27-1-1. Site of principal office and records.

1. Every insurance company organized after May 3, 1956, under the laws of this state shall have its principal office and maintain all of its records, or duplicates of those records, in this state; provided, that the director of business regulation may, after a public hearing, allow any insurance company, upon application, to locate its principal office and maintain certain original records outside of this state if it is determined that it is not inconsistent with the public interest of the people of the state of Rhode Island. In determining what is not inconsistent with the public interest of the people of the state of Rhode Island, the director shall make findings of fact, reduced to writing and filed with the secretary of state, which findings shall include, but are not limited to the following:
   1. The number of full time employees currently located within the state, and the number of full time employees anticipated to be located within the state if the petition is granted;
   2. That no detriment nor prejudice will inure to any current or anticipated future policyholders of the company by granting the application;
   3. That the granting of the application is not inimical to the ability of policyholders to file claims with and against the company, and, in furtherance of this finding, may require that the company maintain a toll free number for registering claims, and may require a claims office to be located within the state, staffed by a person authorized to issue payment on behalf of the company on approved claims; and
   4. That a review of the financial records of the company and the records relied upon by the director in making the determination have satisfied the director that the company is able to meet its obligations to current policyholders. In the event that there is any risk associated with the granting the application the director may deny the application or may, in furtherance of the application, require the posting of bonds and/or securities with the general treasurer, in an amount to be determined by the director, sufficient to protect the interest of the policyholders within the state.
2. The director is authorized to promulgate regulations as provided for by the Administrative Procedures Act, chapter 35 of title 42, not inconsistent with this section, in furtherance of the authority granted in this section.

History of Section. G.L. 1938, ch. 150, § 41; P.L. 1956, ch. 3793, § 1; G.L. 1956, § 27-1-1 ; P.L. 1966, ch. 254, § 1; P.L. 1976, ch. 280, § 1; P.L. 1999, ch. 253, § 1; P.L. 2002, ch. 292, § 5.

27-1-1.1. Telephone number — Toll free or collect.

Every third party health insurer doing business within this state shall have a toll free telephone number or provide collect charge telephone service for use by the general public when calling the insurer from any location within the state.

History of Section. P.L. 1987, ch. 229, § 1.

27-1-2. Special stockholders’ meetings — Notice — Quorum.

The board of directors or the president and secretary of any insurance company may call special meetings of the stockholders of the company whenever they may deem it expedient so to do, first giving thirty (30) days’ notice of the time, place, and purpose of the meeting in a newspaper published in the county where the company is established, or, if there is no newspaper published in the county, then in a newspaper published in an adjoining county. At all of these special meetings, not less than two-thirds (2/3) of the shares shall be represented either in person or by proxy in order to constitute a quorum for doing business. The stockholders of the company, when so assembled, may act on the business for which they were specially called together, and also on any other business as may be transacted by law at any regular meeting of the company.

History of Section. G.L. 1896, ch. 181, § 15; G.L. 1909, ch. 219, § 15; G.L. 1923, ch. 255, § 15; G.L. 1938, ch. 150, § 14; G.L. 1956, § 27-1-2 .

27-1-2.1. Corporate governance standards.

1. The importance of good corporate governance is crucial in promoting integrity in an insurance company’s business practices and in maintaining public confidence and policyholder trust. The size and ownership structure of a company often determines the corporate governance standards employed by the company. All Rhode Island domestic insurers, regardless of their size or ownership structure, shall establish the following minimum corporate governance standards:
   1. The board of directors must be comprised of a minimum of five (5) and a maximum of twenty-one (21) members.
   2. The board must meet at least two (2) times per year, however, four (4) times per year is encouraged.
   3. The board must establish a written attendance policy.
   4. The board shall have authority to meet in executive session.
   5. There must be an audit committee established by and amongst the board of directors for the purpose of overseeing the accounting and financial reporting processes of the insurer and audits of the financial statement of the insurer. If no such committee exists, the entire board of directors shall act as the audit committee.
   6. The board must review the minutes of the audit committee.
   7. The audit committee must meet at least two (2) times per year.
   8. There must be a written audit committee charter.
   9. At least one member of the audit committee must have knowledge of statutory accounting principles or generally accepted accounting principles.
   10. The internal audit function should have a direct reporting relationship to the audit committee for critical matters such as the audit plan, resources and budgets.
   11. The audit committee must approve the selection of the independent auditor that performs any audit required by the Rhode Island regulation governing annual audited financial reports.
   12. The audit committee shall require the independent accountant that performs any audit required by Rhode Island regulation governing annual audited financial reports, to timely report to the audit committee in accordance with the requirements of Statement of Auditing Standards No. 61, communications with audit committee, or its replacement, including:
       1. All significant accounting policies and material permitted practices;
       2. All material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the accountant; and
       3. Other material written communications between the accountant and the management of the insurer, such as any management letter or schedule of unadjusted differences.
   13. There must be a written code of ethics covering directors and officers that includes the insurer’s conflict of interest policy.
   14. There should be a written policy encouraging employees to come forward with observations of improprieties or other malfeasance.
   15. On or after July 1, 2008 no domestic insurer or any affiliate member of its holding company system (as defined in § 27-35-1 et seq.) may extend or maintain credit, arrange for the extension of credit, or renew an extension of credit in the form of a personal loan to or for any director or officer of a domestic insurer. The terms and purpose of any such existing extensions of credit made to any director or officer of a domestic insurer must be disclosed to the director. For purposes of this subsection, benefits that are offered to directors or officers as policyholders of a domestic insurer, or benefits that are offered to the general public in the insurer’s normal course of business, shall not be considered a violation of this subsection.
2. In addition to the standards enumerated in subsection (a) of this section, the following corporate governance standards must be employed by all Rhode Island domestic mutual insurance companies and all domestic insurance companies writing more than one hundred million dollars ($100,000,000) in premium, in any jurisdiction, on a direct and/or assumed basis, as determined at the end of the previous calendar year:
   1. The board must have an independent majority of members.
   2. The audit committee must have an independent majority of members.
   3. The audit committee must approve all related party transactions, which include transaction between the company and its affiliates and those between the company and its officers and directors. The company may establish materiality thresholds, however, they must be clearly stated in its audit committee charter as required by subdivision (a)(8), but in no event shall the materiality thresholds exceed those established in chapter 35 of title 27.
3. For purposes of this section, an independent board or audit committee member is defined as an individual: (1) who is not being compensated by the domestic insurer or any company within its holding company system (“organization”), other than any reasonable compensation and benefits for services as a director, and has not been compensated within the past twelve (12) months including full-time and part-time compensation as an employee or an independent contractor, except for reasonable compensation as a director; (2) whose own compensation is not determined by individuals who are compensated by the organization, except for reasonable compensation paid to the director; (3) who does not receive material financial benefits; (i.e. service contracts, grants or other payments) from the organization; or (4) who is not related to (as a spouse, sibling, parent, or child) or the domestic partner of an individual compensated by or who receives material financial benefits from the organization. Policyholders of a domestic insurer may be considered independent providing they meet the requirements as defined in this subsection.
4. Any Rhode Island domestic insurer that does not currently employ one or more of the standards enumerated in subsections (a) and (b) of this section, must submit a plan of corrective action to the director for his or her approval. The director, at his or her discretion, may waive any of the requirements in this section for a period not exceeding thirty-six (36) months. The director’s refusal to approve a plan of corrective action after reviewing such plan of corrective action for a period of sixty (60) days shall, constitute a final order for purposes of the Rhode Island administrative procedures act allowing the party to appeal to the superior court.
5. Nothing contained in the company’s by-laws shall conflict with the corporate governance standards set forth in this act. Any amendments to a domestic insurance company’s by-laws shall be submitted in writing to the department.
6. A domestic insurer that is a member of an insurance holding company system as defined in chapter 35 of title 27, is exempt from this section if it can demonstrate that it is, or is controlled by an entity that either is required to be compliant with, or voluntarily is compliant with, all of the following provisions of the Sarbanes-Oxley Act of 2002: (i) the preapproval requirements of § 201 (§ 10A(i) of the Securities Exchange Act of 1934); (ii) the audit committee independence requirements of § 301 (§ 10A(m)(3) of the Securities Exchange Act of 1934); and (iii) the internal control over financial reporting requirements of § 404 (Item 308 of SEC regulation S-K) — (“SOX Compliant Entity”). If the department makes a determination, as a result of its statutory examination or financial analysis, that the domestic insurer is not controlled by a SOX Compliant entity or that the insurer’s interests and affairs are not adequately considered and evaluated by the SOX Compliant Entity, the domestic insurer must take steps to comply with this act.
7. A Rhode Island domestic insurer that is a wholly-owned subsidiary of another Rhode Island domestic insurer that is compliant with the provisions of subsection (a), and if applicable the requirements of subsection (b), shall be exempt from compliance with any other requirements of this act.
8. The requirements of this section, 27-1-2.1 , shall not apply to entities regulated pursuant to chapters 19, 20, 20.1, 20.2, 20.3 and 41 of title 27 and shall not supersede or replace any specific statutory corporate governance standards otherwise applicable to domestic insurance companies.

History of Section. P.L. 2007, ch. 240, § 1; P.L. 2008, ch. 240, § 1; P.L. 2008, ch. 310, § 1; P.L. 2008, ch. 475, § 72.

27-1-3. Stock assessments to meet deficits.

Whenever the capital stock of any insurance company is diminished by reason of losses or from any other cause, the stockholders of the company, at any legal meeting called for the purpose, may, after making due allowance from the assets of the company of the amount as may be required to reinsure its outstanding risks, assess on the several stockholders a further sum as may be necessary to fill up the capital stock to its original amount in proportion to the amount of stock owned by each, and the stock of every stockholder shall be pledged and liable for the assessment. In case any stockholder refuses to pay the assessment, the stock standing in the name of the delinquent stockholder may be sold at public auction after thirty (30) days’ notice, in a manner as may be provided in the bylaws of the company.

History of Section. G.L. 1896, ch. 181, § 14; G.L. 1909, ch. 219, § 14; G.L. 1923, ch. 255, § 14; G.L. 1938, ch. 150, § 13; G.L. 1956, § 27-1-3 .

27-1-4. Power of companies to comply with tax and license laws not held invalid.

Every domestic insurance company and its officers, directors, agents, and employees shall have power and authority to comply with any statute, ordinance, or other law of any state, territory, or political subdivision of a state or territory, including the District of Columbia, imposing any license, excise, privilege, occupation, premium, or other tax, fee, or deposit requirement and to pay the tax or fee and make the deposit unless prior to payment the statute, ordinance, or other law shall have been expressly held invalid by the Supreme Court of the United States. No company, officer, director, employee, or agent shall be subject to liability by reason of any compliance or payment either previously or subsequently made.

History of Section. P.L. 1945, ch. 1622, § 1; G.L. 1956, § 27-1-4 .

27-1-5. Deposits with general treasurer to comply with laws of other states.

In all cases in which the laws of any other state of the United States now require and may subsequently require that the insurance companies incorporated by the laws of other states shall deposit, with some officer of the state in which the insurance company is incorporated, stocks or other securities in trust or for the benefit of policyholders of the companies as a condition for doing business in the other state, the general treasurer, or his or her custodian, shall receive from any insurance company incorporated under the laws of this state stocks or other securities, including mortgages insured and debentures issued by the federal housing administration and obligations of national mortgage associations, in an amount as may be required by the laws of the other state or states, on deposit and in trust for the benefit of the policyholders of the company. In the event the security required under this section is one which is maintained in the federal reserve book entry system or by the depository trust company book entry system or any similar entity, then the insurance company required to make the deposit shall designate the general treasurer as the pledgee of the security and provide written notification to the general treasurer identifying the security.

History of Section. G.L. 1896, ch. 181, § 17; P.L. 1908, ch. 1552, § 1; G.L. 1909, ch. 219, § 17; G.L. 1923, ch. 255, § 17; P.L. 1938, ch. 2584, § 1; G.L. 1938, ch. 150, § 16; G.L. 1956, § 27-1-5 ; P.L. 1990, ch. 73, § 1.

27-1-6. Holding of deposits — Income — Replacement.

The general treasurer shall hold stocks or securities deposited as security for policyholders in the company, but any company depositing stocks or securities shall be permitted to receive and to collect the interest and dividends on its securities deposited, and to withdraw the securities upon depositing with the general treasurer other securities of the same character, the market value of which at the time of the deposit shall equal or exceed the amount required to be deposited.

History of Section. G.L. 1896, ch. 181, § 18; P.L. 1908, ch. 1552, § 2; G.L. 1909, ch. 219, § 18; G.L. 1923, ch. 255, § 18; G.L. 1938, ch. 150, § 17; G.L. 1956, § 27-1-6 .

27-1-7. Certificate of deposits.

Whenever any insurance company has deposited the requisite stocks or other securities in conformity with the laws of the state in which the company is desirous of transacting business, the general treasurer shall furnish the company at its expense a certificate under seal of the deposit for each state which shall require the deposit, which certificate shall embrace the items of security and the amount of each deposited, and shall state that the general treasurer is satisfied that the stocks are of the market value represented, but no stocks or other securities deposited in this manner shall be withdrawn except as provided in § 27-1-6 .

History of Section. G.L. 1896, ch. 181, § 19; G.L. 1909, ch. 219, § 19; G.L. 1923, ch. 255, § 19; G.L. 1938, ch. 150, § 18; G.L. 1956, § 27-1-7 .

27-1-8. Return of deposit on termination of business.

Whenever any insurance company which has deposited stocks or other securities with the general treasurer desires to relinquish its business, the general treasurer shall, on application of the company, under the oath of the president or principal officer and secretary, give notice of that intention in two (2) newspapers published in this state, to be inserted at least twice a week for six (6) months. After the publication, the general treasurer, on being satisfied by an examination of the books and of the officers of the company under oath that all of its debts and liabilities are paid or extinguished upon any contract or agreement, shall deliver up to the company from whom the general treasurer received the securities, the stocks or other securities held by the general treasurer belonging to the company.

History of Section. G.L. 1896, ch. 181, § 20; G.L. 1909, ch. 219, § 20; G.L. 1923, ch. 255, § 20; G.L. 1938, ch. 150, § 19; G.L. 1956, § 27-1-8 .

27-1-9. Examinations to ascertain market value of securities deposited — Deficiencies.

Whenever it becomes necessary, on application of any company, for the general treasurer or any person appointed by the general treasurer to examine and ascertain the value and condition of any stocks or other securities deposited with the general treasurer by any insurance company, the expenses of the examination shall be borne by the company applying, and the general treasurer shall be allowed to charge for his or her time and expense or for the time and expense of the person the general treasurer shall appoint to make the examination; the examination shall be made annually by the general treasurer. In case it appears at any time that the stocks or other securities deposited in this manner amount to less than the sum required for the purposes for which the deposit has been made, the general treasurer shall notify the company, and unless the deficiency is made up within thirty (30) days, the general treasurer shall countermand all of the certificates he or she may have issued and notify the treasurer, comptroller, or other financial officer of the states to which the general treasurer has transmitted his or her certificate, and shall, as soon as possible, publish notice of his or her actions in one newspaper published in the city of Providence for three (3) weeks.

History of Section. G.L. 1896, ch. 181, § 21; G.L. 1909, ch. 219, § 21; G.L. 1923, ch. 255, § 21; G.L. 1938, ch. 150, § 20; G.L. 1956, § 27-1-9 .

27-1-10. State not liable for deposits.

Nothing in this chapter shall be construed to render this state liable for the value of any stocks or other securities deposited by any insurance company according to the provisions of this chapter.

History of Section. G.L. 1896, ch. 181, § 22; G.L. 1909, ch. 219, § 22; G.L. 1923, ch. 255, § 22; G.L. 1938, ch. 150, § 21; G.L. 1956, § 27-1-10 .

27-1-11. Visitation and examination of insurance companies.

The insurance commissioner shall, whenever requested by the governor, visit any insurance company incorporated in this state. He or she shall have free access to its vaults and all of its books and papers, and shall, if the insurance commissioner deems it expedient, thoroughly inspect and examine all of the affairs of the company and make all inquiries as may in the commissioner’s opinion be necessary to ascertain the condition of the company and its ability to fulfill all of its engagements, and whether it has complied with the provisions of law applicable to its transactions.

History of Section. G.L. 1896, ch. 181, § 2; G.L. 1909, ch. 219, § 2; G.L. 1923, ch. 255, § 2; G.L. 1938, ch. 150, § 1; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-1-11 .

27-1-12. Summons of witnesses — Obstruction or refusal to testify.

The insurance commissioner, or the commissioner’s duly authorized agent, may summon and examine under oath all directors, officers, and other agents of the insurance company and any other witnesses as the commissioner may think proper in relation to the affairs, transactions, and condition of the company. Any director, officer, agent, or other person who refuses without justifiable cause to appear and testify whenever required, or who in any way obstructs the commissioner or the commissioner’s agent in the discharge of his or her duties as prescribed in this chapter, shall be fined not exceeding five thousand dollars ($5,000) or be imprisoned not exceeding two (2) years, and if the person refusing or obstructing is a director, officer, or agent of the company, the company may also be proceeded against.

History of Section. G.L. 1896, ch. 181, § 3; G.L. 1909, ch. 219, § 3; G.L. 1923, ch. 255, § 3; G.L. 1938, ch. 150, § 2; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-1-12 .

27-1-13. Citation for forfeiture of charter for unsafe practices.

The superior court, upon complaint in writing from the insurance commissioner under oath setting forth that, in the commissioner’s opinion, any insurance company has forfeited its charter at law, or is managing its concerns in a manner that the public or those having funds in its custody are in danger of being defrauded, or the continued operation of its business would be hazardous to the public or its policyholders, or has become insolvent, shall issue a citation to the company, directed to and to be served on the president, secretary, or treasurer of the company by leaving an attested copy at the office or usual place of business of the company, commanding the president, secretary, or treasurer personally to appear before the court on a day and in a place to be mentioned in the citation, then and there under oath to show cause, if they have any, why the company should not be enjoined from further exercising the powers and franchises conferred by its charter and why the charter should not be forfeited.

History of Section. G.L. 1896, ch. 181, § 4; C.P.A. 1905, § 1220; G.L. 1909, ch. 219, § 4; G.L. 1923, ch. 255, § 4; G.L. 1938, ch. 150, § 3; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-1-13 ; P.L. 1991, ch. 348, § 5.

27-1-14. Decree of forfeiture — Receiver.

If, upon the examination of the president, secretary, or treasurer and of any other witnesses and evidence as may be introduced by the insurance commissioner and defendants, the court is of the opinion that the charter of the company is forfeited at law, or that the company is managed in a manner that the public or those having funds in its custody or who hold policies of insurance issued by it are in danger of being defrauded, or the continued operation of its business would be hazardous to the public or its policyholders, or that the company has become insolvent, the court shall issue an injunction to the president, secretary, or treasurer and other officers of the corporation, enjoining them from proceeding further in transacting the business of the company, and shall appoint a discreet and proper person to be receiver of all the evidences of debt, goods, effects, and property of every description belonging to the corporation. The court may require the receiver to give bond with surety to the satisfaction of the court for the faithful execution of his or her trusts. The person once appointed as the receiver may, subject to the discretion of the court, continue to be receiver for the duration of the receivership proceedings.

History of Section. G.L. 1896, ch. 181, § 5; G.L. 1909, ch. 219, § 5; G.L. 1923, ch. 255, § 5; G.L. 1938, ch. 150, § 4; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-1-14 ; P.L. 1980, ch. 338, § 1; P.L. 1991, ch. 348, § 5.

27-1-15. Collection and distribution of assets by receiver — Reinsurance.

