Comptroller, State - As introduced, increases from $50,000 to $100,000 the bond amount that every insurance company doing a workers' compensation business in this state must furnish with a surety company; increases from $100,000 to $200,000 the certificate amount that such a company may deposit with the commissioner of labor and workforce development in lieu of the bond. - Amends TCA Title 12; Title 29; Title 50 and Title 56.

114th Regular Session (2025-2026) Introduced by Bo Watson

Tennessee requires workers’ compensation insurers to increase financial assurance to bond $100,000 or deposit $200,000 with the state to strengthen protection for policyholders, ef

Assigned to General Subcommittee of Senate Commerce & Labor Committee

#comptroller #state

Purpose and Intent

The bill increases the financial requirements for insurance companies operating in Tennessee that issue workers’ compensation policies.

Specifically, it raises the bond amount and the alternative deposit on file with the Commissioner of the Department of Commerce and Insurance (DCI) to secure payment of compensation losses to policyholders.

Key Provisions

Bond Requirement Increase

Current: Insurance companies issuing workers’ compensation policies must furnish a bond in the amount of $50,000.
Change (Section 50-6-404(a)(1)): Increase bond amount to $100,000.
Purpose: Strengthen financial assurance for payment of compensation losses.

Deposit-in-Lieu Increase

Current: Insurance companies may deposit with the Commissioner a certificate/delivery of funds totaling $100,000 in lieu of the bond.
Change (Section 50-6-404(b)): Increase the deposit amount to $200,000.
Purpose: Provide greater security for policyholders by increasing cash-on-deposits available to cover claims.

Effective Date

The act takes effect January 1, 2026.

Affected Entities

Insurance companies doing workers’ compensation business in Tennessee.

The Tennessee Department of Commerce and Insurance (DCI) as the administering agency for bonds and deposits.

Policyholders receiving workers’ compensation coverage from such companies (indirectly affected through enhanced protection).

Procedural and Timeline Aspects

Legislative history indicates passage through committees (Senate Commerce & Labor) and scheduled consideration in 2025, with the bill introduced in 2025 and becoming effective in 2026 if enacted.

Fiscal notes indicate the financial impact on the state is not significant; the primary effect is on private entities (insurance companies and surety/financial institutions that hold deposits).

Estimated Impact

Fiscal Impact: Not significant to state finances; costs to DCI to implement are expected to be manageable within existing resources.

Impact on Commerce: Potentially modest increases in operating costs for some insurance companies that must meet higher bond/deposit thresholds; could create some increased business for surety companies and financial institutions holding deposits. Net commerce impact is anticipated to be not significant, with no substantial effect on employment in Tennessee.

Summary in Plain Terms

SB 1383 (HB 476) would require Tennessee-based insurance companies offering workers’ compensation coverage to raise their financial assurance from $50,000 to $100,000 via a bond, or from $100,000 to $200,000 if using an alternative deposit with the state. The goal is to strengthen protection for policyholders against nonpayment of compensation claims. The changes would take effect January 1, 2026, and are expected to have minimal overall fiscal impact on state government, with a modest effect on the cost structures of affected insurers and related financial institutions.

Bill