State RegulationsTN specificDifficulty 1/5
Under Tennessee insurance law, what makes an insurer an "unauthorized insurer" with respect to business written in this state?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
T.C.A. § 56-6-114 defines an unauthorized insurer as one that has not been licensed or otherwise authorized by the Tennessee Department of Commerce & Insurance to transact the business of insurance in this state. Authorization status turns on the Commissioner's licensure, not on how the insurer distributes products, which lines it writes, or what private rating agencies say. A producer who places business with such an insurer acts outside Tennessee's regulatory system.
Why the other options are wrong
- A) Distribution method has nothing to do with authorization; an insurer using managing general agents may still be fully licensed in Tennessee.
- B) Private financial ratings are not issued or policed by the Commissioner and do not determine an insurer's authorization status under T.C.A. § 56-6-114.
- D) The lines an insurer writes do not determine authorization; a commercial-lines insurer must still be licensed by Tennessee to be authorized.
Memory hook
Unauthorized means not admitted in Tennessee — no Tennessee license, no Tennessee business.