Chapter 15 - TN State Laws

If after notice and a hearing the Commissioner finds that any person has violated any statute, rule or order, they can order a penalty up to ___ for each violation, but cannot exceed an aggregate penalty of ___.

$1,000 $100,000

An insurer or its representative that terminates a producer's appointment must: - Notify the Commissioner within ___ days after the termination's effective date - State the cause for termination, if the cause is also grounds for license suspension or revocation - Pay a termination fee - Notify the Commissioner of any information pertinent to the termination that is discovered after the fact - Mail a copy of the initial termination notice to the producer within ___ days after the notice has been provided to the Commissioner

- 30 - 15

The Commissioner (or a person appointed by the Commissioner) will personally visit, at least once every 5 years, each insurance company licensed in this state and examine its: (4 things)

- Affairs - Financial Condition - Ability to fulfill its obligations - Compliance with insurance laws

The Association will cover claims that:

- Existed prior to the determination of insolvency - Arise within 30 days after the determination of insolvency - Arise before the policy expiration date, if that date is less than 30 days after the determination of insolvency - Arise before the insured replaces the policy or requests cancellation, if such actions are taken within 30 days after the determination of insolvency

The following are unfair trade practices in insurance:

- False Advertising - Defamation - Boycotting, Coercion, and Intimidation - Unfair Discrimination - Rebating

The list of subjects that will be acceptable for continuing education credits includes, but is not limited to:

- Insurance, annuities, and risk management - Insurance laws and regulations - Mathematics, statistics, and probability - Economics - Business law - Finance - Taxes - Business environment, management, or organization

To issue a producer license, the Commissioner must determine that the applicant: (5 things)

- Is at least 18 years of age - Has completed any required prelicensing course - Has passed the appropriate licensing exam - Has paid all required fees - Has not committed any act that is ground for denial, suspension, or revocation of the license

Commercial risk insurance does not include the following types of insurance:

- Life and annuities - Disability - Ocean marine - Reinsurance - Aircraft liability and aircraft hull - Fidelity and surety bonds - Surplus lines - Other types of insurance specified by law

To renew a license, a producer must: (3 things)

- Pay a renewal fee - Submit a renewal form - Complete all continuing education requirements

The Commissioner may place on probation, suspend, revoke, or refuse to renew a license, and/or impose a fine, for the following grounds:

- Problems in Keeping a License - Moral Turpitude, Lack of Character, or Mishandling of Funds - Violation of Regulations - Default on Student Loans - Failure to Pay Ordered Supports

An insurer may not be obligated to decide a claim with insufficient ___ and ___.

- investigation - information

An agent must personally inspect the property within ___ days after a policy is written. If an agent fails to appraise an insured property within ___ days, and if a loss occurs, the value shown in the policy or application must be the value upon which a settlement is based.

-90 -90

Upon receipt of a claim for a sinkhole loss, an insurer must meet the following investigation standards:

1.) An inspection of the premises must be made to determine if there has been structural damage resulting from possible sinkhole activity 2.) If, upon investigation, the insurer determines that there is no sinkhole loss, the insurer may deny the claim 3.) If there is structural damage, but the insurer concludes that such damage is inconsistent with sinkhole activity, then prior to denying the claim, the insurer shall obtain a written certification from a qualified individual stating that the damage under the claim was not caused by sinkhole activity

A policy in effect for at least 60 days, or a renewal policy, may be cancelled:

1.) For fraud or material misrepresentation 2.) For failure to comply with written loss control recommendations 3.) For material increase in risk 4.) If continuing the policy could result in the insuring company's insolvency, as determined by the Commissioner 5.) If continuing the policy could result in the insurer violating state insurance laws 6.) For the insured's violation of any policy terms or conditions 7.) For other reasons, as approved by the Commissioner 8.) The insured being convicted of a crime that results in increasing any hazard insured against 9.) The named insured's conviction of a crime that resulted in the increase of a hazard 10.) Nonpayment of premium, including nonpayment of any additional premiums that are justified by a physical change in the property or a change in its occupancy or use

