Tenn. Comp. R. & Regs. 0780-01-54-.24 - ASSESSMENTS

(1)

(a) If the aggregate assets of the pool are at any time insufficient to enable the pool to discharge its legal liabilities and other obligations and to maintain the reserves required of it under this Chapter, the pool shall, within thirty (30) days of receiving notice of such deficiency, levy an assessment upon its members for the amount needed to eliminate the deficiency.

(b) Any deficiency expected for any fund year shall be reported, accompanied by supporting financial documentation, to the Commissioner within three (3) days of the pool receiving notice of the deficiency. The pool shall subsequently submit a plan to the Commissioner for the correcting of the fund year deficiency within thirty (30) days. The plan shall propose for the deficiency to be corrected in one of the following ways:

1. Surplus funds obtained by the pool from a fund year prior to the deficient year with the prior written approval of the Commissioner;

2. Surplus funds obtained by the pool from a fund year subsequent to the deficient year with the prior written approval of the commissioner. However, a pool should satisfy the deficiency under Subparagraph (b)1. of this Paragraph where practical before using the funds of a subsequent fund year;

3. Administrative funds;

4. Assessment of the membership, if ordered by the pool; or

5. Such alternative method as the Commissioner may approve or direct.

(2) If the pool fails to assess its members or to otherwise make up such deficiency within thirty (30) days of notice of such deficiency, or such other time as may be allowed by the Commissioner, the Commissioner shall issue an order to the pool and the pool's members specifying the time period in which the pool must assess its members, the procedures for implementing the assessment, and the time in which the members have to pay the assessment.

(3) Any pool or member affected by an order of assessment issued by the Commissioner may request, in writing, a hearing before the Commissioner as to the necessity or grounds for such order. Any request for such a hearing must be filed no later than thirty (30) days after the entry of the Commissioner's order.

(4) A pool that has a deficiency in a fund year may be considered to be in a hazardous financial condition for purposes of this Chapter, the Insurers Rehabilitation and Liquidation Act, T.C.A. §§ 56-9-101, et seq., or any other regulatory purpose or any of the remedies provided by this Chapter.

(5) A pool that fails to comply with an order of the Commissioner issued under this Rule shall be considered to be insolvent for purposes of this Chapter, the Insurers Rehabilitation and Liquidation Act, T.C.A. §§ 56-9-101, et seq., or any other regulatory purpose.

(6) In the event of a supervision, liquidation, or rehabilitation of a pool, the Commissioner shall levy an assessment upon such members of the pool for such an amount as the Commissioner determines to be necessary to discharge all liabilities of the pool, including the reasonable costs of the supervision, liquidation, or rehabilitation.

Notes

Tenn. Comp. R. & Regs. 0780-01-54-.24

Original rule filed August 31, 2005; effective November 14, 2005. Amendment filed December 31, 2008; effective March 16, 2009.

Authority: T.C.A. §§ 50-6-405(c) and (h) and 56-9-101, et seq.