Tennessee Code 56-9-321 – Obligation to pay earned premiums to insurer – Penalties for failure to pay – Proceedings to collect unpaid premiums – Appeal from proceedings – Limitations on claims of insurer against insured
Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
Guaranty association: means the Tennessee insurance guaranty association created by chapter 12, part 1 of this title, the life and health insurance guaranty association created by chapter 12, part 2 of this title, and any other similar entity now or hereafter created by the general assembly of this state for the payment of claims of insolvent insurers. See Tennessee Code 56-9-103
insolvent: means :(A) For an insurer issuing only assessable fire insurance policies: (i) The inability to pay any obligation within thirty (30) days after it becomes payable. See Tennessee Code 56-9-103
Insurer: means any person who has done, purports to do, is doing or is licensed to do an insurance business, and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision, or conservation by, any insurance commissioner. See Tennessee Code 56-9-103
Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
Person: means any association, aggregate of individuals, business, company, corporation, individual, joint-stock company, Lloyds-type organization, organization, partnership, receiver, reciprocal or interinsurance exchange, trustee or society. See Tennessee Code 56-16-102
Receiver: means receiver, liquidator, rehabilitator or conservator as the context requires. See Tennessee Code 56-9-103
Representative: when applied to those who represent a decedent, includes executors and administrators, unless the context implies heirs and distributees. See Tennessee Code 1-3-105
State: means any state, district or territory of the United States and the Panama Canal Zone. See Tennessee Code 56-9-103
written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(1) An agent, broker, premium finance company, or any other person, other than the insured, responsible for the payment of a premium is obligated to pay any earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer. The liquidator also has the right to recover from the person any part of an unearned premium that represents commission of the person. Credits or setoffs, or both, shall be allowed to an agent, broker, or premium finance company for any amounts advanced to the insurer by the agent, broker, or premium finance company on behalf of, but in the absence of a payment by, the insured.(2) An insured shall be obligated to pay any unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer.(b) Upon satisfactory evidence of a violation of this section, the commissioner may pursue either one (1) or both of the following courses of action:
(1) Suspend or revoke or refuse to renew the licenses of the offending party or parties; and(2) Impose a penalty of not more than one thousand dollars ($1,000) for each and every act in violation of this section by the offending party or parties.(c) Before the commissioner takes any action as set forth in subsection (b), the commissioner shall give written notice to the person, company, association or exchange accused of violating the law, stating specifically the nature of the alleged violation, and fixing a time and place, at least ten (10) days thereafter, when a hearing on the matter shall be held. After the hearing, or upon failure of the accused to appear at the hearing, the commissioner, if the commissioner finds a violation, shall impose any of the penalties under subsection (b) as the commissioner deems advisable.(d) When the commissioner takes action in any or all of the ways set out in subsection (b), the party aggrieved may appeal from the action to the chancery court of Davidson County.(e) With respect to any policy of insurance issued or delivered in this state, the claims of an insurer declared to be insolvent under the laws of any state, or of its liquidator, receiver, statutory successor or other legal representative, against the insured or against the agent through whom the policy was written are subject to the following limitations:
(1) The insured is not liable to an insolvent insurer or its legal representative for any premium that had not been earned on a pro rata basis as of the date the insurer was declared insolvent. In addition, the insured is entitled to credit against any obligation owed to the insolvent insurer or its legal representative for any unearned premium that has been paid by the insured and for which the insured has not been reimbursed by the Tennessee insurance guaranty association; and(2) The agent through whom the policy was written also is not liable to the insolvent insurer or its legal representative for any premiums that had not been earned on a pro rata basis as of the date the insurer was declared insolvent. The agent is entitled to retain the commission due on earned premiums. The insured is entitled to any unearned premium that has been collected by the agent but not remitted to the insurer.
