Tennessee § 56-22-111 - Insolvency — Assessments by other county mutual insurance companies.

§ 56-22-111. Insolvency — Assessments by other county mutual insurance companies.

If the assets of a county mutual insurance company are insufficient to pay its existing liabilities, including those liabilities incurred but not reported and other obligations, as well as maintain the reserves required under this chapter, the county mutual insurance company shall notify the commissioner immediately. Upon notice or determination by the commissioner of a county mutual insurance company's insolvency under subsection (a), the commissioner shall promptly institute appropriate action under § 56-22-118. After the institution of action under § 56-22-118, the commissioner, as early as is practicable, shall determine the amount of the insolvency and shall order the remaining county mutual insurance companies to pay an assessment in the amount of the insolvency, as well as any additional costs anticipated to be incurred by the commissioner for conducting the assessment. The assessment paid by each county mutual insurance company shall be based on a pro rata formula whereby the share that each county mutual insurance company pays is in proportion to the total insurance in force of all the county mutual insurance companies combined for the year in which the insolvency occurs. However, the commissioner shall not assess a county mutual insurance company in excess of that county mutual insurance company's gross premium reported for the previous year. In the event that the amount assessed by the commissioner exceeds the amount of the insolvency, the commissioner shall refund the excess amount to the assessed county mutual insurance companies. The commissioner shall have the authority to contract with experts, actuaries, examiners, legal counsel and other persons for the purpose of assisting in the assessment. All costs incurred by the commissioner in conducting the assessment shall be assessed to the county mutual insurance companies that are subject to the assessment. Any county mutual insurance company failing to pay an assessment under subsection (c) when it is made due by the commissioner shall forfeit and pay to the state, in addition to the amount of the assessment, an amount equal to five percent (5%) per month, or fractional part thereof, of the delinquency. All delinquencies shall bear interest at the rate of ten percent (10%) per annum from the date the assessment was due until paid. The penalty and interest shall apply to any part of the assessment unpaid by the due date and no penalty or interest may be waived. Any county mutual insurance company that fails to pay an assessment ordered by the commissioner under this chapter within thirty (30) days of the date when the assessment is made due by the commissioner shall be summarily suspended from transacting any business in this state until the assessment is paid. Assessments made by the commissioner shall be allowed as a credit against premium taxes imposed on a county mutual insurance company, up to twenty-five percent (25%) of the net premium taxes due in any one (1) calendar year, until the aggregate of all assessments paid by the county mutual insurance company have been offset by the premium tax credit. The commissioner may bring action in the chancery court for Davidson County to recover any uncollected assessment against a county mutual insurance company. Acts 2006, ch. 689, §§ 3, 14. Compiler's Notes. Former chapter 22, §§ 56-22-101 — 56-22-130 (Acts 1907, ch. 463, §§ 1-19; Acts 1921, ch. 159, §§ 1, 3-19; 1925, ch. 84, §§ 1-4; Shan., §§ 3369a30-3369a58; Shan. Supp., §§ 3369a58b1-3369a58b4; Code 1932, §§ 6284, 6285, 6287-6316; Acts 1945, ch. 133, § 1; C. Supp. 1950, § 6284; 1953, ch. 214, §§ 1-3; 1961, ch. 79, § 1; 1968, ch. 486, §§ 1, 2; 1969, ch. 155, § 1; impl. am. Acts 1971, ch. 137, § 2; Acts 1971, ch. 319, § 1; 1974, ch. 519, § 1; 1975, ch. 118, § 1; 1977, ch. 301, §§ 1, 2; 1978, ch. 554, § 1; 1979, ch. 298, § 4; T.C.A. (orig. ed.), § 56-2101-56 -2134; Acts 1982, ch. 846, § 1; 1983, ch. 85, § 3, 1988, ch. 547, §§ 1-3; 1989, ch. 488, § 1; 2001, ch. 136, §§ 1, 2; 2003, ch. 215, § 7), concerning county mutual fire insurance companies, was repealed by Acts 2006, ch. 689, § 3, effective January 1, 2007.