State RegulationsTN specificDifficulty 1/5
Under Tennessee law, who is entitled to receive a commission or other compensation for soliciting or negotiating an insurance application?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
T.C.A. § 56-6-113 governs compensation and referrals in connection with insurance transactions: payment for soliciting or negotiating insurance may flow only to persons authorized under Tennessee's licensing laws, such as a licensed producer acting for an appointed insurer. Paying unlicensed persons for producing insurance business undermines the licensing scheme that the Tennessee Department of Commerce & Insurance administers.
Why the other options are wrong
- B) Being an adult employee of the applicant does not authorize receiving insurance commissions; licensure, not employment or age, is the requirement.
- C) An officer or director of a business entity must still be individually licensed to be compensated for transacting insurance in Tennessee.
- D) An insurer cannot contract around the licensing statute; designation in an agency contract does not substitute for a Tennessee license.
Memory hook
No license, no commission — Tennessee pays only licensed hands.