Unfair Use of Proprietary Information

The Unfair Trade Practices Act states that insurance in a pool, residual market mechanism, joint underwriting authority, assigned risk plan or plan depopulation initiative could not be used by the servicing carrier or its representatives for the purpose of soliciting any form of insurance. The law now also prevents carriers who contract with the state for depopulation from taking client information to solicit insurance, or from passing that information on to others. Carriers and their representatives who violate the law face penalties of $1,000 per violation, per day, or $25,000 per violation, per day if they knew they were in violation of the law.

TCA §56-8-104. Unfair trade practices defined.

The following practices are defined as unfair trade practices in the business of insurance by any person:

     (16)Unfair Utilization of Proprietary Information. With respect to any policy of insurance underwritten in a pool, residual market mechanism, joint underwriting authority or assigned risk plan or through a plan depopulation initiative or other similar program, any information contained in a policy application or obtained in the servicing of such a policy of insurance cannot be used in any manner by the servicing carrier or its representatives for the purpose of soliciting any form of insurance, except when permission to use the information is granted by the commissioner on any specific risk;