information to the National Association of Insurance Commissioners (NAIC).

Licensing-Courses Required for National Insurance Credentials such as those for CLU, CIC, CPCU and LUCTFC, are also acceptable:

A producer must: not repeat and submit for credit a course submitted for credit within the prior three years; submit to the Commissioner, prior to expiration of the licensing period, certification of his completion of continuing education coursework; retain the original certificate(s) of completion for the most recent two years licensing as evidence of his compliance; so long as his home state recognizes continuing education on the same basis as TN, a non resident licensee's fulfillment of his home stat's continuing education requirements will satisfy TN requirements.

Licensing-Resident Application Process; continued

An applicant is exempt from the pre-license education requirement if he holds one of the following national insurance credentials, the requirements for which are presumed to meet the TN pre-license education criteria. He may obtain some of these credential through study and testing and others by meeting designated experience thresholds.

Licensing-Resident Application Process-Nonresident License:

An individual license applicant is exempt from taking any pre-licensing education or examination if his application is for the same lines of authority in which he is licensed or within the 90 days prior to receipt of his application, had been licensed in another state; a licensed producer in another state who moves to TN will have the exemptions for the same lines of authority of his prior license if he applies for a resident license within 90 days of establishing residence in TN.

Termination of Appointments continued-

An insurer or producer that fails to report or falsely reports a termination to the Commissioner is subject to: suspension or revocation of its license or certificate of authority; and/or a fine of $100 to $1,000 of reach violation. Example: On December 1, after 3 months of employment, Kinkly Insurance Company decided that Spotty Bartrock was not working out as an agent. The company filed a termination notice with the Commissioner, along with the $15 fee. On the same day, it also sent Spotty a letter, terminating his contract, and a copy of the termination notice. Because Spotty believed that Kindly insurance had mistreated him, he sent a letter to the Commissioner, explaining his side of the story.

Licensing Exemptions-The Following are not Require to have an Insurance Producer License:

An insurer; an officer, director or employee of an insurer or producer who does not receive commissions on policies sold whose functions are: executive, administrative, managerial and/or clerical and only indirectly related to the transaction of insurance; related to underwriting, loss control, inspections or claims; those of a special agent or agency supervisor, providing technical advice and assistance to producers (but not transacting insurance); A person who provides information about and assists in administering a group insurance plan and is not paid a commission for the service; An employer or association or its officers, directors or employees or a trustee who administers an employee benefit or trust plan and is not compensated by the carrier of the contracts; An employee of an insurer or organization employed by an insurer, who inspects, rates or classifies risk or supervises producer training and does not transact insurance; An officer, director, or employee of a vehicle rental company that transacts optional insurance as part of a motor vehicle rental agreement of no more than 90 days; An advertiser of insurance whose activities do not include transacting insurance business; a nonresident producer who transacts commercial property and casualty insurance covering an insured's risk in Tennessee, as well as, his risks in another state in which the producer is licensed and the insured has his principal place of business; A salaried full time employee who counsels and advises his employer about insurance but does no transact it or receive a commission or salaried officer, employee or member who recruits members for a fraternal benefit society that provides only accidental death and disability benefits, provided he receives no monetary compensation for recruiting members.

Licensing-Resident Application Process-Nonresident License:

Can be licensed as a producer of insurance in TN, if: He currently has a license in a good standing in his home state; he submits a request for licensure and pays the required fee; he submits a copy of his home state license application or completed uniform application for licensure; his home state awards TN producers licenses on the same basis.

Licensing-Resident Application Process;-For a Life Insurance License:

Certified insurance Counselor (CIC); Certified Employee Benefit Specialist (CEBS); Chartered Life Underwriter (CLU); Chartered Financial Consultant (ChFC) Certified Financial Planner (CFP) Fellow of Life Management Institution (FLMI); Life Underwriter Training Council Fellow (LUTCF)

Licensing-Fail to Renew

If a producer fails to renew his license on time, his license lapses, but he may, within 12 months of the renewal due to date, apply to reinstate it, he must pay double the original renewal fee (i.e. $120 for a producer and $60 for a limited lines producer) but is not required to pass a new licensing examination.