The receiver may take evidence and property into his or her possession and shall collect the debts, dispose of the property, and pay out of the proceeds of the disposition, if the proceeds are sufficient, all of the debts of the corporation, first reserving to himself or herself a reasonable compensation that shall be allowed by the court for his or her services; provided, the receiver may reinsure, upon the written consent of the insurance commissioner and the attorney general, all the policy obligations of the corporation in any solvent corporation authorized to do business in this state, if the assets of the corporation of which he or she is a receiver are sufficient to effect the reinsurance. If the assets are insufficient for that purpose, the receiver, upon the written consent of the insurance commissioner and the attorney general, may reinsure a percentage of each policy obligation of the corporation outstanding to the extent that its assets may be sufficient for that purpose. No contract of reinsurance shall be entered into by the receiver except in pursuance of an order of the court in which the receiver was appointed directing the reinsurance and establishing the general form of the contract for the reinsurance.

History of Section. G.L. 1896, ch. 181, § 6; G.L. 1909, ch. 219, § 6; G.L. 1923, ch. 255, § 6; P.L. 1928, ch. 1219, § 1; G.L. 1938, ch. 150, § 5; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-1-15 ; P.L. 1998, ch. 441, § 18.

27-1-16. Powers of receiver — Removal and control by court.

The receiver shall be clothed with all of the powers and rights, in respect of the collection of debts due to the corporation, which the corporation possessed by virtue of its charter or otherwise before the injunction issued, and may be removed and another may be appointed by the court in his or her stead. The court shall have the same power and authority over the receiver, his or her acts, proceedings, and accounts, as is exercised by courts of equity in similar cases.

History of Section. G.L. 1896, ch. 181, § 7; C.P.A. 1905, § 1127; G.L. 1909, ch. 219, § 7; G.L. 1923, ch. 255, § 7; G.L. 1938, ch. 150, § 6; G.L. 1956, § 27-1-16 .

27-1-16.1. Sale by receiver of charter and licenses.

1. Notwithstanding any decree of forfeiture or finding of insolvency and order of liquidation, the receiver may, subject to court approval, sell or dispose of the charter and/or licenses of the insolvent insurer separate and apart from its outstanding liabilities or remaining assets.
2. The sale may be made after proper advertisement in a national publication on terms and conditions the court deems appropriate. The order approving the sale shall provide that the proceeds of the sale shall become part of the assets of the liquidation estate, to be distributed in the manner set forth in the pertinent provisions of law governing distribution of the estate and the order shall provide that the charter and licenses shall after this be free and clear from the claims or interests of all claimants, creditors, policyholders, and stockholders of the corporation under liquidation.
3. Nothing in this section of law shall be deemed a waiver of capitalization or surplus requirements, or any other condition of licensure imposed by this title which is necessary to obtain approval to do insurance business in this state, or which is necessary to obtain approval for the change in control of a foreign or domestic insurer.
4. This section applies retrospectively and shall be liberally construed to accomplish its purpose to provide a more expeditious and effective procedure for marshalling the assets of the estate in order to realize the maximum amount possible from the sale of those assets and ensure that the purchasers receive clear and marketable titles. It shall not be construed as a limitation upon the receiver, nor shall it exclude in any manner the receiver’s right to do other acts not specifically enumerated.

History of Section. P.L. 1992, ch. 404, § 1.

27-1-16.2. Court approved settlements.

Notwithstanding any provisions of law to the contrary, a person, corporation, or other entity who has resolved its liability to the receiver in a judicially-approved good faith settlement shall not be liable for claims for contribution or equitable indemnity regarding matters addressed in the settlement. The settlement does not discharge any other joint tortfeasors unless its terms provide for this discharge, but it reduces the potential liability of joint tortfeasors by the amount of the settlement.

History of Section. P.L. 1994, ch. 86, § 2.

27-1-17. Stay of executions and process against company.

As long as the injunction is in force against any corporation, all executions and other final process against the corporation for the collection of debts shall be stayed.

History of Section. G.L. 1896, ch. 181, § 8; G.L. 1909, ch. 219; G.L. 1923, ch. 255, § 8; G.L. 1938, ch. 150, § 7; G.L. 1956, § 27-1-17 .

27-1-18. Limited injunction without receivership.

The court may also issue a limited or temporary injunction, staying proceedings in any particulars and for any length of time as in the opinion of the court may be necessary for the safety of the public and the proper management of the affairs of the corporation, without proceeding to the appointment of a receiver.

History of Section. G.L. 1896, ch. 181, § 9; G.L. 1909, ch. 219, § 9; G.L. 1923, ch. 255, § 9; G.L. 1938, ch. 150, § 8; G.L. 1956, § 27-1-18 .

27-1-19. Declaration of forfeiture.

The court shall, upon hearing of the parties to the complaint, if it sees cause, declare the charter of the corporation forfeited.

History of Section. G.L. 1896, ch. 181, § 10; G.L. 1909, ch. 219, § 10; G.L. 1923, ch. 255, § 10; G.L. 1938, ch. 150, § 9; G.L. 1956, § 27-1-19 .

27-1-20. Temporary injunction.

The citation may also contain a temporary injunction against the corporation and all of its officers, restraining them from proceeding in any business of the corporation, except under the direction of the court, which injunction unless removed shall continue until the complaint is finally disposed of.

History of Section. G.L. 1896, ch. 181, § 11; G.L. 1909, ch. 219, § 11; G.L. 1923, ch. 255, § 11; G.L. 1938, ch. 150, § 10; G.L. 1956, § 27-1-20 .

27-1-21. Failure to deliver property or records to receiver.

If the president, secretary, treasurer, agent, or servant of any insurance company which is enjoined as provided in this chapter, or any other person upon being required, neglects or refuses to deliver to the receiver or receivers of the corporation, who may be appointed by virtue of this chapter, evidences of debt, goods, effects, books, papers, and other evidences of property of every description belonging to the corporation as may be in his or her possession or under his or her control, he or she shall be fined not exceeding ten thousand dollars ($10,000) or be imprisoned not exceeding three (3) years, or be both fined and imprisoned at the discretion of the court.

History of Section. G.L. 1896, ch. 181, § 12; G.L. 1909, ch. 219, § 12; G.L. 1923, ch. 255, § 12; G.L. 1938, ch. 150, § 11; G.L. 1956, § 27-1-21 .

27-1-22. Assessments by receiver of mutual company.

The receiver of any mutual insurance company shall, under decree of the superior court, make and assess, pursuant to the provisions of the charter of the company of which he or she shall be a receiver, any further assessments, in addition to those which may have been made by the company, as may be necessary for the payment of the debts of the corporation, with the incidental expense of assessing and collecting the assessments and the cost and expenses of closing up the business of the corporation, including any reasonable compensation of the receiver that may be allowed by the court, and may demand, receive, sue for, and collect the assessments. For the purpose of the assessment and collection, the receiver shall have all the powers and rights in these respects which the corporation possessed by virtue of its charter or otherwise; provided, these provisions shall not apply to policies issued by mutual insurance companies that do not render the holders of the policies liable to assessment.

History of Section. G.L. 1896, ch. 181, § 13; C.P.A. 1905, § 1220; G.L. 1909, ch. 219, § 13; G.L. 1923, ch. 255, § 13; G.L. 1938, ch. 150, § 12; P.L. 1953, ch. 3174, § 1; G.L. 1956, § 27-1-22 .

27-1-23. Plan for reorganization of company in receivership — Application for submission of plan to creditors and stockholders.

Whenever a receiver has been appointed for an insurance company incorporated under the laws of this state, any creditor or creditors or any stockholder or stockholders of the company may propose to the receiver a plan of compromise or arrangement between the company and its creditors or classes of creditors and stockholders or classes of stockholders. If the receiver is satisfied that the adoption of the plan would be more advantageous to the creditors than any other course of procedure available to the receiver under the laws of this state, and if the receiver is further satisfied that the plan is, in other respects, fair and equitable to all creditors or classes of creditors and stockholders or classes of stockholders, the receiver may apply to the superior court having jurisdiction over the receivership proceedings for the entry of an order determining the various classes, if more than one, of creditors and stockholders and calling a meeting of the creditors, or classes of creditors and stockholders, or classes of stockholders, or separate meetings of the creditors or classes of creditors and stockholders or classes of stockholders.

History of Section. G.L. 1938, ch. 150, § 38; P.L. 1955, ch. 3586, § 1; G.L. 1956, § 27-1-23 .

27-1-24. Meetings to approve reorganization plan — Filing of approved plan.

On the application by a receiver, the court may enter an order determining, in accordance with the provisions of § 27-1-26 , the various classes of creditors and stockholders, and may order a meeting of the creditors or classes of creditors and stockholders or classes of stockholders, or separate meetings of the creditors or classes of creditors and stockholders or classes of stockholders, the meeting or meetings to be summoned in a manner or upon any notice as the court may direct. The receiver shall preside at all meetings of creditors and/or stockholders held pursuant to the order. If the holders of two thirds (2/3) in value of the claims held by each class of creditors, acting in person or by proxy, and the holders of a majority in number of shares of each class of stockholders, acting in person or by proxy, agree to the plan or to any amendment and to any reorganization of the company as a consequence of the plan, the receiver shall, within five (5) days after the approval, file the plan as originally submitted or as amended and his or her petition for instructions with reference to the plan with the court. The court shall order the plan as filed or as amended and the petition set down for hearing before it at a time and subject to further notice as may be provided in the order.

History of Section. G.L. 1938, ch. 150; § 39, P.L. 1955, ch. 3586, § 1; G.L. 1956, § 27-1-24 .

27-1-25. Decree approving reorganization plan — Binding effect.

Upon the hearing, the court shall determine the regularity of all proceedings taken under this chapter in connection with the plan as originally submitted or as amended and the fairness and equity of the plan, and may enter an appropriate decree. Upon entry of any decree by the court approving a compromise or arrangement and any reorganization as a consequence of a compromise or arrangement, then the compromise or arrangement and any reorganization as a consequence of the compromise or arrangement shall be binding upon the company, on every other company issuing securities or acquiring property under the reorganization, and on all creditors and stockholders of the company, whether or not the creditors and stockholders are affected by the reorganization or have accepted it or have filed proofs of their claims or interests and whether or not their claims or interests have been scheduled or allowed or are allowable.

History of Section. G.L. 1938, ch. 150; § 40, by P.L. 1955, ch. 3586, § 1; G.L. 1956, § 27-1-25 ; P.L. 1998, ch. 441, § 18.

27-1-26. Principles for classification of creditors and stockholders.

For the purposes of §§ 27-1-23 — 27-1-25 , the following principles shall be applied in determining classes of creditors and stockholders; provided, that as to any situation not covered by the principles, the court may make any further determination of classes, not inconsistent with the principles, that may be fair and equitable:

1. Creditors.  No creditor whose claim is wholly secured shall be included in any class provided for under this chapter, nor have any right to vote at any meeting of creditors as long as the plan does not impair that security. Any creditor whose claim is partially secured shall, unless the creditor releases his or her right to the security, be included in the class of general creditors, but shall be entitled to vote only as to the portion of his or her claim in excess of the value of the security; and
2. Stockholders.  Common or capital stock and preferred stock shall be classified as separate classes of stock. Common or capital stock of the same par value, regardless of series or number of issues, and preferred stock of the same par value, regardless of series or number of issues, shall constitute only one class of common or capital or preferred stock, unless the charter of the company specifically otherwise provides, in which event the provisions of the charter shall be controlling.

History of Section. G.L. 1938, ch. 150, § 41; P.L. 1955, ch. 3586, § 1; G.L. 1956, § 27-1-26 .

27-1-27. Severability.

If any provision of §§ 27-1-23 — 27-1-26 , or the application of those sections to any person or circumstances is held invalid, the invalidity shall not affect other provisions or applications of §§ 27-1-23 — 27-1-26 which can be given effect without the invalid provision or application; to this end the provisions of §§ 27-1-23 — 27-1-26 are declared to be severable.

History of Section. P.L. 1955, ch. 3586, § 2; G.L. 1956, § 27-1-27 .

27-1-28. Proxies, consents, and authorizations in respect to any equity security issued by a domestic insurer.

1. The commissioner may by regulations prescribe the form, content, and manner of solicitation of any proxy, consent, or authorization in respect of any equity security issued by a domestic insurer, which regulations when and if issued and in force shall substantially conform to those prescribed by the National Association of Insurance Commissioners.
2. No domestic insurer, or any director, officer, or employee of the insurer or any other person shall solicit or permit the use of his or her name to solicit, by mail or otherwise, any person to give or to refrain from giving any proxy, consent, or authorization in respect of any equity security issued by the insurer in contravention of any regulations the commissioner may prescribe pursuant to this section.
3. From and after the date of issuance of any regulations by the commissioner, every proxy, consent, or authorization, and every form of written solicitation, announcement or advertisement to be used to obtain the proxy, consent, or authorization, which is intended to be used in respect of any meeting or procedure of equity security holders of a domestic insurer and is not exempted from the operation of the regulations by its terms shall be filed with the commissioner in the manner and at the times provided by the regulations by the person intending to use the written solicitation, announcement, or advertisement. For the purposes of this section, the term “person” means an individual, a corporation, a partnership, an association, a joint stock company, a business trust, or an unincorporated organization.
4. Failure to comply with any regulation of the commissioner made pursuant to this section shall be unlawful and any proxy, consent, or authorization obtained in violation of this section or in contravention of any regulation issued pursuant to this section shall be void. Any domestic insurer or any person legally entitled to vote or to give his or her consent or authorization with respect to the equity security, or the commissioner, may enforce compliance with the regulations of the commissioner made pursuant to this section by appropriate action at law or in equity; provided, that no action shall be brought more than fifteen (15) days after the date of the meeting at which a vote, consent, or authorization was purported to have been recorded.

History of Section. P.L. 1965, ch. 102, § 1.

27-1-29. Reports of directors, officers, and principal shareholders.

Every person who is directly or indirectly the beneficial owner of more than ten percent (10%) of any class of any equity security of a domestic stock insurance company, or who is a director or an officer of a domestic stock insurance company, shall file in the office of the commissioner within ten (10) days after he or she becomes the beneficial owner, director, or officer, a statement, in a form as the commissioner may prescribe, of the amount of all equity securities of the company of which he or she is the beneficial owner. Within ten (10) days after the close of each calendar month, if there has been a change in ownership during the month, he or she shall file in the office of the commissioner a statement, in a form as the commissioner may prescribe, indicating his or her ownership at the close of the calendar month and any changes in his or her ownership as have occurred during the calendar month.

History of Section. P.L. 1965, ch. 101, § 1; P.L. 2002, ch. 292, § 5.

27-1-30. Liability of directors, officers, and shareholders.

For the purpose of preventing the unfair use of information which may have been obtained by a beneficial owner, director, or officer by reason of his or her relationship to the company, any profit realized by him or her from any purchase and sale, or any sale and purchase, of any equity security of the company within any period of less than six (6) months, unless the security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the company, irrespective of any intention on the part of the beneficial owner, director, or officer in entering into a transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding six (6) months. An action to recover profit may be instituted in any court of competent jurisdiction by the company, or by the owner of any security of the company in the name and on behalf of the company if the company fails or refuses to bring the action within sixty (60) days after request or fails diligently to prosecute the action, but no action shall be brought more than two (2) years after the date the profit was realized. This section shall not be construed to cover any transaction where the beneficial owner was not the beneficial owner, both at the time of the purchase and sale, or the sale and purchase, of the security involved, or any transaction or transactions that the commissioner by rules and regulations may exempt as not comprehended within the purpose of this section.

History of Section. P.L. 1965, ch. 101, § 1.

27-1-31. Prohibited sales of securities.

It shall be unlawful for any beneficial owner, director, or officer, directly or indirectly, to sell any equity security of the company if the person selling the security or his or her principal: (1) does not own the security sold, or (2) if owning the security, does not deliver it against the sale within twenty (20) days thereafter, or does not within five (5) days after the sale deposit it in the mails or other usual channels of transportation. No person shall be deemed to have violated this section if he or she proves that notwithstanding the exercise of good faith he or she was unable to make the delivery or deposit within time, or that to do this would cause undue inconvenience or expense.

History of Section. P.L. 1965, ch. 101, § 1.

27-1-32. Exempted sales of dealers.

The provisions of § 27-1-30 shall not apply to any purchase and sale, or sale and purchase, and the provisions of § 27-1-31 shall not apply to any sale, of an equity security of a domestic stock insurance company not then or previously held by a beneficial owner, director, or officer in an investment account by a dealer in the ordinary course of his or her business, and incident to the establishment or maintenance by the dealer of a primary or secondary market, otherwise than on an exchange referred to in 15 U.S.C. § 78l(d) for the security. The commissioner may, by any rules and regulations that the commissioner deems necessary or appropriate in the public interest, define and prescribe terms and conditions with respect to securities held in an investment account and transaction made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market.

History of Section. P.L. 1965, ch. 101, § 1.

27-1-33. Exempted arbitrage transactions.

The provisions of §§ 27-1-30 , 27-1-31 , 27-1-32 , and 27-1-34 shall not apply to foreign or domestic arbitrage transactions unless made in contravention of the rules and regulations that the commissioner may adopt in order to carry out the purposes of §§ 27-1-29 — 27-1-36 .

History of Section. P.L. 1965, ch. 101, § 1.

27-1-34. Definitions.

When used in §§ 27-1-28 — 27-1-36 :

1. “Equity security” means any stock or similar security, or any security convertible with or without consideration into a security, or carrying any warrant or right to subscribe to or purchase a security, or any warrant or right; or any other security which the commissioner shall deem to be of similar nature and consider necessary or appropriate, by the rules and regulations the commissioner may prescribe in the public interest or for the protection of investors, to treat as an equity security;
2. “Officer” means a president, vice president, treasurer, actuary, secretary, controller, and any other person who performs for the company functions corresponding to those performed by the foregoing officers.

History of Section. P.L. 1965, ch. 101, § 1.

27-1-35. Companies not subject to securities regulations.

The provisions of §§ 27-1-29 — 27-1-31 shall not apply to equity securities of a domestic stock insurance company if: (1) the securities shall be registered, pursuant to 15 U.S.C. § 78l, or if (2) the domestic stock insurance company shall not have any class of its equity securities held of record by five hundred (500) or more persons on the last business day of the year next preceding the year in which equity securities of the company would be subject to the provisions of §§ 27-1-29 — 27-1-31 except for the provisions of this clause.

History of Section. P.L. 1965, ch. 101, § 1.

27-1-36. Regulations of “insider trading”.

The commissioner shall have the power to make any rules and regulations that may be necessary for the execution of the functions vested in the commissioner by §§ 27-1-29 — 27-1-35 , and may for that purpose classify domestic stock insurance companies, securities, and other persons or matters within the commissioner’s jurisdiction. No provision of §§ 27-1-29 — 27-1-31 imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the commissioner, notwithstanding that the rule or regulation may, after the act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.

History of Section. P.L. 1965, ch. 101, § 1.

27-1-37. Minimum capital and surplus requirement — Charters.

1. No domestic insurance corporation shall commence business and write, issue, or effect any policy of insurance unless the capital stock of the company is at least equal to one million dollars ($1,000,000) and the gross paid in and contributed surplus of the company is at least equal to two million dollars ($2,000,000), or, if a mutual company, its net assets over all liabilities amount to not less than three million dollars ($3,000,000), or, if a mono line business company, has a combined capital and surplus of two million dollars ($2,000,000), and until it has secured from the commissioner of insurance a certificate in compliance with the provisions of its charter and this section. “Commence business” as used in this section means the date of issuance of a certificate in compliance by the insurance commissioner.
2. The provisions of this section relating to capital and surplus requirements shall also apply to all charters for domestic insurance companies which have not commenced business prior to June 18, 1991. The provisions of this section relating to capital and surplus requirements shall also apply to domestic insurance companies which have undergone a change in control subsequent to August 1, 1995, except that the commissioner of insurance may require lesser capital and surplus, but in no event less than one million dollars ($1,000,000) as he or she deems appropriate for the protection of all policyholders and the general public, based upon his or her review of the transaction resulting in the change in control of the insurer. “Control” as used in this section shall be defined in accordance with § 27-35-1(c) .