*******An insurer licensed to write auto liability insurance in Tennessee may issue an auto liability policy only if it is noncancellable and if it is guaranteed renewable as long as:

1.) The insurer remains licensed to write auto liability insurance 2.) All drivers of the insured auto maintain their driver's licenses 3.) Premiums are paid when due 4.) The insured auto is used for a purpose for which a valid rate has been approved by the Commissioner; auto policies usually exclude coverage for an auto used primarily as a residence and for an auto being used to commit a crime.

The cancellation notice must: - Be mailed to the named insured at the address shown in the Declarations - Provide at least ___ days' notice of cancellation

10

For claims other than Workers' Compensation claims, arising from bodily injury, sickness, or disease, including death resulting from the same, the Association shall be obligated to an amount of at least $___ but not more than $___.

100 100,000

A lapsed license may be reinstated within ___ months from the renewal fee's due date, without taking an exam, by paying the reinstatement fee (which is twice the renewal fee).

12

If a producer completes more than the required number of continuing education hours during a licensure period, up to ___ excess CE hours can be transferred into the next licensure period.

12

The stabilization and all other repairs to the structure and contents must be completed within ___ months after the contract becomes effective

12

Claim forms must be provided to the insured within ___ days of being requested and must include instructions for use.

15

Every insurer of commercial risk insurance must file with the Commissioner within ___ days after the effective date. The Commissioner may, after a hearing, give written notice of their disapproval of rates within ___ days.

15 20

To appoint a producer, an insurer must: - File a notice of appointment within ___ days from the date a producer either is appointed or submits the first insurance application. - Pay a ___ appointment fee for the duration of the producer's contract

15 quarterly

If the Commissioner deems the issuance of a temporary license to be in the public interest, they may issue a temporary license for up to ___ days, without requiring an exam, to the following as necessary to service an insurer: - The surviving spouse or the representative of a decedent or disabled producer - If a producer is entering the United States armed forces, that producer's designee - Other parties, if not prohibited by law

180

Any investigation must be completed within ___ years of receiving a complaint or entering an inquisitorial order, whichever comes first. All actions shall be commenced within ___ years of the date that the Commissioner knew or reasonably should have known of the cause of action.

2 years 5 years

Each person applying for a license to transact insurance business in Tennessee must complete ___ credit hours of prelicensing education per line of authority for the lines of life, health, property, and casualty.

20

A nonrenewal notice must do one of the following: State the reason for nonrenewal Advise the named insured that the insurer must state the reason for nonrenewal within ___ days after receiving a request for such information, if the request is made within ___ days after the effective date of nonrenewal

20 15

Cancellation of personal risk policies requires ___ days' advance notice, but nonrenewal requires ___ days.

20 30

To renew a license, an insurance producer must complete ___ credit hours of approved continuing education every ___ years, excluding the year in which the original license is issued. A producer must complete at least ___ hours of ___ continuing education during a licensure period.

24 2 3 ethics

A license is valid for ___ months unless revoked or suspended. An individual's license expires on the last day of the licensee's ___ month

24 birth

The Commissioner must notify the Association that an insurer has become insolvent not later than ___ days after they have received notice of the determination of insolvency.

3

All insurers must file all rates, rate information, policy forms and endorsements with the Commissioner at least ___ days before their intended date of use.

30

Any change of address must be reported to the Commissioner within _____ days.

30

If the Commissioner denies a license application for failure to pay child support, the Commissioner must notify the applicant of such denial within ______ days.

30

The Commissioner must provide a person subject to an investigation a copy of the complaint which initiated the investigation within ___ days of receiving the complaint.

30

When a claim is denied, written notice of denial must be sent to the first party claimant within ___ days of the determination.