Licensing-Continuing Education:

In order to renew a license, an individual producer must complete within the prior two-years license period 24hrs of Commissioner- Approved continuing education, at least three hours of which must be focused on ethics. However, a producer who has been continuously licensed in TN since January 1, 1994, is exempt form this requirement.

Licensing-Resident Application Process; Pas an Examination Covering:

Information on the specific line(s) of authority for which he is applying; An insurance producer's responsibilities and duties; TN insurance laws and regulations; Pay the application fee of $50.

Licensing-Continuing Education Acceptable Subjects Include:

Insurance, annuities and risk management; insurance laws and regulations; mathematics, statistics and probability; economics; business law; finance; taxes; business environment, management or organization

Licensing-Resident Application Process;-Business Entity:

Is a corporation, association, partnership, limited liability company, or partnership or other legal business organization. A business entity may be licensed as an insurance producer but only an individual license can actually transact insurance. To become licensed, a business must: Submit a uniform business-entity application: Designate a principal or officer of the company who holds a current producer license to be responsible for the entity's compliance with the state insurance laws; Pay a $50 application fee; If the Commissioner does not grant a license, he must notify the applicant within 30 days and provide the reasons for the denial.

Licensing-Resident Application Process;-Limited Lines Producer:

Is a person licensed to sell, solicit or negotiate, limited lines (e.g. baggage or travel accident insurance, credit life or credit accident and health insurance mortgage guaranty insurance crop hail insurance; or title insurance, if the producer is an attorney). An applicant for a limited lines license is not required to pass an examination

Commissioner's Disciplinary Action:

Is governed by the Uniform Administrative Procedures Act. A licensee must be given notice and an opportunity for hearing before an administrative law judge or hearing officer to contest Commissioner's investigation findings. The final decision in the contested case is subject to judicial review.

Unfair Trade and Prohibited Acts Lesson-

Knowingly misrepresenting relevant facts or policy provisions relating to the coverage offered for a specific claim; Failing to act or communicate promptly with regard to: A communication about a claim; whether or not a claim will be paid after receiving the proof of loss statement; processing a claim by requiring submission of both a preliminary claim report and a proof of loss, when the forms call for the same information; making a settlement offer that is substantially less than that likely to be awarded in a lawsuit; attempting to settle a claim: for less than what would be expected based on advertising available, or based on an insurance application altered without the consent of the insured. pressuring a claimant to accept a settlement offer less than what would be received in an arbitration award by making known the insurer's policy of appealing arbitration awards; delaying settlement of one portion of a claim in order to influence settlement of another portion under a different policy provision; delaying the settlement of a claim where fault is reasonably clear; failing to pay a valid WC claim.

Licensing-Continuing Education tSubjects which are NOT Acceptable Include:

Licensing; exam prep; computer science; motivation and sales training; securities other than variable annuities.

Unfair Trade Practice Prohibited--

No person may engage in an unfair trade practice from, in or into TN that is determined by rule to be or defined as an unfair method of competition or an unfair or deceptive trade practice in the business of insurance. No person may engage in an unfair claims practice defined by rule or definition. however, the Commissioner may not levy a civil penalty or suspend or revoke a license for violating an unfair claim practice unless: it is committed knowingly; or it has been committed with such frequency as to indicate a general business practice.

Lending of Money and Extensions of Credit-

No person or depository institution can require as a condition of lending money, extending or renewing any terms of credit, or offering any product or service that is equivalent to an extension of credit, that a customer obtain insurance from the depository institution or any particular insurer or producer. This does not prevent the depository institution from requiring insurance as a condition of a loan approval or information the customer that the required insurance is available from the institution.

