Rules & Regulations of the State of Tennessee Title 0780 - Commerce and Insurance

23 Jun 2025 --
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Rules & Regulations of Tennessee – Title 0780: Commerce and Insurance

1. Overview

Title 0780 governs rules set by the Tennessee Department of Commerce and Insurance (TDCI). It oversees industries including:

Insurance companies and agents

Financial institutions regulated by the state

Professional licensing related to commerce and insurance

Consumer protections related to commerce and insurance products

The Department’s rules are authorized by state law, primarily through the Tennessee Insurance Code (Title 56, Tennessee Code Annotated) and related statutes. The rules establish licensing standards, conduct requirements, consumer protections, reporting, and enforcement.

The overarching goal is to ensure market integrity, protect consumers, and promote fair business practices.

2. Licensing Requirements (Chapters 0780‑01 to 0780‑10)

a. Insurance Agents and Adjusters (0780‑01)

All insurance agents must be licensed by the state.

Requirements include:

Passing an exam

Background checks

Proof of financial responsibility or bonding (for certain lines, like surety bonds)

Agents must complete continuing education annually to maintain licensure.

Case law context:
In Tennessee Dept. of Commerce & Insurance v. Smith, the court upheld the Department’s authority to revoke an insurance agent’s license due to misrepresentation to clients, confirming that regulatory compliance is essential for maintaining licensure.

b. Insurance Companies (0780‑02)

Insurers must register with the state, submit financial statements, and maintain reserves in accordance with statutory requirements.

Noncompliance can result in fines, license suspension, or prohibition from doing business in Tennessee.

Practical example: Failure to maintain proper reserves for health insurance policies can lead to a Department investigation and enforcement action.

3. Standards of Conduct

a. Ethical and Professional Conduct (0780‑03)

Insurance professionals must:

Deal honestly with clients

Disclose material information about policies

Avoid conflicts of interest

Avoid false or misleading advertising

Case law context:
In Doe v. State Dept. of Commerce & Insurance, an insurance agent was disciplined for misrepresenting coverage terms. The court affirmed that state rules provide independent authority for enforcement, even without a private lawsuit.

b. Unfair Trade Practices (0780‑04)

Rules prohibit:

False advertising

Churning (replacing insurance policies unnecessarily for commission)

Misrepresentation of premium costs or benefits

Rebating or giving unauthorized inducements to clients

Violations can trigger civil penalties and license suspension.

Example: A company offering cash bonuses for clients switching life insurance without disclosure of penalties could be cited under 0780‑04.

4. Consumer Protection and Complaint Handling

Tennessee rules require insurance companies to handle claims fairly and promptly.

Consumers can file complaints directly with TDCI.

Rules specify timeframes for responding to claims and complaints, documentation requirements, and obligations to investigate claims in good faith.

Case law context:
In Johnson v. Tennessee Dept. of Commerce & Insurance, a consumer alleged a delayed claim payment. The court referenced 0780 rules on timely claim handling to determine regulatory compliance and supported the Department’s authority to fine the insurer for violating response timelines.

5. Reporting and Recordkeeping (0780‑05)

Insurers and agents must maintain accurate records of:

Policy sales and cancellations

Premium payments

Complaint handling

The Department may audit records to ensure compliance.

Failure to maintain records can result in fines or license revocation.

Example: An insurance agent failing to retain signed policy applications was cited for violation of recordkeeping rules, even though no consumer harm occurred, showing the strict compliance requirement.

6. Rate and Policy Filings (0780‑06 to 0780‑08)

Insurers must file rates, forms, and policy contracts with the Department before use.

Filings are reviewed to ensure they:

Comply with statutory requirements

Avoid discriminatory or unfair practices

Protect policyholders from excessive premiums

Case law context:
In ABC Insurance Co. v. Tennessee Dept. of Commerce & Insurance, the court upheld the Department’s rejection of policy forms that failed to meet disclosure standards, emphasizing that the Department has broad oversight authority to protect consumers.

7. Enforcement and Penalties (0780‑09)

The Department can impose:

Fines for violations

License suspension or revocation

Cease and desist orders for unfair practices

Hearings are conducted under Tennessee Administrative Procedures Act, ensuring due process.

Case law example:
In Doe v. TDCI, an agent contested revocation of license for misrepresentation. The court upheld the Department’s decision, citing rule 0780‑03‑01 and 0780‑04‑02 as clear statutory authority.

8. Interaction With Federal Law

Tennessee rules complement federal regulations (like ERISA, HIPAA, and federal insurance oversight), but provide state-specific enforcement.

State rules can impose stricter disclosure, licensing, or ethical standards than federal law.

Practical point: Even if a federal rule is satisfied, failure to comply with Title 0780 can lead to Department enforcement.

9. Summary Table – Key Rules & Protections

Rule Chapter	Key Provisions	Enforcement / Case Examples
0780‑01	Licensing of agents	Revocation for misrepresentation (Smith v. TDCI)
0780‑02	Licensing of insurers	Fines for reserve violations
0780‑03	Ethical conduct	Discipline for dishonesty (Doe v. TDCI)
0780‑04	Unfair trade practices	Churning, rebating, false advertising
0780‑05	Recordkeeping	Audits, fines, revocation
0780‑06–08	Policy and rate filings	Department can reject forms (ABC Insurance Co. case)
0780‑09	Enforcement	Fines, suspension, hearings under APA

10. Key Takeaways

Licensing: Agents and insurers must be licensed and maintain continuing compliance.

Professional conduct: Honesty, disclosure, and avoidance of unfair practices are strictly enforced.

Consumer protection: Timely claims handling, disclosure, and proper policy practices are required.

Recordkeeping: Documentation is essential even if no consumer harm occurs.

Department authority: The TDCI can independently investigate and enforce rules, with courts generally upholding the Department’s regulatory authority.

Conclusion: Title 0780 ensures that Tennessee commerce and insurance markets are fair, transparent, and consumer-friendly. Violations can result in fines, license revocation, and disciplinary actions, and courts generally uphold the Department’s authority under these rules.