30

An insurer that receives notice from a consumer reporting agency that information provided was incomplete or incorrect, and if that information was used for underwriting or rating purposes, that consumer's policy must be re-underwritten or re-rated within ___ days and repay overpaid premiums for the actual policy period, up to ___ months.

30 12

The Commissioner must: Verify, within ___ days, that a producer is eligible for appointment Notify an insurer within ___ days of determining that a producer is ineligible for appointment

30 5

An authorized insurer cannot: Use credit information unless no later than ___ months following the last time the insurer obtained current credit information for the insured, the insurer recalculates the insurance score or obtains an updated credit report.

36

If the insurer obtains written certification and if the policyholder has submitted the sinkhole claim without good faith grounds, the policyholder shall reimburse the insurer for ___% of the analysis and certification cost. However, a policyholder will not be required to reimburse an insurer more than $___ with respect to any claim

50% 2,500

A company may not be held liable beyond the actual value of a property at the time of partial or total loss by fire. If the insured has paid premiums on over insurance, the insured must be reimbursed for the portion of the premium for the excess insurance, with at least ___% per annum interest.

6

An insurer that fails to provide this notice must extend the existing policy for ___ days from the date the notice is provided (and charge a pro rata premium for the extension).

60

An insurer must give the named insured at least ___ days' notice of its intent to increase rates by more than ___%

60 25%

If the investigation remains incomplete, the insurer will, ___ days from the initial notification and every ___ days thereafter, send to the first party claimant a letter setting forth the reasons additional time is needed for investigation.

60 60

Within ___ days after receipt by the insurer of properly completed and executed proofs of loss and such information or documents required under the policy, the first party claimant must be advised of the acceptance or denial of liability for the claim by the insurer

60 days

Proof of Financial Responsibility - Any 1 of the following: 1.) A written proof of liability insurance coverage providing at least $______ per accident. 2.) Split limit policy of (_____/_____/______)

60,000 (25,000/50,000/15,000)

If the Commissioner suspends a license, the licensee must be notified of the opportunity to request a hearing within ___ days.

7

An authorized insurer cannot: Take adverse action based on a credit score more than ___ days old

90

The following are exempt from license examination requirements: - An individual who applies for an insurance producer license in this state who was previously licensed for the same lines of authority in another state. - A person licensed as an insurance producer in another state who moves to this state and makes application within ___ days of establishing legal residence in Tennessee.

90

Personal risk insurance includes insurance on residences, farms, private passenger autos, watercraft, and rental agreements of ___ days or less.

90 days

Denial or cancellation of, increase in charge for, or unfavorable change in the terms or amount of any personal insurance.

Adverse Action

It is an unfair trade practice to: A File a material misstatement about a person's financial condition or business B Accidentally omit material facts C Keep a complete record of all complaints received since an insurer's last examination date D Keep incomplete records of complaints

B

The Tennessee Insurance Guaranty Association will cover claims that: A Arise before the insured replaces the policy or requests cancellation, if such actions are taken within 30 days after the determination of insolvency B Arise within 30 days after the determination of insolvency C Existed after the determination of insolvency D Arise within 60 days after the determination of insolvency

B

Which of the following is true of Sinkhole Loss Coverage? A Insurers may not offer coverage that is broader or more extensive than the offer of coverage required by statute B A policyholder will not be required to reimburse an insurer more than $2,500 with respect to any claim C Sinkhole loss coverage is automatically included in any homeowner property insurance policy D The insurer cannot require an inspection of the property before issuance of sinkhole loss coverage

B

If a bank will not grant a loan unless the borrower buys insurance from a specific company, the bank and insurer are guilty of which of the following unfair trade practices?

Boycott, coercion, intimidation

Entering into an agreement to commit an act resulting in, or tending to result in, unreasonable restraint of, or monopoly in, the insurance business. (3 things)

Boycotting, Coercion, and Intimidation

A corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.

Business entity

A commission or other valuable consideration for transacting insurance business, received by an unlicensed person who is required to be licensed.

