On May 28, 2014, Governor Haslam signed legislation revising the State’s Holding Company Act (“Act”). The Act revisions include a provision in Section 13 of the bill that requires the ultimate controlling officer of every insurer file an annual Enterprise Risk Report to the Tennessee Department of Commerce and Insurance (“Department”).

Section 13 of the bill, T.C.A. § 56-11-105(l), states as follows:

(l) ENTERPRISE RISK FILING. The ultimate controlling person of every insurer subject to registration shall also file an annual enterprise risk report. The report shall, to the best of the ultimate controlling person’s knowledge and belief, identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The report shall be filed with the lead state commissioner of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.

The Commissioner of the Department, Julie Mix McPeak, issued a memorandum dated April 10, 2014 (“Memorandum”). The purpose of the Memorandum was to inform applicable insurance companies that the Department will not penalize them if they are not able to file the report by April 30, 2014. The Commissioner explained that the Department found that in the absence of rules implementing the new legislation that specify the form to be used by the Enterprise Risk Filing, companies may not be able to make the Enterprise Risk Filing with the Department by April 30, 2014. “The Department, therefore, takes the position that just cause exists under § 56-11-111(a) for companies not to file the Enterprise Risk Filing as required by PC583. The Department will not penalize a company under § 56-11-111(a) for non-compliance with the Enterprise Risk Filing provision in calendar year 2014.” The memorandum notes that the Department encourages companies to make this filing by October 31, 2014. It concluded by stating that it applied only to the Enterprise Risk Filing under the Holding Company Act revisions and only for calendar year 2014.