Section 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(a)(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.