Governor Bill Lee signed two insurance-related bills into law in April 2026, one mandating fidelity bonds for HOAs and another restructuring group insurance oversight committees.
Senate Bill 2326, chaptered as Public Chapter 731 on April 23, 2026, amends Tennessee Code Annotated, Title 66, Chapter 27. Starting January 1, 2027, any HOA that collects assessments for common expenses must obtain and maintain a blanket fidelity bond. The coverage must protect the association against losses from theft or dishonesty by its officers, directors, persons employed by the HOA, managing agents, or employees of those managing agents.
The law lays out a specific formula for how much coverage is needed. The bond or insurance policy must equal the HOA's reserve balances plus one-fourth of its aggregate annual assessment income, with a floor of $10,000. That means the coverage scales with the size and financial activity of the association. Boards of directors and managing agents are both permitted to obtain the bond or insurance on behalf of the HOA.
The bill was sponsored in the House by Representatives Caleb Hemmer, Clark Boyd, and G.A. Hardaway, and in the Senate by Senator Yarbro. It passed the legislature on March 26, 2026.
For insurance professionals in Tennessee, the takeaway is straightforward. There is a new, clearly defined market for fidelity bond products, and the clock is already ticking toward the January 2027 effective date. Every HOA collecting assessments will need to comply, which could translate into significant volume for agents and carriers writing surety and fidelity lines.
In the same legislative session, House Bill 2536 was chaptered as Public Chapter 767 on April 24, 2026. That bill, which passed on March 30, 2026, restructures the membership of Tennessee's three group insurance oversight committees: the state insurance committee, the local education insurance committee, and the local government insurance committee.
The state insurance committee now includes the commissioner of human resources, the state treasurer, the commissioner of commerce and insurance, the comptroller of the treasury, the commissioner of finance and administration, the chairs of the relevant Senate and House finance committees, and four state employees. Of those four, at least one must be a preferred service employee, and one must come from either the University of Tennessee or the state university and community college system.
The local education insurance committee is composed of the commissioner of education, the state treasurer, the commissioner of commerce and insurance, the comptroller of the treasury, the commissioner of finance and administration, a representative of local school boards selected by the commissioner of finance and administration, and three teachers from local education agencies participating in the group insurance plan. The five state officials on this committee may designate alternate representatives to attend, participate, and vote in their absence, provided the designation is made in writing to the chair of the local education insurance committee.
The local government insurance committee now consists of the commissioner of finance and administration, the comptroller of the treasury, the state treasurer, and one employee or official each from a participating municipality and a participating county government. Those local members must be appointed by the commissioner of finance and administration and must represent the interests of all participating municipalities and counties, respectively.
The bill was sponsored in the House by Representatives Lamberth, Cochran, Hill, Renea Jones, and Crawford, and in the Senate by Senators Jack Johnson, Paul Rose, Paul Bailey, and Janice Bowling. It takes effect on July 1, 2026.
The committee restructuring may not create new business in the way the fidelity bond mandate does, but insurers involved in Tennessee's public-sector group plans should take note. The composition of these committees shapes how coverage decisions are made for state employees, educators, and local government workers across Tennessee, and the new membership rules take effect in roughly two months.
