Tenn. Code § 56-12-104

Current through Acts 2023-2024, ch. 1069

Section 56-12-104 - Part definitions

As used in this part, unless the context otherwise requires:

(1) "Account" means any one (1) of the accounts created by § 56-12-105;

(2) "Affiliate" means a person who directly, or indirectly, through one (1) or more intermediaries, controls, is controlled by, or is under common control with an insolvent insurer on December 31 of the year next preceding the date the insurer becomes an insolvent insurer;

(3) "Association" means the Tennessee insurance guaranty association created under § 56-12-105;

(4) "Claimant" means any insured making a first-party claim or any person instituting a liability claim; provided, that no person who is an affiliate of an insolvent insurer may be a claimant;

(5) "Commissioner" means the commissioner of commerce and insurance;

(6) "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. "Control" is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing ten percent (10%) or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not exist in fact;

(7)

(A) "Covered claim" means an unpaid claim, including one for unearned premiums, submitted by a claimant, which arises out of and is within the coverage and is subject to the applicable limits of an insurance policy to which this part applies and was issued by an insurer that is insolvent, if the insurer becomes an insolvent insurer after March 31, 1999, and:

(i) The claimant or insured is a resident of this state when the insured event occurs; provided, that for an entity other than an individual, the residence of a claimant, insured or policyholder is the state in which its principal place of business is located when the insured event occurs; or

(ii) The claim is a first-party claim for damage to property with a permanent location in this state.

(B) "Covered claim" does not include:

(i) Any amount awarded as punitive or exemplary damages;

(ii) Any amount sought as a return of premium under any retrospective rating plan;

(iii) Any amount due any reinsurer, insurer, insurance pool, or underwriting association as subrogation recoveries, reinsurance recoveries, contribution, indemnification or otherwise. No such claim for any amount due any reinsurer, insurer, insurance pool, or underwriting association may be asserted against a person insured under a policy issued by an insolvent insurer other than to the extent the claim exceeds the association's obligations and limitations set forth in this part or policy limits of the insured, whichever amount is greater;

(iv) Any first party claim by an insured whose net worth exceeds ten million dollars ($10,000,000) on December 31 of the year next preceding the date the insurer becomes an insolvent insurer. An insured's net worth on this date is deemed to include the aggregate net worth of the insured and all of its subsidiaries as calculated on a consolidated basis; and

(v) Any first-party claims by an insured that is an affiliate of the insolvent insurer;

(8) "Insolvent insurer" means an insurer authorized to transact insurance in this state, either when the policy was issued or when the insured event occurred, and against whom a final order of liquidation has been entered after March 31, 1999, with a finding of insolvency by a court of competent jurisdiction in the insurer's state of domicile;

(9)

(A) "Member insurer" means any person who:

(i) Writes any kind of insurance to which this part applies under § 56-12-103 including the exchange of reciprocal or inter-insurance contracts; and

(ii) Is licensed to transact insurance in this state, except county mutual fire insurance companies and nonprofit service corporations.

(B) An insurer shall cease to be a member insurer effective on the day after the termination or expiration of its license to transact the kinds of insurance to which this chapter applies; provided, that the insurer shall remain liable as a member insurer for any and all obligations, including obligations for assessments levied before the termination or expiration of the insurer's license and assessments levied after the termination or expiration, which relate to any insurer that became an insolvent insurer before the termination or expiration of the insurer's license;

(10)

(A) "Net direct written premiums" means direct gross premiums written in this state on insurance policies to which this part applies, less return premiums and dividends paid or credited to policyholders on this direct business;

(B) "Net direct written premiums" does not include premiums on contracts between insurers or reinsurers; and

(11) "Person" means any individual, corporation, partnership, governmental entity, association, voluntary organization or any other legal entity.

T.C.A. § 56-12-104

Acts 1971, ch. 180, § 4; modified; Acts 1975, ch. 62, § 4; 1977, ch. 203, § 2; T.C.A., § 56-4004; Acts 1989, ch. 316, § 1; 1999, ch. 48, § 2.