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Any captive insurance company, when permitted by its organizational documents, may apply to the commissioner for a license to do any and all insurance comprised in §§ 56-2-201(2) and (4)-(7), 56-2-202, 56-2-203, and 56-2-204; provided, however, that:
No pure captive insurance company shall insure any risks other than those of its parent and affiliated companies or a controlled unaffiliated business or businesses;
No association captive insurance company shall insure any risks other than those of its association, those of the member organizations of its association, and those of a member organization's affiliated companies;
No industrial insured captive insurance company shall insure any risks other than those of the industrial insureds that comprise the industrial insured group, those of their affiliated companies, and those of the controlled unaffiliated business of an industrial insured or its affiliated companies;
No risk retention group shall insure any risks other than those of its members and owners;
No captive insurance company shall provide personal motor vehicle or homeowner's insurance coverage or any component thereof;
No captive insurance company shall accept or cede reinsurance except as provided in §§ 56-13-112 and 56-13-412;
Any captive insurance company may provide excess or stop-loss accident and health insurance, unless prohibited by federal law or the laws of the state having jurisdiction over the transaction;
Except as provided in subdivision (a)(9), a captive insurance company may only issue policies of workers' compensation insurance to an insured or an affiliate who otherwise qualifies and maintains its qualifications as a self-insured under title 50, chapter 6; provided, that a captive insurance company may provide excess or stop-loss workers' compensation coverage for those insureds not qualifying as self-insureds. The commissioner has the discretion to waive the requirements of this subdivision (a)(8) and the self-insurance requirements of § 50-6-405(b) and (c), according to guidelines established through the promulgation of rules or regulations; and
Any association captive insurance company of an association that is described in § 56-13-102(3)(B) or mutual captive insurance company whose member organizations or insureds are the type member organizations described in § 56-13-102(3)(B) may issue policies of workers' compensation, directors' and officers' liability, and public officials' liability insurance and reinsurance in addition to the insurance and reinsurance otherwise permitted to be made under this section.
Except as provided in subsection (f), no captive insurance company shall transact any insurance business in this state unless:
It first obtains from the commissioner a license authorizing it to do insurance business in this state;
Its board of directors or committee of members or managers or, in the case of a reciprocal insurer, its subscribers' advisory committee holds at least one (1) meeting each year in this state;
It maintains its principal place of business in this state; and
It appoints a registered agent to accept service of process and to otherwise act on its behalf in this state; provided, that whenever such registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the commissioner shall be an agent of such captive insurance company upon whom any process, notice, or demand may be served.
In order to receive a license to issue policies of insurance as a captive insurance company in this state, an applicant business entity shall meet the requirements of this subdivision (c)(1).
The applicant business entity shall submit its organizational documents to the commissioner. If the commissioner approves the organizational documents, then the commissioner shall issue a letter to the applicant certifying the commissioner's approval. The applicant business entity shall submit the organizational documents, along with a copy of the approval letter issued by the commissioner, and the required filing fees for organizational documents prescribed in title 48 and title 61 to the secretary of state for filing. Upon filing the organizational documents, the secretary of state shall issue an acknowledgment letter to the applicant. The applicant business entity shall submit a copy of the acknowledgment letter relative to the applicant's organizational documents issued by the secretary of state to the commissioner.
The applicant business entity shall also file with the commissioner evidence of the following:
The amount and liquidity of its assets relative to the risks to be assumed;
The adequacy of the expertise, experience, and character of the person or persons who will manage it;
The overall soundness of its plan of operation;
The adequacy of the loss prevention programs of its insureds; and
Such other factors deemed relevant by the commissioner in ascertaining whether the applicant business entity will be able to meet its policy obligations.
No less than the amount required by § 56-13-105 shall be paid in by the applicant business entity and deposited with the commissioner. In the alternative, an irrevocable letter of credit in that amount and acceptable to the commissioner shall be filed with the commissioner.
Upon compliance with subdivision (c)(1)(C), the applicant business entity shall be certified as compliant with this chapter through examination by the commissioner. The department shall be reimbursed for the cost of the examination in accordance with § 56-1-413.
The applicant business entity shall submit to the commissioner for approval a description of the coverages, deductibles, coverage limits, and rates, together with such additional information as the commissioner may reasonably require.
Whenever a captive insurance company desires to amend the organizational documents submitted pursuant to subdivision (c)(1)(A), the company shall submit the amended organizational documents to the commissioner. If the commissioner approves the amendment, then the commissioner shall issue a letter to the applicant certifying the commissioner's approval. The applicant business entity shall submit the organizational documents, along with a copy of the approval letter issued by the commissioner, and the required filing fees for organizational documents prescribed in title 48 and title 61 to the secretary of state for filing. Upon filing the organizational documents, the secretary of state shall issue an acknowledgment letter to the applicant. The applicant shall submit a copy of the acknowledgment letter relative to the applicant's organizational documents issued by the secretary of state to the commissioner.
If a captive insurance company makes any subsequent material change to any item in the description submitted pursuant to subdivision (c)(1)(E), then the company shall submit an appropriate revision to the commissioner for approval and shall not offer any additional kinds of insurance until a revision of such description is approved by the commissioner. The captive insurance company shall inform the commissioner of any material change in rates within thirty (30) days of the adoption of such change.
Information submitted pursuant to this subsection (c) shall be and remain confidential, and shall not be made public by the commissioner without the written consent of the captive insurance company, except that:
Such information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted such information is a party, upon a showing by the party seeking to discover such information that:
The information sought is relevant to and necessary for the furtherance of such action or case;
The information sought is unavailable from other non-confidential sources; and
A subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the commissioner; provided, however, that this subdivision (c)(3) shall not apply to any risk retention group; and
The commissioner shall have the discretion to disclose such information to a public officer having jurisdiction over the regulation of insurance in another state; provided, that:
Such public official shall agree in writing to maintain the confidentiality of such information; and
The laws of the state in which such public official serves require such information to be and to remain confidential.
Each captive insurance company shall make payments to the commissioner in accordance with the fee schedule established in chapter 4, part 1 of this title. The commissioner is authorized to retain legal, financial, and examination services from outside the department, the reasonable costs of which may be charged against the applicant. Sections 56-1-401 — 56-1-420 shall apply to examinations, investigations, and processing conducted under the authority of this section.
If the commissioner is satisfied that the documents and statements filed by an applicant captive insurance company comply with this chapter, then the commissioner may grant a license authorizing it to do insurance business in this state. The commissioner may make the license effective as of any date on or before the date the license is signed as long as the effective date is no earlier than the date of incorporation of the applicant captive insurance company.
Any captive insurance company licensed and in good standing on September 1, 2011, which was licensed under the former “Tennessee Captive Insurance Act of 1978”, shall not be required to obtain a new license as required in this section; provided, that any such captive insurance company is subject to the remainder of this chapter.