History of Section. P.L. 1974, ch. 144, § 1; P.L. 1977, ch. 186, § 1: P.L. 1978, ch. 349, § 1; P.L. 1991, ch. 348, § 5; P.L. 1996, ch. 188, § 1; P.L. 2001, ch. 122, § 1.

27-1-38. Acquisition of minority interests in subsidiary insurers.

1. Any parent corporation directly or indirectly owning at least ninety-five percent (95%) of the aggregate issued and outstanding shares of all classes of voting stock of an insurance company created by special act of the general assembly may, pursuant to a plan for acquisition of minority interests in the insurance company adopted pursuant to this section, acquire all of the remaining issued and outstanding shares of voting stock of the insurance company, by exchange of stock, other securities, cash, other consideration, or any combination of these.
2. The board of directors, trustees, or other governing body of the parent corporation may adopt a plan for the acquisition of minority interests in a subsidiary insurer. Every plan shall set forth:
   1. The name of the company whose shares are to be acquired;
   2. The total number of issued and outstanding shares of each class of voting stock of the company, the number of its shares owned by the parent corporation and, if either of these is subject to change prior to the effective date of acquisition, the manner in which any change may occur;
   3. The terms and conditions of the plan, including the manner and basis of exchanging the shares to be acquired for shares or other securities of the parent corporation, for cash, other consideration, or any combination of these, the proposed effective date of acquisition, and a statement clearly describing the rights of dissenting shareholders to demand appraisal;
   4. If the parent corporation that has adopted the plan is neither a domestic corporation nor an authorized insurer, its consent to the enforcement against it in this state of the rights of shareholders pursuant to the plan, and a designation of the insurance commissioner as the agent upon whom process may be served against the parent corporation in the same manner as if the parent corporation were a foreign insurance company licensed to do business in this state; and
   5. The other provisions with respect to the plan that the board of directors, trustees or other governing body deems necessary or desirable, or which the director of the department of business regulation may prescribe.
3. Upon adoption of the plan, it shall be duly executed by the president and attested by the secretary, or the executive officers corresponding to the president and the secretary, under the corporate seal of the parent corporation which has adopted the plan. A certified copy of the plan, together with a certificate of its adoption subscribed by the officers and affirmed by them as true under the penalties of perjury and under the seal of the parent corporation, shall be submitted to the director of business regulation for his or her approval. The director of business regulation shall consider the plan and, if satisfied that it complies with this section, is fair and equitable and not inconsistent with law, the director of business regulation shall approve the plan. The director of business regulation shall approve, modify, or disapprove the plan within sixty (60) days of its submission to him or her. If the director of business regulation modifies or disapproves the plan, notification of his or her modification or disapproval, assigning the reasons for that action, shall be given in writing by him or her to the parent corporation that submitted the plan. No plan shall take effect unless the approval of the director of the department of business regulation has been obtained.
4. If the director of business regulation approves the plan as submitted or modified, the parent corporation which has adopted the plan shall deliver to each person who as of the date of delivery is a holder of record of stock to be acquired pursuant to the plan a copy of the plan, or a summary of the plan approved by the director of the department of business regulation in person or by depositing a copy or a summary of the plan in the post office, postage prepaid, addressed to the shareholder at the shareholder’s address of record. On or before the date of acquisition proposed in the plan, the parent corporation which has adopted the plan shall file with the director of the department of business regulation a certificate, executed by its president and attested by its secretary, or the executive officers corresponding to the president and the secretary, and subscribed by the officers and affirmed by them as true under the penalties of perjury and under the seal of the parent corporation, attesting to compliance with this subsection.
5. Upon compliance with this section, ownership of the shares to be acquired pursuant to the plan shall vest in the parent corporation which has adopted the plan on the date of acquisition proposed in the plan whether or not the certificates for the shares have been surrendered for exchange. The parent corporation shall be entitled to have new certificates registered in its name. Shareholders whose shares have been acquired in this manner shall after this retain only the right either to receive the consideration to be paid in exchange for their shares pursuant to the plan or to demand appraisal pursuant to subsection (g).
6. Neither the right granted by this section nor the exercise of that right by a parent corporation shall preclude the exercise by the parent corporation of any other rights it may have under any other applicable law.
7. 1. Any shareholder of an insurance company whose shares are to be acquired by a parent corporation pursuant to a plan for the acquisition of minority interests adopted under this section shall have the right to dissent from the plan.
   2. A shareholder may not dissent as to less than all of the shares registered in the shareholder’s name which are owned beneficially by the shareholder. A nominee or fiduciary may not dissent on behalf of any beneficial owner as to less than all of the shares of the owner registered in the name of the nominee or fiduciary.
   3. Any shareholder electing to exercise the right of dissent shall file with the parent corporation a written demand for payment of the fair value of the shareholder’s shares within fifteen (15) days after the plan shall have been mailed to the shareholder.
   4. Any shareholder failing to make demand within the fifteen (15) day period shall be bound by the terms of the plan. Any shareholder making a demand shall be entitled only to payment as provided in this section and shall not be entitled to vote or to exercise any other rights of a shareholder.
   5. No demand may be withdrawn unless the parent corporation consents. If, the demand shall be withdrawn upon consent, or if the plan shall be abandoned, or if no demand or petition for the determination of fair value by a court shall have been made or filed within the time provided in this section, or if a court of competent jurisdiction shall determine that the shareholder is not entitled to the relief provided by this section, then the right of the shareholder to be paid the fair value of his or her shares shall cease and his or her status as a shareholder shall be restored, without prejudice to any corporate proceedings which may have been taken during the interim.
   6. Within ten (10) days after the effective date of the acquisition under the plan, the parent corporation shall make a written offer to each shareholder who has made demand to pay for the shares at a specified price deemed by the corporation to be fair value of the shares. The notice and offer shall be accompanied by a balance sheet of the insurance company as of the latest available date and not more than twelve (12) months prior to the making of the offer, and a profit and loss statement of the insurance company for the twelve (12) month period ended on the date of the balance sheet.
   7. If within thirty (30) days after the effective date of the acquisition under the plan the fair value of the shares is agreed upon between any dissenting shareholder and the parent corporation, payment for the shares shall be made within ninety (90) days after the effective date of the acquisition under the plan upon surrender of the certificate or certificates representing the shares. Upon payment of the agreed value, the dissenting shareholder shall cease to have any interest in the shares.
   8. If within the period of thirty (30) days a dissenting shareholder and the parent corporation do not agree as provided in subdivision (7) of this subsection, then the parent corporation shall file a petition in any court of competent jurisdiction in the county in this state where the insurance company maintains its principal office praying that the fair value of the shares be found and determined; provided, that the parent corporation shall have received a written request for the filing from any dissenting shareholder given within sixty (60) days after the effective date of the acquisition under the plan, and the parent corporation shall file the petition within thirty (30) days after receipt of the request. If no request is made, the parent corporation may at its election file a petition at any time within sixty (60) days after the effective date of the acquisition date of the plan. If the parent corporation shall fail to institute the proceeding, any dissenting shareholder may do so in the name of the parent corporation.
   9. The subsidiary insurance company shall join as a party petitioner in the proceeding, and in the event that the insurance company shall fail to do so, the court upon the motion of any party shall join the insurance company as a party petitioner.
   10. All dissenting shareholders, wherever residing, shall be made parties to the proceeding as an action against their shares quasi in rem. A copy of the petition shall be served on each dissenting shareholder who is a resident of this state and shall be served by registered or certified mail on each dissenting shareholder who is a nonresident. Service on nonresidents shall also be made by publication as provided by law. The jurisdiction of the court shall be plenary and exclusive. All shareholders who are parties to the proceeding shall be entitled to judgment against the parent corporation and the subsidiary insurance company jointly and severally for the amount of the fair value of their shares, and execution shall issue upon the motion of any party respondent against either or both of the parent corporation and the subsidiary insurance company and their respective assets, and any execution so issued against the insurance company shall have priority over the claims of any other shareholder.
   11. The court may, if it elects, appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have the power and authority specified in the order of their appointment or an amendment of the order. The judgment shall be payable only upon and concurrently with the surrender to the parent corporation of the certificate or certificates representing the shares. Upon payment of the judgment, the dissenting shareholder shall cease to have any interest in the shares.
   12. The judgment shall include an allowance for interest at a rate that the court may find to be fair and equitable in all the circumstances, from the date of acquisition proposed in the plan to the date of payment.
   13. The costs and expenses of any proceeding shall be determined by the court and shall be assessed against the parent corporation, but all or any part of the costs and expenses may be apportioned and assessed as the court may deem equitable against any or all of the dissenting shareholders who are parties to the proceeding to whom the parent corporation shall have made an offer to pay for the shares, if the court shall find that the action of the shareholders in failing to accept the offer was arbitrary or vexatious or not in good faith. The expenses shall include reasonable compensation for and reasonable expenses of the counsel for any experts employed by any party; but if the fair value of the share as determined materially exceeds the amount which the parent corporation offered to pay, or if no offer was made, the court in its discretion may award to any shareholder who is a party to the proceeding the sum as the court may determine to be reasonable compensation to any expert or experts employed by the shareholder in the proceeding.
   14. Within twenty (20) days after demanding payment for his or her shares, each shareholder demanding payment shall submit the certificate or certificates representing his or her shares to the parent corporation for notation on the certificate or certificates that the demand has been made. The shareholder’s failure to do this shall, at the option of the parent corporation, terminate the shareholder’s rights under this subsection unless a court of competent jurisdiction, for good and sufficient cause shown, otherwise directs. If shares represented by a certificate on which notation has been made in this manner shall be transferred, each new certificate issued shall bear similar notation, together with the name of the original dissenting holder of the shares, and a transferee of the shares shall acquire by transfer no rights in the insurance company other than those which the original dissenting shareholder had after making demand for payment of the fair value of the shares.

History of Section. P.L. 1975, ch. 146, § 1; P.L. 2002, ch. 292, § 5.

27-1-39. Discrimination in rates prohibited.

1. No insurance company organized to do business within this state shall make any distinction or discrimination as to the premiums or rates charged for policies of casualty, fire, home owners, accident and health, or marine insurance, nor shall the company make or permit the rejection of an individual’s application for insurance coverage, and the determination of the rate class for the individual, solely on the basis of a disability unless the disability is relevant to the risk of loss, nor shall any insurance company make or require any rebate, diminution, or discount upon the sum to be paid on any policy based on any disability discrimination, nor insert in the policy any condition nor make any stipulation, where the person insured shall bind himself or herself, his or her heirs, executors, administrators, and assigns, to accept any less sum than the full value or amount of the policy in case of a claim accruing on the policy by reason of the claim of the person insured, other than those stipulations or conditions as are imposed upon all persons in similar cases, and any stipulation or condition made in this manner or inserted shall be void.
2. No insurance company organized to do business within this state shall make any distinction or discrimination as to the premiums or rates charged for automobile insurance policies, nor shall the company make or permit the rejection of an individual’s application for insurance coverage, and the determination of the rate class of the individual, solely on the basis of a disability or the modification of the automobile with specialized equipment that permits an individual with a disability to operate the automobile, unless the disability or modification of the automobile is relevant to the risk or loss, nor shall any insurance company make or require any rebate, diminution, or discount upon the sum to be paid on any policy based on any disability discrimination, nor insert in the policy any condition nor make any stipulation where the person insured shall bind himself or herself, his or her heirs, executors, administrators, and assigns, to accept any less sum than the full value or amount of the policy in case of a claim accruing on the policy by reason of the claim of the person insured, other than those stipulations or conditions as are imposed upon all persons in similar cases, and any stipulation or condition made in this manner or inserted shall be void. The department of business regulation shall enforce the provisions of this section.

History of Section. P.L. 1981, ch. 216, § 1; P.L. 1993, ch. 127, § 1; P.L. 1993, ch. 285, § 1; P.L. 1999, ch. 83, § 60; P.L. 1999, ch. 130, § 60.

27-1-40. Conversion to stock form of organization.

1. Any mutual insurance company created under the laws of this state which meets or exceeds all capital and surplus funds required by law for the transaction of business in Rhode Island may convert to and become an insurance company with a capital stock form of organization upon adoption of a plan of conversion by two-thirds (2/3) vote of the board of directors or other governing body and approval of the plan by the director of the department of business regulation and the affirmative vote of one half (1/2) of its members or policyholders present in person or by proxy at a meeting called by the board of directors or other governing body. Unless otherwise provided in its charter or bylaws or plan of conversion, each member or policyholder shall have one vote, and in the case of any policy or contract of group life or other group insurance, the employer or other person to whom or in whose name the master policy or contract has been issued shall be deemed to be the member or policyholder and shall be entitled to one vote for each policy or contract of group insurance irrespective of the number of individuals insured. The plan of conversion shall provide that the insurance company shall issue and sell the stock issued in connection with the conversion at a price which represents its pro forma market value, as determined by an independent appraisal, and shall offer its stock, initially, in a subscription offering to the members or policyholders, individuals in the insurance company’s management, and employee groups of the insurance company on an eligibility record date established by the board of directors, giving the members or policyholders, individuals in the insurance company’s management, and employee groups priority rights to purchase the shares over the general public pro rata. The plan of conversion may provide for the establishment of accounts for the benefit of members or policyholders pursuant to which the converting insurance company shall provide for the continued maintenance of its dividend practices required by existing charter, bylaws, or policy provisions relative to its then existing lines of business, but assets in the account will be assets of the converting insurance company, subject to liabilities in the same manner and priority as all other assets of the company. The plan of conversion may provide for restrictions on the amount of stock which any person or entity may purchase in the conversion, or own or control after this, which may also be incorporated into the stock charter or agreement of association of the converted entity.
2. In connection with the conversion, the insurance company may form a holding company or utilize an existing holding company to hold all the shares of the converted entity, and offer to its members or policyholders and the general public, subject to subscription rights in favor of members or policyholders as stated in subsection (a), all of the stock of the holding company in lieu of the capital stock of the converting insurance company. The converting insurance company may, at the time of the conversion, merge any insurance company subsidiary into the capital stock entity resulting from the conversion, or cause the subsidiary to become a separate subsidiary of a holding company.
3. The corporate existence of an insurance company converting to the stock form of organization shall not terminate, but the converted institution shall be deemed to be a continuation of entity of the converted insurance company.
4. The director of the department of business regulation, upon finding that the requirements of this section and applicable regulations have been met, that the terms and conditions of the plan are fair and equitable, and that the conversion has been completed with the sale of all shares offered in the conversion, shall issue a certificate of approval of the conversion to the converted entity. Upon the payment of fifty dollars ($50.00), the certificate of approval shall be filed in the office of the secretary of state, together with the certificate of the general treasurer that the converted entity has paid into the treasury for the use of the state a sum equal to one-tenth of one percent (.1%) of the capital stock, but in no event less than ten thousand dollars ($10,000). Upon the filing of the certificate with the secretary of state and payment of fifty dollars ($50.00), the secretary of state shall immediately record the certificate of approval and stock charter or agreement of association, then the stock charter or agreement of association will become effective.
5. The director of the department of business regulation may employ staff personnel and professional consultants and other persons to assist in the review of the plan of conversion and may hold public hearings as, in the director’s discretion, are desirable prior to granting approval of the plan of conversion. All reasonable costs related to the review of the plan of conversion, including the costs attributable to staff personnel and professional consultants, shall be borne by the insurance company filing a plan of conversion for approval.
6. The department of business regulation shall issue rules and regulations implementing this section, which shall be administered by the director of the department of business regulation.
7. To the extent not inconsistent with this section, each insurance company converted into a capital stock insurance company shall have all the powers, privileges, including the right to merge, convert, or otherwise restructure its corporate form upon a two-thirds (2/3) vote of its stockholders and subject to any regulatory approval as required by law, and duties and liabilities imposed upon insurance companies generally under the laws of this state, as applicable. Unless otherwise governed by the laws of this state specifically applicable to insurance companies, a capital stock entity converted pursuant to this section shall be subject to the general provisions of the Rhode Island Business Corporation Act, chapter 1.2 of title 7, with respect to its corporate governance.

History of Section. P.L. 1987, ch. 357, § 1; P.L. 2002, ch. 292, § 5; P.L. 2005, ch. 36, § 20; P.L. 2005, ch. 72, § 20.

27-1-40.1. Mutual insurance holding companies.

1. 1. Any domestic mutual insurance company, upon approval of the commissioner, may reorganize by forming or merging into a mutual insurance holding company based upon a plan of reorganization and continuing the corporate existence of the reorganizing insurance company as a stock insurance company. The commissioner, after a public hearing as provided in § 27-35-2(d) , if satisfied that the interests of the policyholders are properly protected and that the plan of reorganization is fair and equitable to the policyholders, may approve the proposed plan of reorganization or may require as a condition of approval such modifications of the proposed plan of reorganization as the commissioner finds necessary for the protection of the policyholders’ interests. The commissioner may retain consultants as provided in § 27-35-2(d) (5). A reorganization pursuant to this section is subject to §§ 27-35-1 , 27-35-1 .5, 27-35-2 and 27-35-2.5 . The commissioner shall retain jurisdiction over a mutual insurance holding company organized pursuant to this section to assure that policyholder interests are protected.
   2. A plan of reorganization must be approved by two-thirds (2/3) vote of the board of directors or other governing body, the director of the department of business regulation, and the affirmative vote of a majority of those members or policyholders, (subscribers in the case of a health service corporation) constituting a quorum, present in person or by proxy at a meeting called by the board of directors or other governing body.
   3. All of the initial shares of the capital stock of the reorganized insurance company shall be issued to the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurance company shall become membership interests in the mutual insurance holding company. Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall at all times own a majority of the voting shares of the capital stock of the reorganized insurance company.
   4. A merger of policyholders’ membership interests in a mutual insurance company into a mutual insurance holding company shall be deemed to be a merger of insurance companies pursuant to § 27-35-2 and that chapter is also applicable.
2. A foreign mutual insurance company or a foreign health service corporation, which if a domestic corporation would be organized under chapters 19, 20, 20.1, 20.2 or 20.3 of title 27, may reorganize upon the approval of the commissioner and in compliance with the requirements of any law or regulation which is applicable to the foreign mutual insurance company or foreign health service corporation by merging its policyholders’ or subscribers’ membership interests into a domestic mutual insurance holding company in the same manner as under subsection (a) above.
3. A mutual insurance holding company resulting from the reorganization of a domestic mutual insurance company organized under chapter 1 of title 27 shall be incorporated pursuant to chapter 1 of title 27. The articles of incorporation and any amendments to such articles of the mutual insurance holding company shall be subject to approval of the commissioner in the same manner as those of an insurance company.
4. A mutual insurance holding company is deemed to be an insurer subject to chapters 14.1, 14.2, 14.3 and 14.4 of title 27 and shall automatically be a party to any proceeding under chapters 14.3 or 14.4 of title 27 involving an insurance company which as a result of a reorganization pursuant to subsection (a) or (b) is a subsidiary of the mutual insurance holding company. In any proceeding under chapters 14.3 or 14.4 of title 27 involving the reorganized insurance company, the assets of the mutual insurance holding company are deemed to be assets of the estate of the reorganized insurance company for purposes of satisfying the claims of the reorganized insurance company’s policyholders. A mutual insurance holding company shall not dissolve or liquidate without the approval of the commissioner or as ordered by the superior court pursuant to chapters 14.3 or 14.4 of title 27.
5. Section 27-1-40 is not applicable to a reorganization or merger pursuant to this section.
6. A membership interest in a domestic mutual insurance holding company shall not constitute a security as defined in chapter 11 of title 7.
7. The majority of the voting shares of the capital stock of the reorganized insurance company, which is required by this section to be at all times owned by a mutual insurance holding company, shall not be conveyed, transferred, assigned, pledged, subjected to a security interest or lien, encumbered, or otherwise hypothecated or alienated by the mutual insurance holding company or intermediate holding company. Any conveyance, transfer, assignment, pledge, security interest, lien, encumbrance, or hypothecation or alienation of, in or on the majority of the voting shares of the reorganized insurance company which is required by this section to be at all times owned by a mutual insurance holding company, is in violation of this section and shall be void in inverse chronological order of the date of such conveyance, transfer, assignment, pledge, security interest, lien, encumbrance, or hypothecation or alienation, as to the shares necessary to constitute a majority of such voting shares. The majority of the voting shares of the capital stock of the reorganized insurance company which is required by this section to be at all times owned by a mutual insurance holding company shall not be subject to execution and levy. The shares of the capital stock of the surviving or new company resulting from a merger or consolidation of two (2) or more reorganized insurance companies or two (2) or more intermediate holding companies which were subsidiaries of the same mutual insurance holding company are subject to the same requirements, restrictions, and limitations as provided in this section to which the shares of the merging or consolidating reorganized insurance companies or intermediate holding companies were subject by this section prior to the merger or consolidation.