Compensation

Any entity that, for a profit, assembles or evaluates consumer credit or other information to provide consumer reports to third parties.

Consumer Reporting Agency

(UM) does not include an auto that is:

Covered under the same policy providing the Uninsured Motorist coverage Owned or regularly used by an insured Self-insured Designed for use mainly off public roads, except while on public roads Being used as a residence

Any credit-related information from a credit report or from a personal insurance application.

Credit Information

Any written, oral, or other communication of information by a consumer reporting agency about a consumer's credit that is used to determine personal insurance premiums, eligibility, or tier placement.

Credit Report

A policy in effect at least 60 days can be cancelled for any of these reasons, EXCEPT: A Failing to comply with loss control recommendations B Fraud C Material increase in the risk D Conviction of the named insured of any crime

D

An authorized insurer can: A Take adverse action based on a credit score more than 90 days old B Consider an absence of credit information as a negative or positive factor in underwriting or rating C Deny, cancel, or nonrenew a personal insurance policy solely on the basis of credit information D Take adverse action based on a credit score more than 30 days old

D

A producer tells an applicant for insurance that a competitor insurer is in dire financial straits, and may not be able to honor its claims obligations. Which unfair trade practice has the producer committed?

Defamation

Making or placing before the public any statement which is false, or maliciously critical of, or derogatory to any person's financial condition with intent to injure the person.

Defamation

Because of the Gramm-Leach-Bliley Act of 1999, personal information must be kept private and not be disclosed without the person's written permission.

Disclosure of Nonpublic Personal Information

Holding, by an individual, of office as a director of at least 2 domestic insurers of Tennessee at the same time, if the insurers are engaged in the same business and if the insurers are or were competitors, so that a non-competition agreement between the insurers would violate any United States or Tennessee anti-trust law.

Dual Office Holding

Insurers must keep a complete record of all the complaints received since its last examination date. Complaint records shall include:

Failure to Maintain Complaint Handling Procedures - The total number of complaints - Their classification by line of insurance - The nature of each complaint - The disposition of each complaint and the time it took to process each complaint

Insurers must keep all books, records, documents and other business records accurate and up to date so that such information is accessible and retrievable for examination by the Commissioner. Data for at least the current calendar year and the 2 preceding years shall be maintained.

Failure to Maintain Marketing and Performance Records

Failure of a company to provide loss information for the 3 previous policy years to the first named insured within 30 days after receiving the first named insured's written request.

Failure to Provide Claims History

Making or placing before the public any statement about the insurance business or about any person in the conduct of the insurance business, which is untrue, deceptive, or misleading.

False Advertising

Knowingly filing with any public official, or knowingly making or placing before the public, any material misstatement about a person's financial condition or business

False Statements and Entries

No insurance company can increase a premium or cancel a homeowner's insurance policy solely on the basis of an inquiry/inquiries by an insured regarding their homeowner's policy or a loss under the policy.

Inquiry by Homeowner's Insurance Policyholder

A person required by the laws of Tennessee to be licensed to sell, solicit, or negotiate insurance.

Insurance producer

Any repair technique intended to replace, rebuild, stabilize, or restore the land, including any repair technique designed to compensate for or prevent land instability.

Land Stabilization

Acquisition, by a domestic insurer in Tennessee, of share capital of a competitor selling the same type or class of insurance, if the acquisition results in decreased competition between the 2 insurers, restrains commerce, or creates a monopoly. (This does not prohibit the purchase of such stock solely for investment purposes.)

Lessening Competition by Stock Transaction

A person authorized by the Commissioner to sell, solicit, or negotiate limited lines insurance.

Limited Lines producer

Insurers must offer coverage to damage resulting from sinkholes and sinkhole loss.

Mandated Offer For Sinkhole Loss Coverage

Making false or fraudulent statements or representations on a policy application, just to receive a monetary or other benefit from any provider or individual person.