Unfair Trade Practices-

Prohibited unfair methods of competition and/or unfair or deceptive acts or practices, include the following: False or deceptive advertising or providing untrue or misleading information about: the insurance industry in general or a person in the insurance business (e.g. its financial status or history of dividend payments) the advantages, disadvantages, name, terms, or conditions of an insurance policy; an existing policy to induce an individual to switch policies; an insurance policy being shares of stock; an insurance product's connection with a band or by knowingly using a bank's name without consent; Making, publishing, disseminating or circulating oral or written information that is false, maliciously critical or derogatory about the financial condition of an insurer with the intent of harming the insurer (this is referred to as defamation.); Boycotting, coercing or intimidating any person in order to effect: a monopoly of insurance an unreasonable restraint on the insurance business

Unfair Trad Practices continued-

Prohibited unfair methods of competition and/or unfair or deceptive acts or practices, include the following: inquiring of an applicant as to the occupation of a family member not to be under the policy; attempting to induce the purchase of an insurance policy by: making a side contract for benefits which are not part of the policy; offering to rebate premiums or provide something (e.g. stocks, securities) in order to sell a policy (however, an insurer is not precluded from offering a child car seat for the purpose of protecting the welfare of the child). Acquiring by on insurer an interest in another doing the same type of business for purposes of lessening competition; using personal information obtained from an application for coverage under an assigned risk plan, residual market mechanism or joint underwriting authority to solicit an insurance sale; changing the rate on a commercial policy more than one year after the policy's renewal without the written consent of the insured; one person sitting on the boards of directors of two or more competing insurance entities dealing in the same type of insurance; Declining an application for accident and health coverages: without underwriting the application for each insurer he represents or if the applicant is insurable with any insurer he represents.

Licensing-Temporary Licenses

The Commissioner can issue a Temp License up to 180 days: if a license dies or becomes incapacitated to the surviving spouse, the personal representative; If a licensee designated on a business application dies or becomes incapacitated to another member or employee of the insurance business, when a licensee enters military service, to a designee; under any circumstances where it will be serve teh public inseret.

Grounds for Suspension or Revocation

The commissioner is authorized to place on probation, suspend, revoke, refuse to issue or renew a license and/or impose a fine if a person has: provided misleading or untrue information on a license application; violated an insurance law or Commissioner order a subpoena; Cheated on an insurance license exam; obtained or tried to obtain a license through fraud or misrepresentation; improperly used or took funds received in the course of transacting insurance; intentionally misrepresented the terms of an insurance policy or application; been convicted of a felony or found to have committed an insurance unfair trade practice or fraud; in the conduct of business: used fraudulent, coercive or dishonest practices, demonstrated incompetence, untrustworthy or financial irresponsibility; had an insurance license denied, suspended or revoked in another jurisdiction; forged another person's name in an insurance transaction; knowingly advised a person to apply for the TennCare program who is a member of a group health care plan; knowingly accepted insurance business from an unlicensed individual; transacted insurance for an unauthorized company; falsely held himself out as a financial planner; failed to disclose that he was an insurance producer as well as a financial planner and received fees for both activities. Notice of the Commissioner's finding of a violation must be provided to the producer, along with information on the right to a hearing on the matter.

Licensing-Appointments

To act as an agent for an insurer, a licensed producer must receive an appointment from the insurer. Once appointed, should a dispute arise, he is an agent of the insurer, not the insured or his beneficiary. A producer is appointed an agent when an insurer files a notice of appointment with the Commissioner, within 15 days after contract is signed or his first insurance application is submitted. The Commissioner will confirm the producer's eligibility within 30 days or inform the insurer within five days of determining that the producer is ineligible.

Licensing-Continuing Education to be Approved for a Correspondence or Self-Study Course it must have:

a final examination; be provided by the originally published provider with authorization or the originally published provider to present the program.