   As used in this section, “majority of the voting shares of the capital stock of the reorganized insurance company” means shares of the capital stock of the reorganized insurance company which carry the right to cast a majority of the votes entitled to be cast by all of the outstanding shares of the capital stock of the reorganized insurance company for the election of directors and on all other matters submitted to a vote of the shareholders of the reorganized insurance company. The ownership of a majority of the voting shares of the capital stock of the reorganized insurance company which are required by this section to be at all times owned by a parent mutual insurance holding company includes indirect ownership through one or more intermediate holding companies in a corporate structure approved by the commissioner. However, indirect ownership through one or more intermediate holding companies shall not result in the mutual insurance holding company owning less than the equivalent of a majority of the voting shares of the capital stock of the reorganized insurance company. The commissioner shall have jurisdiction over an intermediate holding company as if it were a mutual insurance holding company. As used in this section, “intermediate holding company” means a holding company which is a subsidiary of a mutual insurance holding company, and which either directly or through a subsidiary intermediate holding company has one or more subsidiary reorganized insurance companies of which a majority of the voting shares of the capital stock would otherwise have been required by this section to be at all times owned by the mutual insurance holding company.

History of Section. P.L. 1996, ch. 231, § 1; P.L. 2012, ch. 66, § 2; P.L. 2012, ch. 84, § 2; P.L. 2012, ch. 308, § 1; P.L. 2012, ch. 335, § 1.

27-1-41. Repealed.

27-1-42. Maximum amount of single risk.

No company organized under the laws of this state, other than a life insurance company, shall incur in any one risk a greater hazard than one-tenth (1/10) part of its capital and surplus if a stock company or of its net assets if a mutual company. Any risk incurred on or before June 18, 1991, which is not in compliance with the provisions in this section shall not be subject to the established limitations.

History of Section. P.L. 1991, ch. 348, § 2.

27-1-43. Applicability.

The general provisions of law relating to the duties, obligations, prohibitions, or penalties which appertain to insurance companies incorporated under the authority of this state, and defining the powers and duties of the insurance commissioner in reference to those companies, shall be and are applicable to all corporations, companies and associations incorporated under the authority of this state, and to all partnerships and individuals, doing, as principals or otherwise, in this state, any insurance business of any name, kind or description, including the transaction of reinsurance.

History of Section. P.L. 1996, ch. 188, § 2.

27-1-44. Prohibition on the pledging of stock.

No domestic insurance company, and no holding company as defined in § 27-35-1(f) , shall pledge its own stock, or any stock of any domestic insurance company subsidiary, without the prior written consent of the director of business regulation. The provisions of this section shall not apply to any of these pledges in effect prior to August 5, 1996.

History of Section. P.L. 1996, ch. 188, § 2; P.L. 1999, ch. 141, § 1.

27-1-45. Determination of premium tax rate.

The department of business regulation may participate in proceedings under § 44-17-1(d) to implement guidelines, directives, criteria, and may promulgate additional resulting rules and regulations pursuant to chapter 35 of title 42 as are necessary to implement § 44-17-1(d) .

History of Section. P.L. 2016, ch. 538, § 2.

27-1.1-0.5. Purpose.

The purpose of this chapter is to protect the interest of insureds, claimants, ceding insurers, assuming insurers and the public generally. The legislature hereby declares its intent is to ensure adequate regulation of insurers and reinsurers and adequate protection for those to whom they owe obligations. In furtherance of that state interest, the legislature hereby provides a mandate that upon the insolvency of a non-U.S. insurer or reinsurer that provides security to fund its U.S. obligations in accordance with this chapter, the assets representing the security shall be maintained in the United States and claims shall be filed with and valued by the state insurance commissioner with regulatory oversight, and the assets shall be distributed, in accordance with the insurance laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic U.S. insurance companies. The legislature declares that the matters contained in this chapter are fundamental to the business of insurance in accordance with 15 U.S.C. §§ 1011-1012.

History of Section. P.L. 2013, ch. 84, § 3; P.L. 2013, ch. 91, § 3.

27-1.1-1. Credit allowed a domestic ceding insurer.

1. Credit for reinsurance shall be allowed a domestic ceding insurer as either an asset or a reduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of subsections (b), (c), (d), (e), (f), (g), or (h) of this section; provided, further, that the commissioner may adopt by regulation pursuant to § 27-1.1-4 specific additional requirements relating to or setting forth:
   1. The valuation of assets or reserve credits;
   2. The amount and forms of security supporting reinsurance arrangements described in § 27-1.1-4 ; and
   3. The circumstances pursuant to which credit will be reduced or eliminated. Credit shall be allowed under subsections (b), (c), or (d) of this section only as respects cessions of those kinds or classes of business which the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile or, in the case of a United States branch of an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed under subsections (d) or (e) of this section only if the applicable requirements of subsection (i) of this section have been satisfied.
2. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is licensed to transact insurance or reinsurance in this state.
3. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited by the commissioner as a reinsurer in this state. In order to be eligible for an accreditation a reinsurer must:
   1. File with the commissioner evidence of its submission to this state’s jurisdiction;
   2. Submit to this state’s authority to examine its books and records;
   3. Be licensed to transact insurance or reinsurance in at least one state, or in the case of a United States branch of an alien assuming insurer, be entered through and licensed to transact insurance or reinsurance in at least one state;
   4. Annually file with the commissioner a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and
   5. Demonstrate to the satisfaction of the commissioner that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers. An assuming insurer is deemed to meet this requirement as of the time of its application if it maintains a surplus as regards policyholders in an amount not less than twenty million dollars ($20,000,000) and its accreditation has not been denied by the commissioner within ninety (90) days after submission of its application.
4. 1. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a United States branch of an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this statute and the assuming insurer or United States branch of an alien assuming insurer:
      1. Maintains a surplus regarding policyholders in an amount not less than twenty million dollars ($20,000,000); and
      2. Submits to the authority of this state to examine its books and records.
   2. Provided, that the requirement of subsection (d)(1)(i) of this section does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.
5. 1. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in § 27-1.1-3(b) , for the payment of the valid claims of its United States ceding insurers, their assigns, and successors in interest. To enable the commissioner to determine the sufficiency of the trust fund, the assuming insurer shall report annually to the commissioner information substantially the same as that required to be reported on the National Association of Insurance Commissioners (NAIC) annual statement form by licensed insurers. The assuming insurer shall submit to examination of its books and records by the commissioner and bear the expense of examination.
   2. 1. Credit for reinsurance shall not be granted under this subsection unless the form of the trust and any amendments to the trust have been approved by:
         1. The commissioner of the state where the trust is domiciled; or
         2. The commissioner of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.
      2. The form of the trust and any trust amendments shall also be filed with the commissioner of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in its trustees for the benefit of the assuming insurer’s United States ceding insurers, their assigns, and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the commissioner.
      3. The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. No later than February 28 of each year the trustee of the trust shall report to the commissioner in writing the balance of the trust and listing the trust’s investments at the preceding year end and shall certify the date of termination of the trust, if so planned, or certify that the trust will not expire prior to the following December 31.
   3. The following requirements apply to the following categories of assuming insurer:
      1. The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer’s liabilities attributable to reinsurance ceded by United States ceding insurers, and, in addition, the assuming insurer shall maintain a trusteed surplus of not less than twenty million dollars ($20,000,000), except as provided in subsection (e)(3)(ii);
      2. At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least three (3) full years, the commissioner with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of United States ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including, when applicable, the lines of business involved; the stability of the incurred loss estimates; and the effect of the surplus requirements on the assuming insurer’s liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than thirty percent (30%) of the assuming insurer’s liabilities attributable to reinsurance ceded by United States ceding insurers covered by the trust;
      3. 1. In the case of a group including incorporated and individual unincorporated underwriters:
            1. For reinsurance ceded under reinsurance agreements with an inception, amendment or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriters’ several liabilities attributable to business ceded by United States domiciled ceding insurers to any underwriter of the group;
            2. For reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this chapter, the trust shall consist of a trusteed account in an amount not less than the respective underwriters’ several insurance and reinsurance liabilities attributable to business written in the United States;
            3. In addition to these trusts, the group shall maintain in trust a trusteed surplus of which one hundred million dollars ($100,000,000) shall be held jointly for the benefit of the United States domiciled ceding insurers of any member of the group for all years of account;
         2. The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of regulation and solvency control by the group’s domiciliary regulator as are the unincorporated members;
         3. Within ninety (90) days after its financial statements are due to be filed with the group’s domiciliary regulator, the group shall provide to the commissioner an annual certification by the group’s domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the group; and
      4. In the case of a group of incorporated underwriters under common administration the group shall:
         1. Have continuously transacted an insurance business outside the United States for at least three (3) years immediately prior to making application for accreditation;
         2. Maintain an aggregate policyholders surplus of ten billion dollars ($10,000,000,000);
         3. Maintain a trust fund in an amount not less than the group’s several liabilities attributable to business ceded by United States domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group;
         4. In addition, maintain a joint trusteed surplus of which one hundred million dollars ($100,000,000) shall be held jointly for the benefit of United States domiciled ceding insurers of any member of the group as additional security for these liabilities; and
         5. Within ninety (90) days after its financial statements are due to be filed with the group’s domiciliary regulator, make available to the commissioner an annual certification of each underwriter member’s solvency by the member’s domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant.
6. Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the commissioner as a reinsurer in this state and secures its obligations in accordance with the requirements of this subsection.
   1. In order to be eligible for certification, the assuming insurer shall meet the following requirements:
      1. The assuming insurer must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the commissioner pursuant to paragraph (f)(3) of this subsection;
      2. The assuming insurer must maintain minimum capital and surplus, or its equivalent, in an amount to be determined by the commissioner pursuant to regulation;
      3. The assuming insurer must maintain financial strength ratings from two or more rating agencies deemed acceptable by the commissioner pursuant to regulation;
      4. The assuming insurer must agree to submit to the jurisdiction of this state, appoint the commissioner as its agent for service of process in this state, and agree to provide security for one hundred percent (100%) of the assuming insurer’s liabilities attributable to reinsurance ceded by United States ceding insurers if it resists enforcement of a final United States judgment;
      5. The assuming insurer must agree to meet applicable information filing requirements as determined by the commissioner, both with respect to an initial application for certification and on an ongoing basis; and
      6. The assuming insurer must satisfy any other requirements for certification deemed relevant by the commissioner.
   2. An association including incorporated and individual unincorporated underwriters may be a certified reinsurer. In order to be eligible for certification, in addition to satisfying requirements of subsection (f)(1) above:

      (i) The association shall satisfy its minimum capital and surplus requirements through the capital and surplus equivalents (net of liabilities) of the association and its members, which shall include a joint central fund that may be applied to any unsatisfied obligation of the association or any of its members, in an amount determined by the commissioner to provide adequate protection;

      (ii) The incorporated members of the association shall not be engaged in any business other than underwriting as a member of the association and shall be subject to the same level of regulation and solvency control by the association’s domiciliary regulator as are the unincorporated members; and

      (iii) Within ninety (90) days after its financial statements are due to be filed with the association’s domiciliary regulator, the association shall provide to the commissioner an annual certification by the association’s domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the association.

      (3) The commissioner shall create and publish a list of qualified jurisdictions, under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the commissioner as a certified reinsurer.

      (i) In order to determine whether the domiciliary jurisdiction of a non-United States assuming insurer is eligible to be recognized as a qualified jurisdiction, the commissioner shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and the extent of reciprocal recognition afforded by the non-United States jurisdiction to reinsurers licensed and domiciled in the United States. A qualified jurisdiction must agree to share information and cooperate with the commissioner with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction may not be recognized as a qualified jurisdiction if the commissioner has determined that the jurisdiction does not adequately and promptly enforce final United States judgments and arbitration awards. Additional factors may be considered in the discretion of the commissioner;

      (ii) A list of qualified jurisdictions shall be published through the NAIC committee process. The commissioner shall consider this list in determining qualified jurisdictions. If the commissioner approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the commissioner shall provide thoroughly documented justification in accordance with criteria to be developed under regulations;

      (iii) United States jurisdictions that meet the requirement for accreditation under the NAIC financial standards and accreditation program shall be recognized as qualified jurisdictions; and

      (iv) If a certified reinsurer’s domiciliary jurisdiction ceases to be a qualified jurisdiction, the commissioner has the discretion to suspend the reinsurer’s certification indefinitely, in lieu of revocation.

      (4) The commissioner shall assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies deemed acceptable to the commissioner pursuant to regulation. The commissioner shall publish a list of all certified reinsurers and their ratings.

      (5) A certified reinsurer shall secure obligations assumed from United States ceding insurers under this subsection at a level consistent with its rating, as specified in regulations promulgated by the commissioner.

      (i) In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the commissioner and consistent with the provisions of section (3), or in a multi-beneficiary trust in accordance with subsection (e) of this section, except as otherwise provided in this subsection;

      (ii) If a certified reinsurer maintains a trust to fully secure its obligations subject to subsection (e) of this section, and chooses to secure its obligations incurred as a certified reinsurer in the form of a multi-beneficiary trust, the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection or comparable laws of other United States jurisdictions and for its obligations subject to subsection (e) of this section. It shall be a condition to the grant of certification under subsection (f) of this section that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the commissioner with principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other such trust account;

      (iii) The minimum trusteed surplus requirements provided in subsection (e) are not applicable with respect to a multi-beneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subsection, except that such trust shall maintain a minimum trusteed surplus of ten million dollars ($10,000,000);

      (iv) With respect to obligations incurred by a certified reinsurer under this subsection, if the security is insufficient, the commissioner shall reduce the allowable credit by an amount proportionate to the deficiency, and has the discretion to impose further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer’s obligations will not be paid in full when due; and

      (v) For purposes of this subsection, a certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure one hundred percent (100%) of its obligations.

      1. As used in this subsection, the term “terminated” refers to revocation, suspension, voluntary surrender and inactive status; and
      2. If the commissioner continues to assign a higher rating as permitted by other provisions of this section, this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.

         (6) If an applicant for certification has been certified as a reinsurer in an NAIC-accredited jurisdiction, the commissioner has the discretion to defer to that jurisdiction’s certification, and has the discretion to defer to the rating assigned by that jurisdiction, and such assuming insurer shall be considered to be a certified reinsurer in this state.

         (7) A certified reinsurer that ceases to assume new business in this state may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection, and the commissioner shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.

7. 1. Credit shall be allowed when the reinsurance is ceded to an assuming insurer, meeting each of the conditions set forth below.
      1. The assuming insurer must have its head office or be domiciled in, as applicable, and be licensed in a reciprocal jurisdiction. A “reciprocal jurisdiction” is a jurisdiction that meets one of the following:
         1. A non-United States jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and European Union, is a member state of the European Union. For purposes of this subsection, a “covered agreement” is an agreement entered into, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. §§ 313 and 314, that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements, as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance;
         2. A United States jurisdiction that meets the requirements for accreditation under the NAIC financial standards and accreditation program; or
         3. A qualified jurisdiction, as determined by the commissioner pursuant to subsection (f)(3) of this section, that is not otherwise described in subsection (g)(1)(i)(A) or (g)(1)(i)(B) of this section and that meets certain additional requirements, consistent with the terms and conditions of in-force covered agreements, as specified by the commissioner in regulation.
      2. The assuming insurer must have and maintain, on an ongoing basis, minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, in an amount to be set forth in regulation. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it must have and maintain, on an ongoing basis, minimum capital and surplus equivalents (net of liabilities), calculated according to the methodology applicable in its domiciliary jurisdiction, and a central fund containing a balance in amounts to be set forth in regulation.
      3. The assuming insurer must have and maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, that will be set forth in regulation. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it must have and maintain, on an ongoing basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled, as applicable, and is also licensed.
      4. The assuming insurer must agree and provide adequate assurance to the commissioner, in a form specified by the commissioner, pursuant to regulation, as follows:
         1. The assuming insurer must provide prompt written notice and explanation to the commissioner, if it falls below the minimum requirements set forth in subsections (g)(1)(ii) or (g)(1)(iii) of this section, or if any regulatory action is taken against it, for serious noncompliance with applicable law;
         2. The assuming insurer must consent in writing to the jurisdiction of the courts of this state and to the appointment of the commissioner as agent for service of process. The commissioner may require that consent for service of process be provided to the commissioner and included in each reinsurance agreement. Nothing in this provision shall limit, or in any way alter, the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent the agreements are unenforceable under applicable insolvency or delinquency laws;
         3. The assuming insurer must consent in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer or its legal successor, that have been declared enforceable in the jurisdiction where the judgment was obtained;
         4. Each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to one hundred percent (100%) of the assuming insurer’s liabilities, attributable to reinsurance ceded pursuant to that agreement, if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its resolution estate; and
         5. The assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement that involves this state’s ceding insurers, and agree to notify the ceding insurer and the commissioner and to provide security in an amount equal to one hundred percent (100%) of the assuming insurer’s liabilities to the ceding insurer, should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provisions of subsection (f) of this section and § 27-1.1-2 and as specified by the commissioner in regulation.
      5. The assuming insurer or its legal successor must provide, if requested by the commissioner, on behalf of itself and any legal predecessors, certain documentation to the commissioner, as specified by the commissioner in regulation.
      6. The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements, pursuant to criteria set forth in regulation.
      7. The assuming insurer’s supervisory authority must confirm to the commissioner on an annual basis, as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complies with the requirements set forth in subsections (g)(1)(ii) and (g)(1)(iii) of this section.
      8. Nothing in this provision precludes an assuming insurer from providing the commissioner with information on a voluntary basis.
   2. The commissioner shall timely create and publish a list of reciprocal jurisdictions.
      1. A list of reciprocal jurisdictions is published through the NAIC committee process. The commissioner’s list shall include any reciprocal jurisdiction as defined under subsections (g)(1)(i)(A) and (g)(1)(i)(B) of this section, and shall consider any other reciprocal jurisdiction included on the NAIC list. The commissioner may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions, in accordance with criteria to be developed under regulations issued by the commissioner.
      2. The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions, upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction, in accordance with a process set forth in regulations issued by the commissioner, except that the commissioner shall not remove from the list a reciprocal jurisdiction as defined under subsections (g)(1)(i)(A) and (g)(1)(i)(B) of this section. Upon removal of a reciprocal jurisdiction from this list, credit for reinsurance ceded to an assuming insurer which has its home office or is domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to this chapter.
   3. The commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this subsection and to which cessions shall be granted credit in accordance with this subsection. The commissioner may add an assuming insurer to such list, if an NAIC accredited jurisdiction has added such assuming insurer to a list of such assuming insurers or if, upon initial eligibility, the assuming insurer submits the information to the commissioner, as required under subsection (g)(1)(iv) of this section and complies with any additional requirements that the commissioner may impose by regulation, except to the extent that they conflict with an applicable covered agreement.
   4. If the commissioner determines that an assuming insurer no longer meets one or more of the requirements under this subsection, the commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this subsection in accordance with procedures set forth in regulation.
      1. While an assuming insurer’s eligibility is suspended, no reinsurance agreement issued, amended, or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer’s obligations under the contract are secured in accordance with § 27-1.1-2 .
      2. If an assuming insurer’s eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation, with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer’s obligations, under the contract, are secured in a form acceptable to the commissioner and consistent with the provisions of § 27-1.1-2.
   5. If subject to a legal process of rehabilitation, liquidation, or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities.
   6. Nothing in this subsection shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement, except as expressly prohibited by this chapter or other applicable law or regulation.
   7. Credit may be taken under this subsection only for reinsurance agreements entered into, amended, or renewed on or after the effective date of the statute adding this subsection, and only with respect to losses incurred and reserves reported on or after the later of:
      1. The date on which the assuming insurer has met all eligibility requirements, pursuant to subsection (g)(1) of this section; and
      2. The effective date of the new reinsurance agreement, amendment, or renewal.
         1. This subsection (g)(7) does not alter or impair a ceding insurer’s right to take credit for reinsurance, to the extent that credit is not available under this subsection, as long as the reinsurance qualifies for credit, under any other applicable provision of this chapter.
         2. Nothing in this subsection shall authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement, except as permitted by the terms of the agreement.
         3. Nothing in this subsection shall limit, or in any way alter, the capacity of parties to any reinsurance agreement to renegotiate the agreement.
8. Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subsections (b), (c), (d), (e), (f), or (g) of this section, but only as to the insurance of risks located in jurisdictions where the reinsurance is required by applicable law or regulation of that jurisdiction.
9. If the assuming insurer is not licensed, accredited, or certified to transact insurance or reinsurance in this state, the credit permitted by subsections (d) and (e) of this section shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:
   1. 1. That in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction, and will abide by the final decision of the court or of any appellate court in the event of an appeal; and
      2. To designate the commissioner or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit, or proceeding instituted by or on behalf of the ceding insurer.
   2. This subsection is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if this obligation is created in the agreement.
10. If the assuming insurer does not meet the requirements of subsections (b), (c), (d), or (g), the credit permitted by subsection (e) or (f) of this section shall not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions:
    1. Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by subsection (e)(3) of this section, or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the commissioner with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the commissioner with regulatory oversight all of the assets of the trust fund;
    2. The assets shall be distributed by and claims shall be filed with and valued by the commissioner with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies;
    3. If the commissioner with regulatory oversight determines that the assets of the trust fund or any part thereof are not necessary to satisfy the claims of the United States ceding insurers of the grantor of the trust, the assets or part thereof shall be returned by the commissioner with regulatory oversight to the trustee for distribution in accordance with the trust agreement; and
    4. The grantor shall waive any right otherwise available to it under United States law that is inconsistent with this provision.
11. If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the commissioner may suspend or revoke the reinsurer’s accreditation or certification.
    1. The commissioner must give the reinsurer notice and opportunity for hearing. The suspension or revocation may not take effect until after the commissioner’s order on hearing, unless:
       1. The reinsurer waives its right to hearing;
       2. The commissioner’s order is based on regulatory action by the reinsurer’s domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer’s eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subparagraph (f)(6) of this section; or
       3. The commissioner finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the commissioner’s action.
    2. While a reinsurer’s accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit except to the extent that the reinsurer’s obligations under the contract are secured in accordance with § 27-1.1-2 . If a reinsurer’s accreditation or certification is revoked, no credit for reinsurance may be granted after the effective date of the revocation except to the extent that the reinsurer’s obligations under the contract are secured in accordance with subsection (f)(5) or § 27-1.1-2 .
12. Concentration Risk.
    1. A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business. A domestic ceding insurer shall notify the commissioner within thirty (30) days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds fifty percent (50%) of the domestic ceding insurer’s last reported surplus to policyholders, or after it is determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.
    2. A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the commissioner within thirty (30) days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than twenty percent (20%) of the ceding insurer’s gross written premium in the prior calendar year, or after it has determined that the reinsurance ceded to any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