Misrepresentation in Insurance Applications

Auto, homeowners, motorcycle, dwelling, boat, personal watercraft, and recreational vehicle policies written for personal, family, or household use.

Personal Insurance

Knowingly permitting or offering, special favor, or advantage concerning dividends or other benefits, or other valuable consideration prohibited by law or not specified in the policy or both as an inducement to buy insurance.

Rebating

Within 10 business days of receipt of a written request from an insured/an insured's designee, a commercial lines insurer must furnish directly to the person designated in the request a copy of the insured's loss run history for up to the previous 3 years, or complete loss run history with the insurer if the history is less than 3 years. A written request includes communications made by email or fax.

Request for Loss Runs

The Commissioner shall have the authority to adopt rules to protect service members of the United States armed forces from dishonest and predatory insurance sales practices by declaring certain identified practices to be false, misleading, deceptive, or unfair.

Sales to Members of the Armed Forces

A subterranean void created by the dissolution of limestone or dolostone strata resulting from groundwater erosion causing a surface subsidence of soil, sediment, or rock.

Sinkhole

Settlement or systematic weakening of the earth supporting a covered building, only if the settlement or systematic weakening results from contemporaneous movement or raveling of soils, sediments, or rock materials into subterranean voids created by the effect of groundwater erosion on a limestone or similar rock formation.

Sinkhole Activity

Structural damage to a covered building caused by the sudden collapse of the earth supporting the covered building as the result of sinkhole activity. Sinkhole loss does not include:

Sinkhole Loss

Issuing or delivering capital stock in an agency, benefit certificates or shares in a corporation, or securities, special or advisory board contracts, or other contracts promising returns and profits, as an inducement to buy insurance.

Stock Operations and Advisory Board Contract

This association was established to cover the claims and obligations of insolvent insurers. All property and casualty insurers must be members of the Association in order to transact business in Tennessee.

Tennessee Insurance Guaranty

A license cannot be suspended, revoked, or withdrawn unless the licensee has first received written notice from ___

The Commissioner

Charging different rates to insureds of the same class or hazard category is considered which of the following unfair trade practices?

Unfair Discrimination

With respect to a policy underwritten in a pool, residual market mechanism, joint underwriting authority, or assigned risk plan, using any information, contained in an application and/or obtained while such policy is being serviced in any manner, to solicit any form of insurance, unless the Commissioner has granted permission to use such information on any specific risk.

Unfair Utilization of Proprietary Information

An auto for which ownership, maintenance, or use has resulted in bodily injury of property damage, and for which the limits of liability are less than the applicable limits of Uninsured Motorist coverage under the policy against which the claim is made.

Uninsured Motor Vehicle

The insurer may limit its total claims payment to the ___ ___ ___ of the sinkhole loss, excluding costs associated with building stabilization or foundation repair. Once the policyholder enters into a contract for building stabilization or foundation repairs in accordance with the recommendations of the engineer retained or approved by the insurer, these exclusions will also be covered. This contract must be in effect within ___ days after the insured is notified that the sinkhole loss coverage is confirmed.

actual cash value 90

Any money that an insurance producer receives for insurance transactions shall be held in a ___ capacity and shall not be misappropriated, converted, or improperly withheld.

fiduciary

The insurer may make sinkhole loss coverage available in the ___ policy itself, by ___, or through other coverage that the insurer may arrange, and the insurer may make an additional charge for the coverage.

homeowner endorsement

A nonresident producer may receive a Tennessee producer license if: - The person submits the required ___ application and ___ fee, and a copy of their ___ application for their ___ state (or a uniform application). Applicants should allow ___ days for the application to be reviewed, processed and approved.

license license license home 30

The insurer must maintain claim data, making it accessible and retrievable for examination. An insurer shall be able to provide the claim ___, line of ___, date of ___, date of payment of the ___, date of ___, or date ___ without payment. This data must be available for all open and closed claim files for the current year and the ___ preceding years.

number coverage loss claim denial closed 5