TCA § 56-29-111 — Reserve requirements

The service corporation shall maintain at all times proper reserves, subject to the approval of the commissioner, for unearned subscription fees and unearned premiums and for unpaid hospital bills, including provision for unreported and undischarged hospital cases and for incurred medical expense indemnity claims and other known liabilities. In addition, a contingency or epidemic reserve shall be accumulated annually at a rate not less than two and one half percent (2.5%) of net premium income. If the service corporation provides for hospital service benefits only when the contingency or epidemic reserve equals seventy-five thousand dollars ($75,000), or fifty-five percent (55%) of the annual premium income, whichever is higher, or if the service corporation provides for hospital service and medical expense indemnity benefits when the contingency or epidemic reserve equals one hundred fifty thousand dollars ($150,000), or fifty-five percent (55%) of the annual premium income, whichever is higher, further accumulations may be discontinued for any length of time that they are not required to meet the contingency or epidemic reserve requirement. If the service corporation is unable to meet the requirements of this section, then the commissioner is empowered to require that the corporation either increase rates or reduce benefits to the extent necessary in order that the corporation may be able to meet the requirements.