(a) At least once every three (3) years, and whenever the commissioner determines it to be prudent, the commissioner shall visit each captive insurance company and thoroughly inspect and examine its affairs to ascertain its financial condition, its ability to fulfill its obligations and whether it has complied with this chapter. The commissioner may extend such three-year period to five (5) years; provided, that the captive insurance company is subject to a comprehensive annual audit by independent auditors approved by the commissioner during such five-year period. The comprehensive audit shall be of a scope satisfactory to the commissioner. The expenses and charges of the examination shall be paid by the captive insurance company. If the captive insurance company chooses to be audited annually by an independent auditor, it is a best practice for the captive insurance company to rotate independent auditors every five (5) years, but the captive insurance company is not required to rotate independent auditors unless the commissioner determines otherwise on a case-by-case basis.
lawyer at desk

Ask an insurance law question, get an answer ASAP!
Click here to chat with a lawyer about your rights.

Terms Used In Tennessee Code 56-13-109

  • Association: means any legal association of individuals, corporations, limited liability companies, partnerships, associations, or other entities, whereby:
    (A) The member organizations of such or the association itself, whether or not in conjunction with some or all of the member organizations:
    (i) Own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer. See Tennessee Code 56-13-102
  • Association captive insurance company: means any company that insures risks of the member organizations of an association, and that also may insure the risks of affiliated companies of the member organizations and the risks of the association itself. See Tennessee Code 56-13-102
  • Captive insurance company: means any pure captive insurance company, association captive insurance company, agency captive insurance company, industrial insured captive insurance company, risk retention group, protected cell captive insurance company, incorporated cell captive insurance company, or special purpose financial captive insurance company formed or licensed under this chapter. See Tennessee Code 56-13-102
  • Commissioner: means the commissioner of the department, or the commissioner's designee. See Tennessee Code 56-13-102
  • Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Person: means any association, aggregate of individuals, business, company, corporation, individual, joint-stock company, Lloyds-type organization, organization, partnership, receiver, reciprocal or interinsurance exchange, trustee or society. See Tennessee Code 56-16-102
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Subpoena: A command to a witness to appear and give testimony.
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(b) Any other law or regulation to the contrary notwithstanding, an association captive insurance company, all of whose insureds operate municipal or cooperative electric systems, shall not be required to have performed an audit of its annual statutory financial statements by an independent certified public accountant, unless, within ninety (90) days before the close of the fiscal year of the association captive insurance company, a majority of the association members who are insured, directly or indirectly by it, request an audit.
(c) Sections 56-1-401 – 56-1-420 shall apply to examinations conducted under this section.
(d) All examination reports, preliminary examination reports or results, working papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the commissioner or any other person in the course of an examination made under this section are confidential and are not subject to subpoena and may not be made public by the commissioner or an employee or agent of the commissioner without the written consent of the captive insurance company, except to the extent provided in this subsection (d). Nothing in this subsection (d), shall prevent the commissioner from using such information in furtherance of the commissioner’s regulatory authority under this title. The commissioner shall have the discretion to grant access to such information to public officers having jurisdiction over the regulation of insurance in any other state or country, or to law enforcement officers of this state or any other state or agency of the federal government at any time, only if the officers receiving the information agree in writing to maintain the confidentiality of the information in a manner consistent with this subsection (d).
  Previous section
Next section  
 Part 1 Contents