History of Section. P.L. 1991, ch. 257, § 1; P.L. 1991, ch. 348, § 1; P.L. 1993, ch. 180, § 26; P.L. 1994, ch. 404, § 15; P.L. 1999, ch. 22, § 2; P.L. 2013, ch. 84, § 1; P.L. 2013, ch. 91, § 1; P.L. 2017, ch. 389, § 1; P.L. 2017, ch. 434, § 1; P.L. 2021, ch. 230, § 1, effective July 8, 2021; P.L. 2021, ch. 231, § 1, effective July 8, 2021.

27-1.1-2. Asset or reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of 27-1.1-1.

An asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of § 27-1.1-1 shall be allowed in an amount not exceeding the liabilities carried by the ceding insurer; provided, further, that the commissioner may adopt by regulation pursuant to § 27-1.1-4 specific additional requirements relating to or setting forth:

1. The valuation of assets or reserve credits;
2. The amount and forms of security supporting reinsurance arrangements described in § 27-1.1-4 ; and
3. The circumstances pursuant to which credit will be reduced or eliminated. The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations thereunder, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer, or, in the case of a trust, held in a qualified United States financial institution as defined in § 27-1.1-3(b) . This security may be in the form of:

1. Cash;
2. Securities listed by the securities valuation office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted assets;
3. 1. Clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution as defined in § 27-1.1-3(a) , no later than December 31st of the year for which the filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement.
   2. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation shall, notwithstanding the issuing or confirming institution’s subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs; or
4. Any other form of security acceptable to the commissioner.

History of Section. P.L. 1991, ch. 257, § 1; P.L. 1991, ch. 348, § 1; P.L. 2013, ch. 84, § 2; P.L. 2013, ch. 91, § 2; P.L. 2017, ch. 389, § 1; P.L. 2017, ch. 434, § 1.

27-1.1-3. Qualified United States financial institutions.

1. For the purposes of § 27-1.1-2(3) , “qualified United States financial institution” means an institution that:
   1. Is organized, or in the case of a U.S. office of a foreign banking organization is licensed, under the laws of the United States or any of its states;
   2. Is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and
   3. Has been determined by either the commissioner or the securities valuation office of the National Association of Insurance Commissioners to meet those standards of financial condition and that are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner.
2. “Qualified United States financial institution” means, for the purposes of those provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust, an institution that:
   1. Is organized, or in the case of a United States branch or agency office of a foreign banking organization is licensed, under the laws of the United States or any of its states and has been granted authority to operate with fiduciary powers; and
   2. Is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies.

History of Section. P.L. 1991, ch. 257, § 1; P.L. 1991, ch. 348, § 1.

27-1.1-4. Rules and regulations.

1. The commissioner may adopt reasonable rules and regulations implementing the provisions of this law.
2. The commissioner is further authorized to adopt rules and regulations applicable to reinsurance arrangements described in subsection (b)(1) of this section.
   1. A regulation adopted pursuant to this section may apply only to reinsurance relating to:
      1. Life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits;
      2. Universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period;
      3. Variable annuities with guaranteed death or living benefits;
      4. Long-term-care insurance policies; or
      5. Other life and health insurance and annuity products as to which the NAIC adopts model regulatory requirements with respect to credit for reinsurance.
   2. A regulation adopted pursuant to subsection (b)(1)(i) or (b)(1)(ii) of this section may apply to any treaty containing:
      1. Policies issued on or after January 1, 2015; and
      2. Policies issued prior to January 1, 2015, if risk pertaining to the pre-2015 policies is ceded in connection with the treaty, in whole or in part, on or after January 1, 2015.
   3. A regulation adopted pursuant to subsection (b) of this section may require the ceding insurer, in calculating the amounts or forms of security required to be held under regulations promulgated under this authority, to use the Valuation Manual adopted by the NAIC under Section 11B(1) of the NAIC Standard Valuation Law, including all amendments adopted by the NAIC and in effect on the date as of which the calculation is made, to the extent applicable.
   4. A regulation adopted pursuant to subsection (b) of this section shall not apply to cessions to an assuming insurer that:
      1. Meets the conditions set forth in § 27-1.1-1(g) ; or
      2. Is certified in this state; or
      3. Maintains at least two hundred fifty million dollars ($250,000,000) in capital and surplus when determined in accordance with the NAIC Accounting Practices and Procedures Manual, including all amendments thereto adopted by the NAIC, excluding the impact of any permitted or prescribed practices; and is:
         1. Licensed in at least twenty-six (26) states; or
         2. Licensed in at least ten (10) states, and licensed or accredited in a total of at least thirty-five (35) states.
   5. The authority to adopt regulations pursuant to subsection (b) of this section does not limit the commissioner’s general authority to adopt regulations pursuant to subsection (a) of this section.

History of Section. P.L. 1991, ch. 257, § 1; P.L. 1991, ch. 348, § 1; P.L. 2002, ch. 292, § 6; P.L. 2017, ch. 389, § 1; P.L. 2017, ch. 434, § 1; P.L. 2021, ch. 230, § 1, effective July 8, 2021; P.L. 2021, ch. 231, § 1, effective July 8, 2021.

27-1.1-5. Reinsurance agreements affected.

This chapter shall apply to all cessions after the effective date of this chapter under reinsurance agreements that have an inception, anniversary, or renewal date not less than six (6) months after the effective date of this chapter.

History of Section. P.L. 1991, ch. 257, § 1; P.L. 1991, ch. 348, § 1; P.L. 1993, ch. 180, § 26; P.L. 2013, ch. 84, § 2; P.L. 2013, ch. 91, § 2.

27-1.1-6. Repealed.

History of Section. P.L. 1993, ch. 180, § 27; Repealed by P.L. 2013, ch. 84, § 4, effective June 17, 2013; P.L. 2013, ch. 91, § 4, effective June 17, 2013.

27-1.1-7. Repealed.

History of Section. P.L. 1993, ch. 180, § 27; Repealed by P.L. 2013, ch. 84, § 4, effective June 17, 2013; P.L. 2013, ch. 91, § 4, effective June 17, 2013.

27-1.1-8. Repealed.

27-1.1-9. Asset or deduction from liability.

No credit shall be allowed as an admitted asset or as a deduction from liability to any ceding company for reinsurance unless the reinsurance is payable by the assuming company on the basis of the liability of the ceding company under the contractor contracts reinsured without diminution because of the insolvency of the ceding company.

History of Section. P.L. 2015, ch. 82, § 18; P.L. 2015, ch. 105, § 18.

27-1.1-10. Payment by assuming company.

1. No credit shall be allowed for reinsurance unless the reinsurance agreement provides that payments by the assuming company shall be made directly to the ceding company or to its liquidator, receiver, or statutory successor, except where the contract specifically provides direct payment of the reinsurance to the insured or a claimant on behalf of the insured in the event of the insolvency of the ceding company, or where the assuming company, with the consent of the direct insured or insureds, has assumed the policy obligations of the ceding company to the payees under the policies and in substitution for the obligations of the ceding company to the payees.
2. Except as provided in this section, no assuming company may pay or settle, or agree to pay or settle, any policy claim, or any portion of a claim, directly to or with a policyholder of any ceding company if an order of rehabilitation or liquidation has been entered against the ceding company.

History of Section. P.L. 2015, ch. 82, § 18; P.L. 2015, ch. 105, § 18.

27-1.2-1. Purpose and scope.

1. The purpose of this chapter is to:
   1. Provide the insurance commissioner a summary of an insurer or insurance group’s corporate governance structure, policies, and practices to permit the commissioner to obtain and maintain an understanding of the insurer’s corporate governance framework;
   2. Outline the requirements for completing a corporate governance annual disclosure with the insurance commissioner; and
   3. Provide for the confidential treatment of the corporate governance annual disclosure and related information that will contain private, confidential, and sensitive information related to an insurer or insurance group’s internal operations and proprietary and trade secret information which, if made public, could potentially cause the insurer or insurance group competitive harm or disadvantage.
2. Nothing in this chapter shall be construed to prescribe or impose additional corporate governance standards and internal procedures beyond that which is required under applicable state corporate and insurance laws. This chapter shall not be construed to limit the commissioner’s authority, or the rights or obligations of third parties, under chapter 13.1 of this title.
3. The requirements of this chapter shall apply to all insurers domiciled in this state.

History of Section. P.L. 2016, ch. 98, § 1; P.L. 2016, ch. 107, § 1.

27-1.2-2. Definitions.

As used in this chapter:

1. “Commissioner” means the director of the department of business regulation and any assistant to the director.
2. “Corporate governance annual disclosure” (CGAD) means a confidential report filed by the insurer or insurance group made as required by this chapter.
3. “Insurance group” means those insurers and affiliates included within an insurance holding company system as defined in chapter 35 of this title.
4. “Insurer” shall have the same meaning as set forth in § 27-54.1-1 , except that it shall not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.
5. “ORSA summary report” means the report filed in accordance with chapter 77 of this title.

History of Section. P.L. 2016, ch. 98, § 1; P.L. 2016, ch. 107, § 1.

27-1.2-3. Disclosure requirement.

1. An insurer, or the insurance group of which the insurer is a member, shall, no later than June 1 of each calendar year, submit to the commissioner a corporate governance annual disclosure (CGAD) that contains the information described in this section and § 27-1.2-5(b) . Notwithstanding any request from the commissioner made pursuant to subsection (c), if the insurer is a member of an insurance group, the insurer shall submit the report required by this section to the commissioner of the lead state for the insurance group, in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the National Association of Insurance Commissioner (NAIC).
2. The CGAD must include a signature of the insurer or insurance group’s chief executive officer or corporate secretary attesting to the best of that individual’s belief and knowledge that the insurer has implemented the corporate governance practices and that a copy of the disclosure has been provided to the insurer’s board of directors or the appropriate committee thereof.
3. An insurer not otherwise required to submit a CGAD under this section shall do so upon the commissioner’s request.
4. For purposes of completing the CGAD, the insurer or insurance group may provide information regarding corporate governance at the ultimate controlling parent level, an intermediate holding company level and/or the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance. The insurer or insurance group is encouraged to make the CGAD disclosures at the level at which the insurer’s or insurance group’s risk appetite is determined; or at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised; or the level at which legal liability for failure of general corporate governance duties would be placed. If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the three (3) criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting.
5. The review of the CGAD and any additional requests for information shall be made through the lead state as determined by the procedures within the most recent Financial Analysis Handbook referenced in subsection (a).
6. Insurers providing information substantially similar to the information required by this chapter in other documents provided to the commissioner, including proxy statements filed in conjunction with form B requirements, or other state or federal filings provided to this division of insurance shall not be required to duplicate that information in the CGAD, but shall only be required to cross reference the document in which the information is included.

History of Section. P.L. 2016, ch. 98, § 1; P.L. 2016, ch. 107, § 1.

27-1.2-4. Rules and regulations.

The commissioner may, in accordance with the administrative procedures act, chapter 35 of title 42, issue such rules, regulations, and orders as shall be necessary to carry out the provisions of this chapter.

History of Section. P.L. 2016, ch. 98, § 1; P.L. 2016, ch. 107, § 1.

27-1.2-5. Contents of corporate governance annual disclosure.

1. The insurer or insurance group shall have discretion over the responses to the CGAD inquiries, provided the CGAD shall contain the material information necessary to permit the commissioner to obtain an understanding of the insurer’s or group’s corporate governance structure, policies, and practices. The commissioner may request additional information that the commissioner deems material and necessary to provide the commissioner with a clear understanding of the corporate governance policies; the reporting or information system; or controls implementing those policies.
2. Notwithstanding subsection (a), the CGAD shall be prepared consistent with the corporate governance annual disclosure regulation adopted by the division of insurance and supporting information shall be maintained and made available upon examination or upon request of the commissioner.

History of Section. P.L. 2016, ch. 98, § 1; P.L. 2016, ch. 107, § 1; P.L. 2017, ch. 451, § 12.

27-1.2-6. Confidentiality.

1. Documents, materials, or other information, including the CGAD, in the possession or control of the division of insurance that are obtained by, created by, or disclosed to the commissioner or any other person under this chapter, are recognized by this state as being proprietary and to contain trade secrets. Subject to the disclosure requirements of § 27-1.2-5(b) , all such documents, materials, or other information shall be confidential by law and privileged; shall not be subject to access pursuant to chapter 2 of title 38; shall not be subject to subpoena; and shall not be subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner’s official duties. The commissioner shall not otherwise make the documents, materials, or other information public without the prior, written consent of the insurer. Nothing in this section shall be construed to require written consent of the insurer before the commissioner may share or receive confidential documents, materials, or other CGAD-related information pursuant to subsection (c) to assist in the performance of the commissioner’s regular duties.
2. Neither the commissioner, nor any person who received documents, materials, or other CGAD-related information, through examination or otherwise, while acting under the authority of the commissioner, or with whom such documents, materials, or other information are shared pursuant to this chapter, shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subsection (a).
3. In order to assist in the performance of the commissioner’s regulatory duties, the commissioner may:
   1. Upon request, share documents, materials, or other CGAD-related information, including the confidential and privileged documents, materials, or information subject to subsection (a), including proprietary and trade-secret documents and materials, with other state, federal, and international financial regulatory agencies, including members of any supervisory college, as described in § 27-35-5.5 , with the National Association of Insurance Commissioners (NAIC), and with third-party consultants pursuant to § 27-1.2-7 , provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, material, or other information and has verified in writing the legal authority to maintain confidentiality; and
   2. Receive documents, materials, or other CGAD-related information, including otherwise confidential and privileged documents, materials, or information, including proprietary and trade-secret information or documents, from regulatory officials of other state, federal, and international financial regulatory agencies, including members of any supervisory college, as described in § 27-35-5.5 , and from the NAIC, and shall maintain as confidential or privileged any documents, materials, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information.
4. The sharing of information and documents by the commissioner pursuant to this chapter shall not constitute a delegation of regulatory authority or rulemaking, and the commissioner is solely responsible for the administration, execution, and enforcement of the provisions of this chapter.
5. No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary, and trade-secret materials or other CGAD-related information shall occur as a result of disclosure of such CGAD-related information or documents to the commissioner under this section or as a result of sharing as authorized in this chapter.

History of Section. P.L. 2016, ch. 98, § 1; P.L. 2016, ch. 107, § 1.

27-1.2-7. NAIC and third-party consultants.

1. The commissioner may retain, at the insurer’s expense, third-party consultants, including attorneys, actuaries, accountants, and other experts, not otherwise a part of the commissioner’s staff, as may be reasonably necessary to assist the commissioner in reviewing the CGAD and related information or the insurer’s compliance with this chapter.
2. Any persons retained pursuant to subsection (a) shall be under the direction and control of the commissioner and shall act in a purely advisory capacity.
3. The National Association of Insurance Commissioners (NAIC) and third-party consultants shall be subject to the same confidentiality standards and requirements as the commissioner.
4. As part of the retention process, a third-party consultant shall verify to the commissioner, with notice to the insurer, that it is free of a conflict of interest and that it has internal procedures in place to monitor compliance with a conflict and to comply with the confidentiality standards and requirements of this chapter.
5. A written agreement with the NAIC and/or a third-party consultant governing sharing and use of information provided pursuant to this chapter shall contain the following provisions and expressly require the written consent of the insurer prior to making public information provided under this chapter:
   1. Specific procedures and protocols for maintaining the confidentiality and security of CGAD-related information shared with the NAIC or a third-party consultant pursuant to this chapter;
   2. Procedures and protocols for sharing by the NAIC only with other state regulators from states in which the insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, materials or other information and has verified in writing the legal authority to maintain confidentiality;
   3. A provision specifying that ownership of the CGAD-related information shared with the NAIC or a third-party consultant remains with the division of insurance and the NAIC’s or third-party consultant’s use of the information is subject to the direction of the commissioner;
   4. A provision that prohibits the NAIC or a third-party consultant from storing the information shared pursuant to this chapter in a permanent database after the underlying analysis is completed;
   5. A provision requiring the NAIC or third-party consultant to provide prompt notice to the commissioner and to the insurer or insurance group regarding any subpoena, request for disclosure, or request for production of the insurer’s CGAD-related information; and
   6. A requirement that the NAIC or a third-party consultant consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant pursuant to this chapter.

