State RegulationsTN specificDifficulty 3/5
Which of the following is an exercise of the Commissioner's regulatory authority under Tennessee insurance law?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
The Commissioner's regulatory authority — investigating suspected violations, conducting hearings, entering orders, and imposing penalties on licensees — is governmental in nature, exercised under T.C.A. § 56-6-107 and the hearing-and-penalty framework of T.C.A. § 56-6-112 through the Tennessee Department of Commerce & Insurance. The distractors describe commercial and underwriting activities that belong to private parties: producers negotiate their own contracts and insurers underwrite their own policies. Recognizing which acts are governmental separates the regulator from the regulated.
Why the other options are wrong
- A) Commission splits are business terms negotiated between producers and insurers, not matters the Commissioner decides for them.
- B) Underwriting decisions on specific policies belong to the insurer; the department regulates the market, it does not underwrite risks.
- C) The department licenses and supervises the market; it does not compete in it by selling insurance to consumers.
Memory hook
The Commissioner polices the game — he never plays in it.