(a) If the assets of a county mutual insurance company are insufficient to pay its existing liabilities, including those liabilities incurred but not reported and other obligations, as well as maintain the reserves required under this chapter, the county mutual insurance company shall notify the commissioner immediately.
Terms Used In Tennessee Code 56-22-111
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Contract: A legal written agreement that becomes binding when signed.
County mutual insurance company: means a person that is authorized to provide insurance coverage pursuant to this chapter. See Tennessee Code 56-22-103
Gross premium: means maximum gross premiums as provided in the policy contracts, new and renewal, including policy or membership fees, whether paid in part or in whole by cash, automatic premium loans, dividends applied in any manner whatsoever, and without deduction or exclusion of dividends in any manner, but excluding premiums returned on cancelled policies, on account of reduction in rates, or reductions in the amount insured. See Tennessee Code 56-22-103
insurance company: means any corporation, association, partnership or individual engaged as a principal in the business of insurance not licensed pursuant to this chapter. See Tennessee Code 56-22-103
Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
Premium: means money given in consideration to a county mutual insurance company on account of or in connection with an insurance policy for a specified policy period. See Tennessee Code 56-22-103
State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
(b) Upon notice or determination by the commissioner of a county mutual insurance company’s insolvency under subsection (a), the commissioner shall promptly institute appropriate action under § 56-22-118.(c)(1) After the institution of action under § 56-22-118, the commissioner, as early as is practicable, shall determine the amount of the insolvency and shall order the remaining county mutual insurance companies to pay an assessment in the amount of the insolvency, as well as any additional costs anticipated to be incurred by the commissioner for conducting the assessment.(2) The assessment paid by each county mutual insurance company shall be based on a pro rata formula whereby the share that each county mutual insurance company pays is in proportion to the total insurance in force of all the county mutual insurance companies combined for the year in which the insolvency occurs. However, the commissioner shall not assess a county mutual insurance company in excess of that county mutual insurance company’s gross premium reported for the previous year.(3) In the event that the amount assessed by the commissioner exceeds the amount of the insolvency, the commissioner shall refund the excess amount to the assessed county mutual insurance companies.(4) The commissioner shall have the authority to contract with experts, actuaries, examiners, legal counsel and other persons for the purpose of assisting in the assessment. All costs incurred by the commissioner in conducting the assessment shall be assessed to the county mutual insurance companies that are subject to the assessment.(d)(1) Any county mutual insurance company failing to pay an assessment under subsection (c) when it is made due by the commissioner shall forfeit and pay to the state, in addition to the amount of the assessment, an amount equal to five percent (5%) per month, or fractional part thereof, of the delinquency. All delinquencies shall bear interest at the rate of ten percent (10%) per annum from the date the assessment was due until paid. The penalty and interest shall apply to any part of the assessment unpaid by the due date and no penalty or interest may be waived.(2) Any county mutual insurance company that fails to pay an assessment ordered by the commissioner under this chapter within thirty (30) days of the date when the assessment is made due by the commissioner shall be summarily suspended from transacting any business in this state until the assessment is paid.(e) Assessments made by the commissioner shall be allowed as a credit against premium taxes imposed on a county mutual insurance company, up to twenty-five percent (25%) of the net premium taxes due in any one (1) calendar year, until the aggregate of all assessments paid by the county mutual insurance company have been offset by the premium tax credit.(f) The commissioner may bring action in the chancery court for Davidson County to recover any uncollected assessment against a county mutual insurance company.
