Amends TCA Section 55-18-105; Title 56 and Section 61-2-105.

This bill revises various provisions regarding insurance, as described below. REINSURANCE Under present law, an insurer that is authorized to act as an insurance, surety or bonding business in this state (referred to as the "ceding insurer") may reinsure its risks and policy liabilities in any other insurer (referred to as the "assuming insurer"). Also under present law, credit for reinsurance is allowed for a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only when the insurer meets certain conditions. For example, credit is allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state. This bill adds to the list of conditions that, if met, allow the credit for reinsurance. Under this bill, credit is allowed when the reinsurance is ceded to an assuming insurer that has its head office in, or is domiciled in, a reciprocal jurisdiction, and is licensed in a reciprocal jurisdiction and: (1) Has and maintains, on an ongoing basis, minimum capital and surplus, or its equivalent in an amount set by the commissioner of commerce and insurance by rule; (2) Has and maintains, on an ongoing basis, a minimum solvency or capital ratio, as applicable, set by the commissioner by rule; (3) Agrees to provide adequate assurance to the commissioner that it will comply with the following requirements: notify the commissioner if it falls below the minimum requirements described in (1) and (2) or if regulatory action is taken against it for serious noncompliance; consent to the jurisdiction of the courts of this state and appoint the commissioner of agent; agree to pay a final judgment obtained by a ceding insurer in certain situations; includes in each of its agreements to provide security equal to its liability in certain situations; and confirms it is not participating in any solvent scheme of arrangement involving this state's ceding insurer and complies with other related requirements; (4) Provides certain documentation specified by the commissioner by rule; (5) Maintains a practice of prompt payment of claims under reinsurance agreements, pursuant to criteria set by rule; and (6) Confirms to the commissioner on an annual basis compliance with (1) and (2) above. This bill defines "reciprocal jurisdiction" as a jurisdiction that is either: a non-U.S. jurisdiction subject to an in-force covered agreement to which the U.S. is a party, or, in the case of a covered agreement between the U.S. and the European Union, is a member state of the European Union; or, a U.S. jurisdiction that meets the requirements for accreditation under the national association of insurance commissioners' financial standards and accreditation program; or a qualified jurisdiction as determined by rules promulgated by the commissioner. This bill requires the commissioner to create and publish a list of reciprocal jurisdictions and a list of assuming insurers that satisfy the conditions above and to which cessions will be granted credit in accordance with this bill. The commissioner is authorized under this bill to revoke or suspend the assuming insurer's eligibility if the commissioner determines the insurer no longer meets a requirement listed above. Under this bill, if subject to a legal process of rehabilitation, liquidation, or conservation, the ceding insurer or its representative may seek and, if determined appropriate by the court in which the proceedings are pending, obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities. REPORTING REQUIREMENT Under present law, every insurer of commercial risk insurance must file with the commissioner all rates, supplementary rate information, policy forms and endorsements, not later than 15 days after the effective date, unless another reporting date is specified in a particular statute. Present law provides that each workers' compensation insurer, or group of insurers under common ownership, must individually file with the commissioner the multiplier and supporting information not later than 15 days after the effective date, and at least annually thereafter on March 1. This bill removes the March 1 deadline. The "multiplier" is the workers' compensation insurance company's determination of the profits and expenses, other than loss expense and loss adjustment expense, all other applicable rating factors, including, but not limited to, schedule rating, experience rating and small deductible credits, and deviation from advisory prospective loss costs associated with writing workers' compensation insurance. TENNESSEE HEALTH CARE LIABILITY REPORTING ACT This bill deletes the Tennessee Health Care Liability Reporting Act. The Act provides for the reporting to the commissioner of data regarding health care liability claims by persons and entities such as medical malpractice carriers, self-insureds or federally exempted healthcare facilities and providers and plaintiffs counsel. CAPTIVE INSURANCE This bill authorizes a captive insurance company, except for a risk retention group, to provide parametric insurance policies, which will be considered contracts of insurance for the purposes of present law insurance provisions. "Parametric insurance" means a type of insurance that does not indemnify the pure loss, but ex ante agrees to make a payment upon the occurrence of a triggering event. Under present law, in order to be issued a license, a captive insurance company must possess and maintain unimpaired paid-in capital and surplus, as detailed by present law. In the case of a protected cell captive insurance company, the insurance company must maintain and possess unimpaired paid in capital and surplus of not less than $250,000. This bill adds, as an alternative to this requirement, that the company possess and maintain not less than $100,000 at the core level, so long as each individual protected cell establishes and maintains unimpaired paid-in capital and surplus of not less than $25,000. Under present law, a pure captive insurance company or an industrial insurance company may make written application to the commissioner for filing a required annual report on a fiscal year-end. Present law provides that if an alternative reporting date is granted by the commissioner, then the annual report is due 180 days after the fiscal year. This bill revises this provision to provide that a captive insurance company, except for a risk retention group, may make such application; and changes the due date of the report in such situations to be 75 days after the fiscal year. SERVICE OF PROCESS Generally, present law requires an insurance company doing business in this state to appoint the commissioner or the commissioner's deputy as the company's true and lawful attorneys, upon whom all lawful process in any action or legal proceeding against it may be served. Under present law, where applicable, the commissioner is deemed to be the true and lawful attorney for service of process for a company, if the company does business in this state without appointing the commissioner as such. This bill removes the requirement that the commissioner be appointed the true and lawful attorney for the purposes of service of process. Under this bill, where applicable, the secretary of state will be deemed to be the true and lawful attorney for service of process for a company, if the company does business in this state without making such appointment. ON APRIL 5, 2021, THE HOUSE ADOPTED AMENDMENT #1 AND PASSED HOUSE BILL 767, AS AMENDED. AMENDMENT #1 adds, with regard to the list of reciprocal jurisdictions that this bill will require the commissioner of commerce and insurance to create and publish, that the commissioner: (1) Shall include other jurisdictions published through the National Association of Insurance Commissioners committee process on the list; and (2) May approve a jurisdiction that does not appear on the National Association of Insurance Commissioners' list of reciprocal jurisdictions in accordance with criteria specified by the commissioner through the promulgation of rules. This amendment reduces from $250,000 to $100,000 the minimum amount of unimpaired paid-in capital and surplus that a cell captive insurance company must maintain and possess. This amendment deletes the provision of this bill that would have authorized an alternative capital and surplus requirement whereby a cell captive insurance company could possess and maintain not less than $100,000 at the core level, so long as each individual protected cell establishes and maintains unimpaired paid-in capital and surplus of not less than $25,000. ON MAY 3, 2021, THE SENATE SUBSTITUTED HOUSE BILL 767 FOR SENATE BILL 726, ADOPTED AMENDMENT #2, AND PASSED HOUSE BILL 767, AS AMENDED. AMENDMENT #2 incorporates the changes made by House Amendment #1, corrects a grammatical error, and retains provisions of present law concerning designated agents (including the commissioner of commerce and insurance) to receive service of process.