History of Section. P.L. 2016, ch. 98, § 1; P.L. 2016, ch. 107, § 1.

27-1.2-8. Sanctions.

Any insurer failing, without just cause, to timely file the CGAD as required in this chapter shall be required, after notice and hearing, to pay a penalty of two hundred and fifty dollars ($250) for each day’s delay, to be recovered by the commissioner, and the penalty so recovered shall be paid into the general revenue fund of this state. The maximum penalty under this section is two hundred and fifty thousand dollars ($250,000). The commissioner may reduce the penalty if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer.

History of Section. P.L. 2016, ch. 98, § 1; P.L. 2016, ch. 107, § 1.

27-1.2-9. Severability clause.

If any provision of this chapter other than § 27-1.2-6 , or the application thereof to any person or circumstance, is held invalid, such determination shall not affect the provisions or applications of this chapter which can be given effect without the invalid provision or application, and to that end the provisions of this chapter, with the exception of § 27-1.2-6 , are severable.

History of Section. P.L. 2016, ch. 98, § 1; P.L. 2016, ch. 107, § 1.

27-2-1. Compliance by foreign insurance companies required.

No insurance company, unless incorporated by the general assembly, shall make any insurance on property within this state or contract for insurance with any party resident in this state until the insurance company shall have complied with the provisions of this chapter.

History of Section. G.L. 1896, ch. 182, § 1; G.L. 1909, ch. 220, § 1; G.L. 1923, ch. 256, § 1; G.L. 1938, ch. 151, § 1; G.L. 1956, § 27-2-1 .

27-2-1.1. Telephone number — Toll free or collect.

Every insurer doing business within this state shall have a toll free telephone number or provide collect charge telephone service for use by the general public when calling the insurer from any location within the state.

History of Section. P.L. 1987, ch. 229, § 2; P.L. 1993, ch. 180, § 3.

27-2-2. Applicability.

The general provisions of law relating to the duties, obligations, prohibitions, or penalties which appertain to insurance companies not incorporated under the authority of this state, and defining the powers and duties of the insurance commissioner in reference to those companies, shall be and are applicable to all corporations, companies, and associations not incorporated under the authority of this state, and to all partnerships and individuals, doing, as principals or otherwise, in this state, any insurance business of any name, kind, or description.

History of Section. G.L. 1896, ch. 182, § 2; G.L. 1909, ch. 220, § 2; G.L. 1923, ch. 256, § 2; G.L. 1938, ch. 151, § 2; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-2-2 .

27-2-3. Reciprocal privileges of nonresident insurance producers.

1. Any commission received by a Rhode Island licensed resident insurance producer may be shared with another licensed resident insurance producer, or with a licensed nonresident insurance producer; provided, that if the nonresident insurance producer resides in, or is a licensed insurance producer in, a state which requires the retention of a stipulated percentage of the commission on risks placed in the state by nonresident insurance producers, then and in that event the Rhode Island resident insurance producer shall require the same percentage of the commission as would be required if a Rhode Island insurance producer should place similar insurance in the state of the residence of the nonresident insurance producer; provided, that if the nonresident insurance producer resides in a state, county, or municipality which by statute or ordinance prohibits the division of commissions on insurance covering property or risks in the city, county, or state of the nonresident insurance producer, then and in that event, it shall be unlawful for the Rhode Island resident insurance producer to pay the nonresident insurance producer any share or portion of the commission on insurance on property or risks in the state of Rhode Island.
2. This section shall not apply to bid bonds issued by any admitted surety insurer in connection with any public or private contract.
3. An insurance producer that has been a licensed nonresident insurance producer prior to June 30, 1989, for twelve (12) years or more but whose company is no longer licensed to do business in a reciprocal state after June 30, 1989, may be licensed in Rhode Island as a special nonresident insurance producer.

History of Section. P.L. 1984, ch. 45, § 1; P.L. 1989, ch. 383, § 1; P.L. 1989, ch. 513, § 1; P.L. 1992, ch. 445, § 7.

27-2-4. Penalty for unlawful business.

Any company, officer, or insurance producer violating any of the provisions of § 27-2-3 shall be punished by a fine of not less than one hundred dollars ($100) nor more than five hundred dollars ($500) for each offense.

History of Section. G.L. 1896, ch. 182, § 7; G.L. 1909, ch. 220, § 7; G.L. 1923, ch. 256, § 7; G.L. 1938, ch. 151, § 7; G.L. 1956, § 27-2-4 .

27-2-5. Minimum capital and surplus requirements — Maximum amount of single risk.

No insurance company not incorporated under the authority of this state shall make any contract of insurance with any person in this state unless the capital stock of the company is at least equal to one million dollars ($1,000,000) and the gross paid in and contributed surplus of the company is at least equal to two million dollars ($2,000,000) or, if a mutual company, its net assets over all liabilities amount to not less than three million dollars ($3,000,000), nor unless the company, if other than a life insurance company, shall be restricted, by its charter or otherwise, so that it cannot lawfully incur in any one risk a greater hazard than one-tenth (1/10) part of its capital and surplus if a stock company or of its net assets if a mutual company; provided, that no fire, marine, or fire and marine insurance company of any foreign country shall make any contract of insurance with any person in this state unless the company has two million dollars ($2,000,000) paid-in capital stock and four million dollars ($4,000,000) surplus, or if a foreign mutual company its net assets over all liabilities amount to not less than six million dollars ($6,000,000) and shall have made a deposit with the insurance commissioner of this state, or with the proper officer of some other state of the United States, of not less than two million dollars ($2,000,000) in securities which shall be at all times at or above par and in trust for the benefit of its policyholders in the United States, or if a mono-line business company as defined in this title, has a combined capital and surplus of two million dollars ($2,000,000). Nothing contained in this section shall be construed to apply to foreign insurance companies licensed prior to May 13, 1977.

History of Section. G.L. 1896, ch. 182, § 8; P.L. 1906, ch. 1324, § 1; G.L. 1909, ch. 220, § 8; G.L. 1923, ch. 256, § 8; G.L. 1938, ch. 151, § 8; P.L. 1953, ch. 3174, § 4; G.L. 1956, § 27-2-5 ; P.L. 1977, ch. 278, § 1; P.L. 1992, ch. 415, § 1; P.L. 2001, ch. 122, § 2.

27-2-6. Certificate of deposit for benefit of policyholders.

No insurance company, association, or society incorporated by or organized under the laws of any other state or government shall make within this state any contract of insurance unless it has deposited securities created by the laws of the United States, or by or under laws of the state in which the company, association, or society is located or in other safe stocks or securities, the market value of which at all times shall be at least one hundred thousand dollars ($100,000) which investments are deposited with the insurance commissioner, auditor, comptroller, or chief financial officer of the state by whose laws the company is incorporated, or where the association or society is located or has its principal office and place of business, and the insurance commissioner of this state is furnished with the certificate of the commissioner, auditor, comptroller, or chief financial officer, under his or her hand and official seal, that he or she, as the commissioner, auditor, comptroller, or chief financial officer of the state holds in trust and on deposit for the benefit of all policyholders of the company, association, or society, voluntary or otherwise, the previously mentioned securities. The certificate shall embrace the items of this security held, and shall state that he or she is satisfied that the securities are worth one hundred thousand dollars ($100,000); provided, that no company of any foreign country shall make any contract of insurance with any person in this state unless the company, if a stock company, has two million dollars ($2,000,000) paid-in capital stock and four million dollars ($4,000,000) surplus, or if a mutual company, it has net assets over all liabilities in the amount of not less than six million dollars ($6,000,000), and one million dollars ($1,000,000) is invested in stocks created by the laws of the United States, or under the laws of some state of the United States, the market value of which at all times shall be at least one million dollars ($1,000,000), and which shall have made a deposit with the insurance commissioner of this state or with the proper officer of some other state of the United States of not less than two million dollars ($2,000,000) in securities which shall at all times have a market value of at least two million dollars ($2,000,000), in trust for the benefit of its policyholders in the United States, and the general treasurer of this state is furnished with the certificate of the commissioner, auditor, comptroller, or chief financial officer, under his or her hand and official seal, if the deposit be made in another state, that he or she as the commissioner, auditor, comptroller, or chief financial officer of the state holds in trust and on deposit for the benefit of all policyholders of the company, association, or society, voluntary or otherwise, in the United States; the previously mentioned securities; the certificate shall embrace the items of this security held, and shall state that he or she is satisfied that the securities are worth two million dollars ($2,000,000). Nothing contained in this section shall be so construed as to apply to foreign insurance companies licensed prior to June 1, 1978.

History of Section. G.L. 1896, ch. 182, § 9; G.L. 1909, ch. 220, § 9; P.L. 1915, ch. 1257, § 1; G.L. 1923, ch. 256, § 9; G.L. 1938, ch. 151, § 9; P.L. 1953, ch. 3174, § 4; G.L. 1956, § 27-2-6 ; P.L. 1977, ch. 278, § 1; P.L. 1978, ch. 120, § 1.

27-2-6.1. Special deposit for benefit of policyholders.

1. The insurance commissioner may require any insurance company, association, or society incorporated by or organized under the laws of any other state or government which seeks to make within this state any contract of insurance to make a special deposit as a condition to licensing. The special deposit shall be held in trust and on deposit for the benefit of all Rhode Island policyholders of the company, association, or society. The special deposit may be in any amount and form acceptable to the insurance commissioner. The special deposit shall be deposited with the insurance commissioner or with the general treasurer of this state.
2. The special deposit shall be held exclusively for the benefit of the Rhode Island policyholders and claimants of the company, notwithstanding the source of the special deposit, and in any agreement entered pursuant to this section the insurer shall grant to the director an interest in the deposit to secure all present and future obligations of the insurer to the policyholders and claimants of the insurer in the state of Rhode Island. The director’s interest shall continue until the insurer’s obligations are fully satisfied or until the deposit is released by the director.

History of Section. P.L. 1998, ch. 71, § 1.

27-2-7. Charter to be filed.

Every insurance company not incorporated under the authority of this state shall, before making any contract of insurance with any person in this state, deposit with the insurance commissioner a copy of the charter of the company.

History of Section. G.L. 1896, ch. 182, § 11; G.L. 1909, ch. 220, § 11; G.L. 1923, ch. 256, § 11; G.L. 1938, ch. 151, § 11; P.L. 1953, ch. 3174, § 4; G.L. 1956, § 27-2-7 .

27-2-8. Statement as to type of company, investments, and risks.

Every company, before making any contract of insurance, shall deposit with the insurance commissioner a statement, signed and sworn to by the president and secretary of the company, specifying that the company is a fire, marine, or fire and marine, life, health, accident, or other insurance company, stating the amount of its capital and the manner of its investment, designating the amount invested respectively in mortgages, public securities, and in the stock of incorporated companies, stating what companies, and also the amount invested in other securities, particularizing each item of investment, the amount of marine risks not terminated and the premium paid on those risks, the amount of fire risks not terminated and the premium paid on those risks, and the amount of liabilities, specifying the amount of outstanding claims adjusted or unadjusted, due or not due. In case the company is incorporated on the mutual principle, the statement shall set forth, in addition to this information, the amount of risks insured by the company, the amount of premium on the risks, what portion of it has been paid in cash, what security has been taken for the remainder, and what is the largest sum insured in any one risk. The statement required to be made in this section, so far as applicable, shall be made of each class in companies authorized to take risks in classes, and in all cases the returns may be varied by the insurance commissioner to obtain more definite information of the company; provided, that not more than one statement needs to be filed on behalf of the company.

History of Section. G.L. 1896, ch. 182, § 12; G.L. 1909, ch. 220, § 12; G.L. 1923, ch. 256, § 12; G.L. 1938, ch. 151, § 12; P.L. 1953, ch. 3174, § 4; G.L. 1956, § 27-2-8 .

27-2-9. Statement as to capital, assets, and investments.

Every life insurance company, health insurance company, livestock, or other insurance company, cooperative, or assessment, shall before making any contract of insurance, deposit with the insurance commissioner a statement signed and sworn to by the president and secretary of the company, specifying the amount of its capital and all of its assets and the manner of its investment, designating the amount invested in mortgages, public securities, and in stock of incorporated companies, stating what companies, and also the amount invested in other securities, particularizing each item of investment, the amount insured by existing policies, the amount of liabilities, specifying the amount of outstanding claims, adjusted or unadjusted, due or not due, and the largest sum insured in any one risk; provided, that no more than one statement needs to be filed on behalf of the company.

History of Section. G.L. 1896, ch. 182, § 13; G.L. 1909, ch. 220, § 13; G.L. 1923, ch. 256, § 13; G.L. 1938, ch. 151, § 13; P.L. 1953, ch. 3174, § 4; G.L. 1956, § 27-2-9 .

27-2-10. Filing of accident and health policy forms.

Any insurance company authorized to transact an accident and health insurance business within this state in accordance with the provisions of this chapter shall file all policy forms used by it with the insurance commissioner. The commissioner may also require any company to file the forms of any rider, endorsement, application blank, and other matter generally used or incorporated by reference in its policies or contracts of insurance. Any organization, bureau, or association of which the company is a member may, on behalf of the company, make the filings required by this section. If the commissioner finds from an examination of any of these filed forms that it is contrary to the public interest, the commissioner shall forbid its use.

History of Section. G.L. 1938, ch. 151, § 1; P.L. 1948, ch. 2134, § 1; G.L. 1956, § 27-2-10 .

27-2-11. License required — Expiration date.

No company shall transact any business of insurance in this state until it has obtained from the insurance commissioner of this state a license stating that it has complied with the laws of this state and specifying the kinds of business it is authorized to transact. The insurance commissioner may refuse to issue the license if he or she is of the opinion that the refusal will be in the public interest. Every license shall be continuous unless revoked or suspended as provided in chapter 13 of this title.

History of Section. G.L. 1938, ch. 151, § 3; P.L. 1953, ch. 3174, § 3; G.L. 1956, § 27-2-11 ; P.L. 1987, ch. 289, § 1.

27-2-12. Review of refusal to issue or renew license.

A company aggrieved by the refusal of the insurance commissioner to issue or renew a license may within ten (10) days from the date of the refusal file a petition in superior court for the county of Providence for a review of the action, which shall be heard and determined in the same manner as is provided under chapter 13 of this title in the case of a petition filed after the revocation or suspension of a license.

History of Section. G.L. 1938, ch. 151, § 3; P.L. 1953, ch. 3174, § 3; G.L. 1956, § 27-2-12 .

27-2-13. Commissioner as attorney to receive process.

No insurance company not incorporated under the authority of this state shall directly or indirectly issue policies, take risks, or transact business in this state until it has first appointed, in writing, the insurance commissioner of this state to be the true and lawful attorney of the company in and for this state, upon whom all lawful process in any action or proceeding against the company may be served with the same effect as if the company existed in this state; provided, that if the insurance company shall make no appointment, the issuance or delivery of a policy or contract of insurance to, the taking of a risk for, or the transacting of business with a citizen of this state or a resident of the state or a corporation authorized to do business in this state by the company shall be equivalent to an appointment for the service of all lawful process in any action or proceeding arising out of the policy or contract. The written power of attorney shall stipulate and agree on the part of the company that any lawful process against the company which is served on the attorney shall be of the same legal force and validity as if served on the company, and that the authority shall continue in force so long as any liability remains outstanding against the company in this state. A certificate of the written appointment, duly certified and authenticated, shall be filed in the office of the insurance commissioner, and copies certified by him or her shall be received in evidence in all of the courts in this state. Service upon the attorney shall be deemed sufficient service upon the principal; service of process may also be effectuated in accordance with the procedures set forth in Rule 4 of the Rules of Civil Procedure.

History of Section. G.L. 1896, ch. 182, § 3; G.L. 1909, ch. 220, § 3; G.L. 1923, ch. 256, § 3; G.L. 1938, ch. 151, § 3; P.L. 1940, ch. 856, § 1; P.L. 1953, ch. 3174, § 3; G.L. 1956, § 27-2-13 ; P.L. 1985, ch. 163, § 1.

27-2-14. Forwarding of process by commissioner.

1. Whenever lawful process against a foreign insurance company shall be served upon the insurance commissioner, the commissioner shall forward a copy of the process served on him or her, to the person appointed by the insurance company to accept service of process on behalf of the company. The manner of forwarding shall be at the discretion of the insurance commissioner.
2. Service upon the insurance commissioner shall be accomplished by regular mail or by whatever alternative method is designated by the commissioner.
3. For each copy of process the insurance commissioner shall collect, for the use of the state, the sum of twenty-five dollars ($25.00), which shall be paid by the plaintiff at the time of the service; the fee is to be recovered by the plaintiff as part of the taxable costs, if he or she prevails in the suit.

History of Section. G.L. 1896, ch. 182, § 4; G.L. 1909, ch. 220, § 4; G.L. 1923, ch. 256, § 4; G.L. 1938, ch. 151, § 4; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-2-14 ; P.L. 1960, ch. 71, art. 1, § 1; P.L. 2004, ch. 595, art. 30, § 9; P.L. 2009, ch. 303, § 1; P.L. 2009, ch. 304, § 1; P.L. 2017, ch. 196, § 1; P.L. 2017, ch. 322, § 1.

27-2-15. Provisions against actions in state courts.

If any foreign insurance company, of any name, kind, or description, authorized to do business in this state shall provide in its charter or bylaws, or in the policies or contracts of insurance issued by it, that no action shall be brought against the company in any court of competent jurisdiction within this state, the insurance commissioner shall revoke all licenses and certificates of authority granted to it or to its insurance producers to do business in this state.

History of Section. G.L. 1896, ch. 182, § 5; G.L. 1909, ch. 220, § 5; G.L. 1923, ch. 256, § 5; G.L. 1938, ch. 151, § 5; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-2-15 .

27-2-16. Filing fees — Certificates of compliance.

1. Every insurance company not incorporated in this state applying for admission to transact business in the state shall pay to the insurance commissioner, for the use of the state, for filing a copy of its charter or deed of settlement, the sum of thirty dollars ($30.00), and for filing a statement preliminary to admission, and for filing each annual statement after admission payable prior to April 1 of each year, the sum of one hundred dollars ($100).
2. A certificate of compliance issued under this chapter shall continue in force as long as the insurer is entitled to it under this chapter and until suspended, revoked, or terminated at the request of the insurer; subject, to continuance of the certificate by the insurer each year by:
   1. Payment prior to April 1 of an annual license fee of one hundred dollars ($100); and
   2. Due filing by the insurer of its annual statement for the preceding calendar year as required under this section.
3. If not continued in this manner by the insurer, its certificate of compliance shall expire at midnight on June 1 next following the failure of the insurer to continue it in force.
4. The commissioner may, in his or her discretion, reinstate a certificate of compliance which the insurer has inadvertently permitted to expire, after the insurer has fully cured all its failures which resulted in the expiration, and upon payment by the insurer of the fee in the amount provided in subdivision (b)(1). Otherwise, the insurer shall be granted another certificate of compliance only after filing an application and meeting all other requirements as for an original certificate of compliance in this state.
5. The commissioner may amend a certificate of compliance at any time to accord with changes in the insurer’s charter or insuring powers.
6. The commissioner may assess a late fee of one hundred dollars ($100) per day for each day the insurer is late in filing its annual statement, and ten dollars ($10.00) per day for each day the insurer is late in remitting its annual license fee, except that the insurer may request and receive an extension of the filing date without penalty.

