Authority Conferred by Certificate — Withdrawal of Permission to Write Insurance — Security Deposit — Risk Limitations — Extension of Business — Surplus Requirements — Use of Names — Insolvency Guaranty Funds
Authority Conferred by Certificate — Withdrawal of Permission to Write Insurance — Security Deposit — Risk Limitations — Extension of Business — Surplus Requirements — Use of Names — Insolvency Guaranty Funds
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A certificate of authority granted pursuant to this chapter shall authorize the county mutual insurance company to insure losses or damage to property, including losses of use and occupancy, by fire, lightning, explosion, windstorm, hail, riot, civil commotion, aircraft, vehicles, collision, extended only to farm machinery, livestock, and other covered farm property, overturn of farm equipment, smoke, glass breakage, theft, vandalism, falling objects, weight of ice, snow or sleet, freezing, sudden and accidental damages caused by discharge or failure of plumbing, heating, air conditioning or automatic sprinkler systems, sudden and accidental tearing apart, cracking, burning or bulging of plumbing, heating, air conditioning or automatic sprinkler systems, sudden and accidental jolts from artificially generated electrical currents to electrical appliances, devices, fixtures and wiring, electrocution, drowning, vicious animals, sinkhole, collapse and volcanic action.
When a county mutual insurance company provides the same financial security to policyholders, and meets all other requirements applicable to insurance companies writing the same insurance transactions, it may also provide comprehensive personal liability, farmers comprehensive personal liability, premises liability for dwellings up to four (4) families, premises liability for churches and medical payment coverage associated therewith, subject to the same limitations that apply to insurance companies and upon the express written permission of the commissioner. The commissioner may, with cause, withdraw the permission to write that business permitted by this subdivision (b)(1). Any decision by the commissioner to withdraw permission may be reviewed as a contested case pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5; provided, that the county mutual insurance company requests a hearing within thirty (30) days after notice of the withdrawal of permission.
Any county mutual insurance company meeting the requirements of subdivision (b)(1) shall place on deposit with the commissioner an amount that the commissioner deems necessary for the protection of policyholders of this state, the sum of which may be no less than two hundred thousand dollars ($200,000). The commissioner may decline to accept for deposit any specific issue of securities, if the commissioner determines that the securities may not provide the necessary protection to policyholders and creditors.
A certificate of authority shall not authorize a county mutual insurance company to issue a policy of insurance covering those risks found in subsection (a) where the retained amount of risk by the county mutual insurance company on any single risk exceeds the lesser of:
Twenty thousand dollars ($20,000), plus three percent (3%) of the county mutual insurance company's surplus; or
One hundred thousand dollars ($100,000).
Any county mutual insurance company meeting the requirements of subsection (b) may not issue a policy of insurance covering those risks found in subsection (b) where the retained amount of risk by the county mutual insurance company on any single risk exceeds one hundred thousand dollars ($100,000) liability and five thousand dollars ($5,000) medical payments.
For the purpose of calculating the allowable amount of risk that may be retained by a county mutual insurance company on any single risk under subdivision (c)(1)(A), the surplus of the county mutual insurance company shall be the lesser of:
That surplus that was reported in the county mutual insurance company's last annual statement;
The surplus level last known by the county mutual insurance company; or
The surplus level the commissioner may determine from any examination or investigation of the county mutual insurance company.
A county mutual insurance company may deduct the amount of reinsurance secured on a single risk in determining the retained amount of risk by the county mutual insurance company. A county mutual insurance company may secure reinsurance pursuant to § 56-2-208(b)(2).
No county mutual insurance company shall write in excess of five million dollars ($5,000,000) in annual direct gross written premium under any certificate of authority granted by the commissioner.
A county mutual insurance company subject to this chapter may issue policies of insurance on property located in the county in which its principal place of business is located and in all those counties contiguous to the county in which its principal place of business is located. Whenever any county mutual insurance company has a surplus of at least seven hundred fifty thousand dollars ($750,000), it may be authorized, through the express written permission of the commissioner, to extend its operation to counties contiguous to the county in which its principal place of business is located in the second degree. Whenever any county mutual insurance company has a surplus of at least three million dollars ($3,000,000), it may be authorized, through the express written permission of the commissioner, to extend its operation to all other counties in this state as the commissioner may allow.
In addition to those surplus requirements found in subdivision (f)(1), a county mutual insurance company shall maintain a surplus of at least thirty-three percent (33%) of the county mutual insurance company's gross premium. Any county mutual insurance company failing to maintain the surplus requirements of this subdivision (f)(2) shall be considered to be operating in a hazardous financial condition and shall be subject to §§ 56-22-117 and 56-22-118.
This subsection (f) shall not prevent any county mutual insurance company possessing a certificate of authority from the commissioner on June 30, 2006, from continuing its operations in any county in which it is legally doing business through December 31, 2010. Any county mutual insurance company not meeting the requirements of subdivision (f)(1) by December 31, 2010, must begin the process of winding down its business in those counties in which it is not lawfully permitted to do business under this section, with winding down to be completed by December 31, 2011.
Any company operating under this chapter must use the words “county mutual insurance company” in their name or the words must be displayed any time the name of the company is used. No name shall be used that is similar to any name already in use by any existing company organized and doing business in the United States, as to be confusing or misleading.
Except as provided for in § 56-22-111, no county mutual insurance company shall be required or permitted to join, or contribute financially to, any insurance insolvency guaranty fund or similar mechanism in this state, nor shall any county mutual insurance company, or its insured or claimants against its insured, receive any benefit from any insolvency guaranty fund for claims arising under the insurance policies issued by the county mutual insurance company. The policy declaration pages of every county mutual insurance company shall prominently disclose that the policyholder is not entitled to receive any benefit from the Tennessee Insurance Guaranty Association.