Licensing-Resident Application Process; To apply for an insurance producer license, a Tennessee resident must:

be at least 18 years old; not have committed a violation of the insurance laws that would result in disciplinary action by the Commissioner; complete a approved pre-licensing course for the line(s) of authority in which he wishes to transact insurance.

Licensing-Insurance Producer (or agent):

is a person required to be licensed to sell, solicit, or negotiate (i.e. transact) insurance. Throughout this course, the terms "producer" and "agent" will be used interchangeably.

A Residual Market Mechanism-

is an arrangement among insurers, arrived at either voluntarily or by law, to provide insurance to applicants who cannot obtain it through normal channels in the regular marketplace. A licensee cannot secure insurance for an applicant through a residual market mechanism until he first makes a diligent effort to obtain a policy from an insurer for which he is an agent and who writes such insurance.

If the finding are upheld through a Judicial Review, the Commissioner can:

issue a cease-and-desist order; impose a fine up to $1000 per violation (not to exceed $100,000 total); impose a fine up to $25,000 per willful violation (not to exceed $250,000); suspend or revoke the violator's license.

Licensing-Temporary Licenses will service the business until:

it can be sold or closed; or the producer returns; or new personnel have been trained and licensed to operate the business. To protect the insureds and/or the public, the commissioner can limit the authority of the Temp License and may require the temp license to be sponsored by another licensee who will assume responsibility for the temp license acts. If the insurance business is closed or sold, the temp license automatically terminates. A temp license is subject to the same discipline as a regular license, and his license can be suspended or revoked for a violation or insurance law or regulations.

Authority continues:

may impose penalties against any person who violates the TN Insurance Producer Licensing Act, including licenses and former licenses whose licenses have been surrendered or lapsed. In addition, he may take action against the license of an insurance business if he finds that: a licensee's violation was known or should have been known to one or more key personnel (i.e. partner, officer, or manager of the business); and The violation was not reported or corrected.

TN Commissioner Authorized to:

place a licensee on probation; suspend, revoke, refuse to issue to renew a license; fine a licensee for an insurance violation; investigate suspected violations of the insurance laws, during which he may subpoena witnesses and examine them under oath. All evidence gathered in an investigation is privileged and may not be used in any private civil suit.

Licensing-Resident Application Process; Lines of Authority

pre-licensing course hours required: Life = 20hrs Accident & Health = 20hrs Property = 20hrs Casualty = 20hrs Title = 5 hours Personal Lines = 30hrs

TN Insurance Producer Licensing Act of 2002:

sets out the requirements and guidelines for obtaining and maintaining an insurance producer license in TN. A person cannot transact insurance in TN without a license for the specific line(s) of authority (i.e. insurance) being marketed. Those lines of insurance for which the Commissioner issues licenses included: life; accident and health or sickness; property; casualty; variable life and variable annuity products; personal lines; credit; any other lines permitted under the Act.

Licensing-Fail to Renew Due to Extenuating Circumstances_

such as military health problem, prevent a producer from renewing his license on time, he can request a waiver of renewal producers or of any sanction imposed for having failed to comply with the renewal procedures.

TN Commissioner of the Department of Commerce and Insurance.

supervises the insurance industry in TN and enforces the State's insurance laws. Within the Department, the Division of Insurance handles the Commissioner's administrative functions, and the Commissioner is responsible for overseeing its regulatory work.

Licensing-Resident Application-Change of Address Shows:

the licensee's name; producer number; date of issuance; lines of authority (i.e. insurance); expiration date; licensee's address; The commissioner must be informed within 30 days of a producer's change of address if: a resident license moves within the state; a nonresident licensee mover form his home state to another state; a resident license mover to another state.

How the Commissioner determines the amount of a fine includes:

whether the act could reasonably have been interpreted to be in compliance with the law; whether the amount of the fine is sufficient to act as a deterrent; the circumstances leading to the violation; the effect of the violation in terms of severity and risk of harm to the general public; the gain realized by the violator; the interest of the public; the violator's effort to cure the violation.