TN Insurance Bulletin (1992-05-07): Sale of Illegal Insurance

NED McWHERTER GOVERNOR TO: FROM: RE: DATE: STATE OF TENNESSEE DEPARTMENT OF COMMERCE AND INSURANCE LEGAL SERVICES 500 JAMES ROBERTSON PARKWAY VOLUNTEER PLAZA BUILDING, FIFTH FLOOR NASHVILLE, TENNESSEE 37243 BULLETIN All Insurance Agents Elaine A. McReynolds ~~ Commissioner Sale of illegal insurance May 7, 1992 ELAINE A. McREYNOLDS COMMISSIONER The purpose of this bulletin is to inform all insurance agents of the position of the Department on the writing of illegal insurance by Tennessee agents. We have received information that many agents may be selling unauthorized health coverage to residents of Tennessee. Multiple employer welfare arrangements (MEWA's) are not authorized to operate in this state unless fully insured by an insurance company licensed in this state. Furthermore there are other entities which call themselves Taft-Hartley Plans or otherwise ERISA exempt plans which are actually thinly-disguised MEWA's and consequently subject to the same requirement that they be fully-insured. All entities offering any type of health coverage to residents of this state are presumed to be under the jurisdiction of this Department pursuant to Tennessee Code Annotated Section 56-7-1010. All entities not specifically authorized or not specifically exempted from the jurisdiction of this Department are in violation of Tennessee insurance law and are illegal insurers in this state. Any agent who markets such illegal insurance is by law personally liable for any and all claims incurred pursuant to contract and he or she is subject to Department sanctions against his or her agent license, which may include revocation and civil penalties up to $1000 for each violation. EAM:JL