History of Section. G.L. 1896, ch. 182, § 25; G.L. 1909, ch. 220, § 25; G.L. 1923, ch. 256, § 25; G.L. 1938, ch. 151, § 25; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-2-16 ; P.L. 1960, ch. 71, art. 1, § 1; P.L. 1971, ch. 283; P.L. 1979, ch. 174, art. 7, § 1; P.L. 1987, ch. 289, § 1; P.L. 1993, ch. 102, § 1; P.L. 1993, ch. 138, art. 62, § 9.

27-2-17. Reciprocal fees and charges.

1. Whenever, by the laws of any other state of the United States, any fees, charges, taxes, deposits of money or of securities, or other obligations or prohibitions are imposed on insurance companies incorporated or organized under the laws of this state or on the insurance producers of the insurance companies, so long as the laws continue in force, the fees, charges, taxes, deposits, and obligations shall be imposed on the insurance companies doing business in this state which are incorporated or organized under the laws of the other state and on their insurance producers.
2. Whenever, by the laws of any other state of the United States, insurance companies incorporated or organized under the laws of this state are required to provide a countersignature as a precondition to the issuance, delivery, or making of any contract of insurance in the other state, and whenever the insurance producer of the company is required to pay any fee or commission for placing any insurance coverage in the other state, then the same requirements for countersignatures and fee or commission shall be imposed upon the insurance companies doing business in this state which are incorporated and organized under the laws of the other states and/or their insurance producers.
3. Whenever insurance companies that are authorized to do business in this state issue, deliver, or make any contract of insurance on a person or property in this state, the companies shall place the business through a licensed resident insurance producer or licensed nonresident insurance producer as permitted under § 27-2-3 or any other provision of Rhode Island law; provided, if the insurance to be issued in this state is part of an insurance contract written on a risk whose principal place of business is located in another state, and the insurance contract is placed through an insurance producer of the domiciliary state of the primary insured, it shall be permitted only if that state allows the placement of the business by a licensed nonresident insurance producer of Rhode Island in similar circumstances.
4. The provisions of this section shall not apply to insurance companies incorporated or organized under the laws of a state or country whose laws do not impose retaliatory taxes or other charges or which grant, on a reciprocal basis, exemptions from those taxes or other charges to insurance companies incorporated or organized under the laws of this state.

History of Section. G.L. 1896, ch. 181, § 23; G.L. 1909, ch. 219, § 23; P.L. 1914, ch. 1063, § 1; G.L. 1923, ch. 255, § 23; G.L. 1938, ch. 150, § 22; G.L. 1956, § 27-2-17 ; P.L. 1983, ch. 170, § 2; P.L. 1984, ch. 346, § 1; P.L. 1988, ch. 131, § 1; P.L. 1994, ch. 432, § 2.

27-2-18. Life insurance companies’ offices.

Every life insurance company doing business in this state, and whose premium income received from the inhabitants of this state in any one year shall exceed twenty-five thousand dollars ($25,000), shall equip and maintain an office in this state, satisfactory to the insurance commissioner, for the transaction of business in this state.

History of Section. G.L. 1896, ch. 182, § 22; G.L. 1909, ch. 220, § 22; P.L. 1909, ch. 382, § 1; G.L. 1923, ch. 256, § 22; G.L. 1938, ch. 151, § 22; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-2-18 ; P.L. 2006, ch. 84, § 1; P.L. 2006, ch. 93, § 1.

27-2-19. Inquiries as to financial condition.

The insurance commissioner may inquire of any life, fire, marine, or fire and marine, or other insurance company, of any name or kind, doing business in this state, or of its secretary, in relation to its financial condition and management, and the inquiry shall be promptly answered.

History of Section. G.L. 1896, ch. 182, § 14; G.L. 1909, ch. 220, § 14; G.L. 1923, ch. 256, § 14; G.L. 1938, ch. 151, § 14; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-2-19 .

27-2-20. Validity of contracts of non-complying companies — Penalty on insurance producers — Actions by company.

If any insurance company, cooperative or otherwise, makes insurance without complying with the provisions of this chapter, the contract shall be valid, but every person acting within this state as an insurance producer of the company within the meaning of chapter 2.4 of this title, respecting the effecting of any insurance, shall be fined not less than three hundred dollars ($300) nor more than one thousand dollars ($1,000). No action at law or suit in equity shall be maintained or recovery had by any insurance company, cooperative or otherwise, or by any assignee of the company or by any person claiming under the assignee or the company, except a domestic receiver of the company, on any contract in any of the courts of this state, so long as the company fails to comply with the provisions of this chapter.

History of Section. G.L. 1896, ch. 182, § 17; G.L. 1909, ch. 220, § 17; G.L. 1923, ch. 256, § 17; G.L. 1938, ch. 151, § 17; P.L. 1940, ch. 856, § 1; G.L. 1956, § 27-2-20 .

27-2-21. Report and prosecution of violations.

The insurance commissioner shall report to the attorney general any violation of the provisions of this chapter that shall come to his or her knowledge. The attorney general shall institute the proper legal proceedings, in the name of the state, against any person violating any provision.

History of Section. G.L. 1896, ch. 182, § 24; G.L. 1909, ch. 220, § 24; G.L. 1923, ch. 256, § 24; G.L. 1938, ch. 151, § 24; impl. am. P.L. 1953, ch. 3174, § 5: G.L. 1956, § 27-2-21 .

27-2-22. Companies owned or controlled in whole or in part by foreign state or government.

No license or certificate of authority to transact any kind of insurance business in this state shall be issued, renewed, or continued in effect to any domestic, foreign, or alien insurance company or other insurance entity which is owned or financially controlled in whole or in part by another state of the United States or by a foreign government or by any political subdivision, instrumentality, or agency of either, or which is an agency or instrumentality of any state government or subdivision, unless the company or entity was owned in this way, controlled, or constituted prior to January 1, 1955, and was authorized to do business in this state on or prior to January 1, 1955.

History of Section. R.P.L. 1957, ch. 162, § 1.

27-2-23. Discrimination in rates prohibited.

1. No foreign insurance company licensed to do or doing business in this state shall make any distinction or discrimination as to the premiums or rates charged for policies of casualty, fire, home owners, accident and health, or marine insurance, nor shall any company make or permit the rejection of an individual’s application for insurance coverage, and the determination of the rate class for the individual, solely on the basis of a disability unless the disability is relevant to the risk of loss, nor shall any company make or require any rebate, diminution, or discount upon the sum to be paid on any policy based on any disability discrimination, nor insert in the policy any condition, nor make any stipulation, where the person insured shall bind himself or herself, his or her heirs, executors, administrators, and assigns, to accept any less sum than the full value or amount of the policy in case of a claim accruing on the policy by reason of the claim of the person insured, other than conditions or stipulations as are imposed upon all persons in similar cases, and any stipulation or condition made in this manner or inserted shall be void.
2. No foreign insurance company licensed to do or doing business in this state shall make any distinction or discrimination as to the premiums or rates charged for automobile insurance policies, nor shall the company make or permit the rejection of an individual’s application for insurance coverage, and the determination of the rate class of the individual, solely on the basis of a disability or the modification of the automobile with specialized equipment that permits an individual with a disability to operate the automobile, unless the disability or modification of the automobile is relevant to the risk of loss, nor shall any insurance company make or require any rebate, diminution, or discount upon the sum to be paid on any policy based on any disability discrimination, nor insert in the policy any condition, nor make any stipulation, where the person insured shall bind himself or herself, his or her heirs, executors, administrators, and assigns, to accept any less sum than the full value or amount of the policy in case of a claim accruing on the policy by reason of the claim of the person insured, other than conditions or stipulations as are imposed upon all persons in similar cases, and any stipulation or condition made or inserted shall be void. The department of business regulation shall enforce the provisions of this section.

History of Section. P.L. 1981, ch. 216, § 2; P.L. 1993, ch. 127, § 2; P.L. 1993, ch. 285, § 2; P.L. 1999, ch. 83, § 61; P.L. 1999, ch. 130, § 61.

27-2-24. Revocation or suspension of license of foreign company.

Whenever it appears to the insurance commissioner from the statements, or from an examination of the affairs, of any life, fire, marine, fire and marine, casualty, or other insurance company not incorporated under the authority of this state, that the company is insolvent, or is in an unsound financial condition, or that its business policies are unsound or improper, or that its condition or management is such as to render its further transaction of business hazardous to the public or its policyholders, or that the amount of its funds, net cash, or contingent assets is deficient, or that its capital is impaired, or that it is conducting its business fraudulently or refuses or neglects to comply with the laws of the state relating to insurance companies, it shall be the duty of the insurance commissioner, after notice and hearing, to revoke the license issued to the company and the licenses issued to all of its insurance producers, or the commissioner may revoke those licenses or suspend them for a period not exceeding their unexpired terms.

History of Section. P.L. 1992, ch. 445, § 3.

27-2-25. Notice of revocation or suspension of license.

The insurance commissioner shall give written notice to the company specifying the date on which any revocation or suspension shall be effective, the term of any suspension, and the ground for the revocation or suspension; provided, that if the ground for revocation or suspension is that the company has violated any provision of law or has failed to comply with its charter, the effective date of the revocation or suspension shall be not less than ten (10) days from the date of issue of the notice, and the particulars of the violation or failure to comply with its charter shall be specified in the notice. The notice shall be served by registered or certified mail, sent postage prepaid, and addressed to the company at its last home office address, or in the case of a company of a foreign country, sent to its resident manager in the United States or at his last address appearing on the records of the insurance commissioner. An affidavit of the insurance commissioner in any form as the commissioner may prescribe, or of anyone authorized by him or her to give notice, appended to a copy of the notice, that the notice has been mailed as provided in this section shall be prima facie evidence that the notice has been duly given. The insurance commissioner shall also cause notice of the revocation or suspension to be published in any manner, as the commissioner may deem necessary for the protection of the public.

History of Section. P.L. 1992, ch. 445, § 3; P.L. 2002, ch. 292, § 8.

27-2-26. Business prohibited during suspension or revocation.

Any insurance company or its insurance producers shall not make any contracts or issue any policies of insurance in the state after its revocation or suspension is effective or until its license is restored by the insurance commissioner.

History of Section. P.L. 1992, ch. 445, § 3.

27-2-27. Appeal from revocation or suspension.

A company aggrieved by a revocation or suspension of its license may, within thirty (30) days from the effective date of the revocation or suspension, file a petition in the superior court for the county of Providence for a review of that action of the insurance commissioner. The court shall summarily hear and determine the question whether the ground for revocation or suspension specified in the notice of the insurance commissioner exists and may make any appropriate order or decree. If the order or decree is adverse to the petitioning company it may within twenty (20) days from the issuing of the order or decree appeal to the supreme court; in case of an appeal the revocation or suspension of the license of the company shall continue in full force until the final determination of the question by the supreme court, unless vacated by the insurance commissioner during the pendency of the appeal.

History of Section. P.L. 1992, ch. 445, § 3.

27-2-28. Determination of premium tax rate.

The department of business regulation may participate in proceedings under § 44-17-1(d) to implement guidelines, directives, criteria, and may promulgate additional resulting rules and regulations pursuant to chapter 35 of title 42 as are necessary to implement § 44-17-1(d) .

History of Section. P.L. 2016, ch. 538, § 3.

27-2.1-1. New application fee.

Any foreign insurance company applying for licensure within the state of Rhode Island to transact insurance business must upon filing of an application submit to the insurance commissioner a non-refundable application fee of one thousand, two hundred dollars ($1,200).

History of Section. P.L. 1982, ch. 285, § 1; P.L. 2009, ch. 68, art. 12, § 5; P.L. 2013, ch. 31, § 1; P.L. 2013, ch. 36, § 1.

27-2.1-2. Review of application fee.

Whenever any foreign insurance company has made application to transact insurance business within the state, the applicant shall be assessed for the actual time incurred in conducting the analysis in accordance with the expense calculation for examinations under § 27-13.1-7(a)(1) .

History of Section. P.L. 1982, ch. 285, § 1; P.L. 2009, ch. 68, art. 12, § 5; P.L. 2013, ch. 31, § 1; P.L. 2013, ch. 36, § 1.

27-2.1-3. Repealed.

27-2.1-4. Use of fees.

Any and all fees as prescribed by this chapter shall be paid to the general treasurer of the state of Rhode Island.

History of Section. P.L. 1982, ch. 285, § 1; P.L. 2002, ch. 292, § 9.

27-2.2-1. Domestication of foreign insurer.

Any foreign insurer may become a domestic insurer by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type, and by filing with the insurance commissioner its articles of association, charter, or other organizational document, together with appropriate amendments to them adopted in accordance with the laws of this state bringing the articles of association, charter, or other organizational document into compliance with the laws of this state. The foreign insurer shall be entitled to the necessary or appropriate certificates and licenses to continue its business and to transact business in this state, and shall be subject to the authority and jurisdiction of this state. In connection with any domestication, the commissioner may waive any and all requirements for public hearings. No insurer domesticating into this state need merge, consolidate, transfer assets, or engage in any other reorganization, other than as specified in this section.

History of Section. P.L. 1992, ch. 24, § 1.

27-2.2-2. Effects of domestication.

Upon domestication in accordance with § 27-2.2-1 , the foreign insurer shall become a domestic insurer organized under the laws of this state and have all the rights, privileges, immunities, and powers, and be subject to all applicable laws, duties, and liabilities, of domestic insurers of the same type. The domestic insurer shall then and after this possess all rights that obtained prior to the domestication to the extent permitted by the laws of this state, and be responsible and liable for all the liabilities and obligations that obtained prior to the domestication. The certificate of authority, insurance producers, appointments and licenses, rates, and other items that the insurance commissioner allows, in his or her discretion, which are in existence at the time any insurer licensed to transact the business of insurance in this state transfers its corporate domicile to this or any other state or jurisdiction by domestication, shall continue in full force and effect after the transfer if the insurer remains duly qualified to transact the business of insurance in this state. All transferring insurers qualified in this state shall notify the commissioner of the transfer of domicile and shall provide the commissioner any information and documentation that the commissioner may request. All outstanding policies of any transferring insurer shall remain in full force and effect.

History of Section. P.L. 1992, ch. 24, § 1.

27-2.2-3. Fees.

An insurer becoming a domestic insurer through the domestication procedure specified in § 27-2.2-1 shall pay to the commissioner the fees that would be payable by a similar domestic insurer organizing and becoming licensed, or transacting business, in this state. An insurer becoming a domestic insurer pursuant to § 27-2.2-1 shall pay to the insurance commissioner a filing fee in the amount of one thousand dollars ($1,000) for the filing required.

History of Section. P.L. 1992, ch. 24, § 1.

27-2.2-4. Conversion to foreign insurer.

1. Any domestic insurer may, upon the approval of, and compliance with any conditions as may be imposed by the insurance commissioner, transfer its domicile, in accordance with the laws of the other state or jurisdiction, to any other state or jurisdiction, and upon the transfer shall cease to be a domestic insurer, and its corporate or other legal existence in this state shall cease upon the filing of proof of the re-domestication with the insurance commissioner and upon payment of a filing fee in the amount of one thousand dollars ($1,000).
2. The insurer shall be admitted to this state as a foreign insurer if qualified as a foreign insurer, upon compliance with the qualification requirements for foreign insurers pursuant to chapter 2 of this title, to the extent not waived by the commissioner.

History of Section. P.L. 1992, ch. 24, § 1.

27-2.3-1 — 27-2.3-22. Repealed.

27-2.4-1. Purpose and scope.

1. This chapter governs the qualifications and procedures for the licensing of insurance producers. It simplifies and organizes some statutory language to improve efficiency, permits the use of new technology and reduces costs associated with issuing and renewing insurance licenses. This chapter does not apply to excess and surplus lines agents and brokers licensed pursuant to § 27-3-38 except as provided in §§ 27-2.4-10 and 27-2.4-17 .
2. Whenever the words “agent”, “solicitor”, or “broker” and their plural construct are used in the context of a licensee pursuant to chapter 3 of this title and occur in this chapter, any general law, public law, act or resolution of the general assembly or department of business regulation, those words mean insurance producer, except for those provisions of law and regulation which govern excess and surplus lines agents or brokers licensed pursuant to § 27-3-38 .

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3.

27-2.4-2. Definitions.

The following definitions apply to this chapter:

1. “Business entity” means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity;
2. “Contracted producer report” means the annual report that all insurers contracting with insurance producers must provide to the department on or by March 1 listing each insurance producer to whom the insurer paid one hundred dollars ($100) or more in commissions for the preceding calendar year of January 1 to December 31. The department shall prescribe the form and manner of reporting.
3. “Department” means the department of business regulation;
4. “Home state” means any state or territory of the United States, or the District of Columbia, in which an insurance producer maintains his or her principal place of residence or principal place of business and is licensed to act as an insurance producer;
5. “Insurance” means any of the lines of authority set forth in this title;
6. “Insurance commissioner” means the director of the department of business regulation or his or her designee;
7. “Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance;
8. “Insurer” means: (i) any person, reciprocal exchange, interinsurer, Lloyds insurer, fraternal benefit society, and any other legal entity engaged in the business of insurance, including insurance producers; (ii) notwithstanding §§ 27-19-2 , 27-20-2 , 27-20.1-2 , 27-20.2-2 , 27-20.3-2 , and 27-41-22 , all of whom shall be engaged in the business of insurance for the purpose of this chapter, nonprofit hospital and/or medical service corporation, a nonprofit dental service corporation, a nonprofit optometric service corporation, a nonprofit legal service corporation, a health maintenance organization as defined in chapter 41 of this title or as defined in chapter 62 of title 42, or any other entity providing a plan of health benefits subject to state insurance regulation; and (iii) an organization that for consideration assumes certain risks for an insured. Insurer organizations may include corporations, stock companies, mutual companies, risk retention groups, reciprocals, captives, Lloyds associations, and government residual plans.
9. “License” means a document issued by this state’s insurance commissioner authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent or inherent, in the holder to represent or commit an insurance carrier;
10. “Limited line credit insurance” includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection (gap) insurance, and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the insurance commissioner determines should be designated a form of limited line credit insurance;
11. “Limited line credit insurance producer” means a person who sells, solicits or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group or individual policy;
12. “Limited lines insurance” means those lines of insurance that the insurance commissioner deems necessary to recognize for purposes of complying with subsection 27-2.4-10(e) ;
13. “Limited lines producer” means a person authorized by the insurance commissioner to sell, solicit or negotiate limited lines insurance;
14. “NAIC” means National Association of Insurance Commissioners;
15. “Negotiate” means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers;
16. “Person” means an individual;
17. “Resident” means a person who either resides in Rhode Island or maintains an office in Rhode Island where the business of producing insurance is transacted and designates Rhode Island as the residence for purposes of licensure;
18. “Sell” means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company;
19. “Solicit” means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company;
20. “Terminate” means the cancellation of the relationship between an insurance producer and the insurer or the termination of an insurance producer’s authority to transact insurance;
21. “Uniform application” means the current version of the NAIC uniform application for resident and nonresident insurance producer licensing.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2007, ch. 85, § 1; P.L. 2007, ch. 211, § 1; P.L. 2008, ch. 144, § 1; P.L. 2008, ch. 198, § 1; P.L. 2008, ch. 475, § 73.

27-2.4-3. License required.

A person shall not sell, solicit or negotiate insurance in this state for any class or classes of insurance unless the person is licensed for that line of authority in accordance with this chapter.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3.

27-2.4-4. Fees.

1. Fees required by this chapter shall be as follows:
   1. Initial insurance producer license: $ 55.00;
   2. Annual insurance producer renewal: $ 55.00; and
   3. Annual contracted producer report: $ 30.00 (per producer).
2. The insurance commissioner may by rule or regulation specify fees for letters of certification, clearance letters, duplicate licenses, and any other documents as well as fees for services and documents provided by or on behalf of the department that are reasonably determined by the insurance commissioner.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2002, ch. 65, art. 13, § 24; P.L. 2007, ch. 85, § 1; P.L. 2007, ch. 211, § 1; P.L. 2008, ch. 144, § 1; P.L. 2008, ch. 198, § 1.

