What are Tennessee’s Excess Insurance Requirements?

Compliance Corner

Did you know that Tennessee sets out excess insurance rules for employers covered by the Volunteer State's workers' compensation law? As Simply Research subscribers know, those rules are as follows.

The Basics

In addition to other requirements imposed under state workers' compensation law, an employer shall obtain and maintain excess insurance, both specific and aggregate, in an amount sufficient to cover its liabilities for losses not paid by the employer and as set by a qualified actuary.

Insurance Polices

Excess insurance policies shall be issued by an insurance company holding a certificate of authority issued by the commissioner to transact such business in Tennessee

Excess insurance policies must contain the following provisions:

(1) A cancellation provision requiring notice to the commissioner at least 60 days prior to any cancellation or termination.

(2) A non-renewal provision requiring notice to the commissioner at least 60 days before the end of the policy.

(3) A provision allowing the commissioner to assume the rights and responsibilities of the employer under the policy in the event of the insolvency of the employer.

(4) A provision requiring all of the following benefits to which an injured employee is entitled to be applied toward reaching the retention amount:

+ Payments made by the employer.

+ Payments due and owing by the employer.

+ Payments made on behalf of the employer by any form of security.

An Employer must notify the commissioner not later than 10 days after the date on which the employer has notice of the cancellation or termination of an excess insurance policy.

'Financially Hazardous'

The commissioner may order an employer to increase its levels of excess insurance if, in the Commissioner’s opinion, such is necessary to prevent the Employer from being considered to be financially hazardous.

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