27-2.4-5. Exceptions to licensing.

1. Nothing in this chapter shall be construed to require an insurer to obtain an insurance producer license. In this section, the term “insurer” does not include an insurer’s officers, directors, employees, subsidiaries or affiliates.
2. A license as an insurance producer shall not be required of the following:
   1. An officer, director or employee of an insurer or of an insurance producer, provided that the officer, director or employee does not receive any commission or fees on policies written or sold to insure risks residing, located or to be performed in this state; and:
      1. The officer, director or employee’s activities are executive, administrative, managerial, clerical or a combination of these, and are only indirectly related to the sale, solicitation or negotiation of insurance; or
      2. The officer, director or employee’s function relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or
   2. The officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers where the person’s activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance;
   3. A person who secures and furnishes information: (i) for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance; or (ii) for the purpose of enrolling individuals under plans, issuing certificates under plans or assisting in administering plans; or (iii) performs administrative services related to mass marketed property and casualty insurance; where no commission or fee is paid to the person for the service;
   4. An employer or association or its officers, directors, employees, or the trustees of an employee trust plan, to the extent that the employers, officers, employees, director or trustees are engaged in the administration or operation of a program of employee benefits for the employer’s or association’s own employees or the employees of its subsidiaries or affiliates, which program involves the use of insurance issued by an insurer, as long as the employers, associations, officers, directors, employees or trustees are not in any manner compensated, directly or indirectly, by the company issuing the contracts;
   5. Employees of insurers or organizations employed by insurers who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation or negotiation of insurance;
   6. A person whose activities in this state are limited to advertising without the intent to solicit insurance in this state through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the state, provided that the person does not sell, solicit or negotiate insurance that would insure risks residing, located or to be performed in this state;
   7. A person who is not a resident of this state who sells, solicits or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under that contract, provided that that person is licensed as an insurance producer to sell, solicit or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insurers risks located in that state;
   8. A salaried full-time employee who counsels or advises his or her employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer provided that the employee does not sell or solicit insurance or receive a commission;
   9. A person engaged or employed as an attorney licensed to practice law in Rhode Island and provided those persons do not sell, solicit or negotiate insurance;
   10. An actuary or a certified public accountant engaged or employed in a consulting capacity performing duties incidental to that position and provided those persons do not sell, solicit or negotiate insurance;
   11. A licensed public adjuster acting within the scope of an applicable license and provided those persons do not sell, solicit or negotiate insurance; or
   12. Rental car companies and their employees principally engaged in the rental of motor vehicles and which offer in connection with and incidental to the rental of those motor vehicles various optional insurance coverage during the term of the rental agreement which shall be no more than sixty (60) days.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2003, ch. 411, § 1; P.L. 2008, ch. 371, § 1.

27-2.4-6. Order to cease unlicensed activities.

1. If the department has reason to believe that any person is conducting any activities requiring licensure under this chapter without obtaining a license, or who after the denial, suspension or revocation of a license conducts any activities requiring licensure under this chapter, the department may issue its order to that person commanding them to appear before the department at a hearing after issuance of that order to show cause why the department should not issue an order to that person to cease and desist from the violations of the provisions of this chapter. The order to show cause may be served on any person named in the order in the same manner that summons in a civil action may be served, or by mailing a copy of the order, certified mail, return receipt requested, to that person at any address at which he or she has done business or at which he or she lives. If upon that hearing the department is satisfied that the person is in fact violating any provision of this chapter, then the department may order that person, in writing, to cease and desist from that violation. All hearings shall be governed in accordance with the Administrative Procedures Act, chapter 35 of title 42. If that person fails to comply with an order of the department after being afforded a hearing, the superior court in the county where the insurance transaction took place has jurisdiction upon complaint of the department to restrain and enjoin that person from violating this chapter.
2. Any person who violates this section by operating without a license shall be guilty of a misdemeanor and fined an amount not exceeding one thousand dollars ($1,000) or imprisoned for a term not exceeding one year, or both. The matter shall be referred to the department of attorney general.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2007, ch. 85, § 1; P.L. 2007, ch. 211, § 1.

27-2.4-7. Application for examination.

1. A resident individual applying for an insurance producer license shall pass a written examination unless exempt pursuant to § 27-2.4-11 . The examination shall test the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an insurance producer and the insurance laws and regulations of this state. Examinations required by this section shall be developed and conducted under rules and regulations prescribed by the insurance commissioner.
2. The insurance commissioner may make arrangements, including contracting with an outside testing service, for administering examinations and collecting a nonrefundable fee.
3. Each individual applying for an examination shall remit a nonrefundable fee as prescribed by the department pursuant to rule and regulation.
4. An individual who fails to appear for the examination as scheduled or fails to pass the examination, shall reapply for an examination and remit all required fees and forms before being rescheduled for another examination.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3.

27-2.4-8. Application for license.

1. A person applying for a resident insurance producer license shall make application to the insurance commissioner on the uniform application and declare under penalty of refusal, suspension or revocation of the license that the statements made in the application are true, correct and complete to the best of the individual’s knowledge and belief. Before approving the application, the insurance commissioner shall find that the individual:
   1. Is at least eighteen (18) years of age;
   2. Has not committed any act that is a ground for denial, suspension or revocation set forth in § 27-2.4-14 ;
   3. Has paid the fees set forth in § 27-2.4-4 ; and
   4. Has successfully passed the examinations for the lines of authority for which the person has applied.
2. A Rhode Island resident business entity acting as an insurance producer may elect to obtain an insurance producer license. Application shall be made using the uniform business entity application. Prior to approving the application, the commissioner shall find both of the following:
   1. The business entity has paid the appropriate fees.
   2. The business entity has designated a licensed producer responsible for the business entity’s compliance with the insurance laws and rules of this state.
3. The insurance commissioner may require any documents reasonably necessary to verify the information contained in an application.
4. Each insurer that sells, solicits or negotiates any form of limited line credit insurance shall provide to each individual whose duties will include selling, soliciting or negotiating limited line credit insurance a program of instruction that may be approved by the insurance commissioner.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2007, ch. 85, § 1; P.L. 2007, ch. 211, § 1; P.L. 2008, ch. 144, § 1; P.L. 2008, ch. 198, § 1; P.L. 2011, ch. 18, § 1; P.L. 2011, ch. 25, § 1.

27-2.4-9. License.

1. Unless denied licensure pursuant to § 27-2.4-14 , persons who have met the requirements of §§ 27-2.4-7 and 27-2.4-8 shall be issued an insurance producer license. An insurance producer may receive qualification for a license in one or more of the following lines of authority:
   1. Life insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income;
   2. Accident and health or sickness insurance coverage for sickness, bodily injury or accidental death and may include benefits for disability income;
   3. Property insurance coverage for the direct or consequential loss or damage to property of every kind;
   4. Casualty insurance coverage against legal liability, including that for death, injury or disability or damage to real or personal property;
   5. Variable life and variable annuity products insurance coverage provided under variable life insurance contracts and variable annuities;
   6. Personal lines-property and casualty insurance coverage sold to individuals and families for primary noncommercial purposes;
   7. Credit-limited line credit insurance;
   8. Any other line of insurance permitted under state laws or regulations.
2. An insurance producer license shall remain in effect unless revoked or suspended as long as the fee set forth in § 27-2.4-4 is paid and education requirements for resident individual insurance producers are met by the license renewal due date.
3. An individual insurance producer who allows his or her license to expire may, within twelve (12) months from the due date of the renewal fee, reinstate this license without the necessity of passing a written examination. A penalty in the amount of double the unpaid renewal fee shall be required for any renewal fee received after the due date.
4. A licensed insurance producer who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance (e.g., a long-term medical disability) may request a waiver of those procedures. The insurance producer may also request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures.
5. The license shall contain the insurance producer’s name, address, license number, license type, lines of authority, and any other information the insurance commissioner deems necessary.
6. Insurance producers shall inform the insurance commissioner by any means acceptable to the insurance commissioner of a change in legal name or address within thirty (30) days of the change. Failure to timely inform the insurance commissioner of a change in legal name or address may result in a penalty to be determined by the insurance commissioner.
7. In order to assist in the performance of the insurance commissioner’s duties, the insurance commissioner may contract with non-government entities, including the NAIC or any affiliates or subsidiaries which the NAIC oversees, to perform any ministerial functions, including the collection of fees, related to insurance producer licensing that the insurance commissioner and the non-governmental entity may deem appropriate.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2006, ch. 84, § 2; P.L. 2006, ch. 93, § 2.

27-2.4-10. Nonresident licensing.

1. Unless denied licensure pursuant to § 27-2.4-14 , a nonresident person shall receive a nonresident insurance producer license if:
   1. The person is currently licensed as a resident and in good standing in his or her home state;
   2. The person has submitted the proper request for licensure and has paid the fees required by § 27-2.4-4 ;
   3. The person has submitted or transmitted to the insurance commissioner the application for licensure that the person submitted to his or her home state, or in lieu of that application, a completed uniform application; and
   4. The person’s home state awards nonresident insurance producer licenses to residents of this state on the same basis.
2. The insurance commissioner may verify the insurance producer’s licensing status through the producer database maintained by the NAIC, its affiliates or subsidiaries.
3. A nonresident insurance producer who moves from one state to another state or a resident insurance producer who moves from this state to another state shall file a change of address and provide certification from the new resident state within thirty (30) days of the change of legal residence. No fee or license application is required.
4. Notwithstanding any other provision of this chapter, a person licensed as a surplus lines broker in his or her home state shall receive a nonresident surplus lines broker license pursuant to subsection (a) of this section. Except as provided in subsection (a) of this section, nothing in this section amends or supersedes any provision of chapter 3 of this title.
5. Notwithstanding any other provision of this chapter, a person licensed as a limited line credit insurance or other type of limited lines insurance producer in his or her home state shall receive a nonresident limited lines insurance producer license, pursuant to subsection (a) of this section, granting the same scope of authority as granted under the license issued by the insurance producer’s home state. For purposes of this section, “limited line insurance” is any authority granted by the home state which restricts the authority of the insurance producer to less than the total authority prescribed in associated major lines pursuant to § 27-2.4-9(a)(1) — (a)(8).

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3.

27-2.4-11. Exemption from examination.

1. An individual who applies for an insurance producer license in this state who was previously licensed for the same lines of authority in another state shall not be required to complete any pre-licensing education or examination, but shall be required to certify knowledge of Rhode Island law applicable to insurance producers. This exemption is only available if the person is currently licensed in that state or if the application is received within ninety (90) days of the cancellation of the applicant’s previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state’s producer database records, maintained by the NAIC, its affiliates or subsidiaries, indicate that the insurance producer is or was licensed in good standing for the line of authority requested.
2. A person licensed as an insurance producer in another state who moves to this state shall make application within ninety (90) days of establishing legal residence to become a resident insurance producer pursuant to § 27-2.4-8 . No pre-licensing education or examination shall be required of that person to obtain any line of authority previously held in the prior state except where the insurance commissioner determines otherwise by regulation.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3.

27-2.4-12. Assumed names.

An insurance producer doing business under any name other than the insurance producer’s legal name is required to notify the insurance commissioner prior to using the assumed name.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3.

27-2.4-13. Temporary licenses.

1. The insurance commissioner may issue a temporary insurance producer license for a period not to exceed one hundred eighty (180) days without requiring an examination if the insurance commissioner deems that the temporary license is necessary for the servicing of an insurance business in the following cases:
   1. To the surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the insurance producer or for the recovery or return of the insurance producer to the business or to provide for the training and licensing of new personnel to operate the insurance producer’s business; or
   2. To a member or employee of a business entity operated by a licensed insurance producer, upon the death or disability of that individual; or
   3. To the designee of a licensed insurance producer entering active service in the armed forces of the United States of America; or
   4. In any other circumstance where the insurance commissioner deems that the public interest will best be served by the issuance of this license.
2. The insurance commissioner may by order limit the authority of any temporary insurance producer in any way deemed necessary to protect the insured and the public. The insurance commissioner may require the temporary insurance producer to have a suitable sponsor who is a licensed insurance producer or insurer and who assumes responsibility for all acts of the temporary insurance producer and may impose other similar requirements designed to protect the insured and the public. The insurance commissioner may by order revoke a temporary license if the interest of the insured or the public are endangered. A temporary license may not continue after the owner or the personal representative disposes of the business.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2007, ch. 85, § 1; P.L. 2007, ch. 211, § 1.

27-2.4-14. Licenses — Denial — Nonrenewal — Suspension or revocation.

1. The insurance commissioner may place on probation, suspend, revoke or refuse to issue or renew an insurance producer’s license or may levy an administrative penalty in accordance with § 42-14-16 or any combination of actions, for any one or more of the following causes:
   1. Providing incorrect, misleading, incomplete or materially untrue information in the license application;
   2. Violating any insurance laws, or violating any regulation, subpoena or order of the insurance commissioner or of another state’s insurance commissioner;
   3. Obtaining or attempting to obtain a license through misrepresentation or fraud;
   4. Improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business;
   5. Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;
   6. Having been convicted of a felony;
   7. Having admitted or been found to have committed any insurance unfair trade practice or fraud;
   8. Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness or financial irresponsibility in this state or in another place;
   9. Having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory or administrative action under this section;
   10. Forging another’s name to an application for insurance or to any document related to an insurance transaction;
   11. Cheating on an examination for an insurance license;
   12. Knowingly accepting insurance business from an individual who is not licensed;
   13. Failing to comply with an administrative or court order imposing a child support obligation; or
   14. Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.
2. In the event that the action by the insurance commissioner is to non-renew or to deny an application for a license, the insurance commissioner shall notify the applicant or insurance producer and advise, in writing, the applicant or insurance producer of the reason for the denial or non-renewal of the applicant’s or insurance producer’s license. The applicant or insurance producer may make written demand upon the insurance commissioner within thirty (30) days for a hearing before the insurance commissioner to determine the reasonableness of the insurance commissioner’s action. The hearing shall be conducted pursuant to the Administrative Procedures Act, chapter 35 of title 42.
3. In addition to or in lieu of any applicable denial, suspension or revocation of a license, a person may, after hearing, be subject to an administrative fine in accordance with § 42-14-16 .
4. The insurance commissioner shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by this chapter and this title against any person who is under investigation for or charged with a violation of this chapter or this title even if the person’s license or registration has been surrendered or has lapsed by operation of the law.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2007, ch. 85, § 1; P.L. 2007, ch. 211, § 1.

27-2.4-15. Commissions.

1. No insurer or insurance producer shall pay, directly or indirectly, any commission, service fee, brokerage, or other valuable consideration to any person for services as an insurance producer unless the person performing the service held a valid license regarding the class or classes of insurance as to which the service was rendered at the time the service was performed. No person, other than a person properly licensed in accordance with this chapter at the time the person performs services as an insurance producer, shall accept any commissions, service fee, brokerage, or other valuable consideration for the services. Acceptance of the consideration shall constitute operating without a license. This section shall not prevent payment or receipt of renewal or other deferred commissions to or by any person entitled to the payment or receipt under this chapter.
2. No person shall accept a commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this chapter and is not licensed.
3. Renewal or other deferred commissions may be paid to a person for selling, soliciting or negotiating insurance in this state if the person was required to be licensed under this chapter at the time of the sale, solicitation or negotiation and was licensed at that time.
4. An insurer or insurance producer may pay or assign commissions, service fees, brokerages or other valuable consideration to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this state, unless the payment would violate §§ 27-4-6 , 27-6-46 , 27-8-7 , 27-9-44 and 27-29-4 of the general laws of this state.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2006, ch. 84, § 2; P.L. 2006, ch. 93, § 2.

27-2.4-15.1. Compensation disclosure.

1. Where any insurance producer or any affiliate of such producer receives any compensation from the customer for the initial placement of insurance, neither that producer nor the affiliate shall accept or receive any compensation from an insurer or other third-party for that placement of insurance unless the producer has, prior to the customer’s purchase of insurance:
   1. Obtained the customer’s documented acknowledgment that such compensation will be received by the producer or affiliate; and
   2. Provided a description of the method and factors utilized for calculating the compensation to be received from the insurer or other third-party for that placement.
2. This section shall not apply to:
   1. A person licensed as an insurance producer who acts only as an intermediary between an insurer and the customer’s producer, for example: a managing general agent, a sales manager, or wholesale broker;
   2. The placement of insurance in secondary or residual markets; or
   3. A producer whose sole compensation for the placement is derived from commissions, salaries and other remuneration from the insurer.
      1. Notwithstanding this provision, a producer shall, at the time of sale or no later than the delivery of the policy, disclose that they will be paid a commission by the company and may receive other performance based compensation. This does not apply to salaried employees of an insurance company.
3. For purposes of this section:
   1. “Affiliate” means a person that controls, is controlled by or is under common control with the producer.
   2. “Compensation from an insurer or other third-party” means payments, commissions, fees, awards, overrides, bonuses, contingent commissions, loans, stock options, gifts, prizes or any other form of valuable consideration, whether or not payable pursuant to a written agreement.
   3. “Compensation from the customer” shall not include any fee or similar expense or any fee or amount collected by or paid to the producer that does not exceed an amount established by the commissioner.
   4. “Customer” means the person signing the application or submission for insurance or the authorized representative of the insured actually negotiating the placement of insurance with the producer. A person shall not be considered a “customer” for purposes of this section if the person is:
      1. A participant or beneficiary of an employee benefit plan; or
      2. Covered by a group or blanket insurance policy or group annuity contract sold, solicited or negotiated by the insurance producer or affiliate.
   5. “Documented acknowledgement” means the customer’s acknowledgment obtained prior to the customer’s purchase of insurance.
4. An insurance producer may satisfy any requirements imposed by this section directly or through an affiliate.

History of Section. P.L. 2005, ch. 113, § 1; P.L. 2005, ch. 116, § 1.

27-2.4-16. Notification to insurance commissioner of termination.

1. Termination for cause.  An insurer or authorized representative of the insurer that terminates the employment contract or other insurance business relationship with an insurance producer shall notify the insurance commissioner within thirty (30) days following the effective date of the termination, using a format prescribed by the insurance commissioner, if the reason for termination is one of the reasons set forth in § 27-2.4-14 or the insurer has knowledge the insurance producer was found by a court, government body, or self-regulatory organization authorized by law to have engaged in any of the activities in § 27-2.4-14 . Upon the written request of the insurance commissioner, the insurer shall provide additional information, documents, records or other data pertaining to the termination or activity of the insurance producer.
2. Ongoing notification requirement.  The insurer or the authorized representative of the insurer shall promptly notify the insurance commissioner in a format acceptable to the insurance commissioner if, upon further review or investigation, the insurer discovers additional information that would have been reportable to the insurance commissioner in accordance with subsection (a) of this section had the insurer then known of its existence.
3. Copy of notification to be provided to the insurance producer.
   1. Within fifteen (15) days after making the notification required by subsections (a) and (b) of this section, the insurer shall mail a copy of the notification to the insurance producer at his or her last known address. If the insurance producer is terminated for cause for any of the reasons listed in § 27-2.4-14 , the insurer shall provide a copy of the notification to the insurance producer at his or her last known address by certified mail, return receipt requested, postage prepaid or by overnight delivery using a nationally recognized carrier.
   2. Within thirty (30) days after the insurance producer has received the original or additional notification, the insurance producer may file written comments concerning the substance of the notification with the insurance commissioner. The insurance producer shall, by the same means, simultaneously send a copy of the comments to the reporting insurer, and the comments shall become a part of the insurance commissioner’s file and accompany every copy of a report distributed or disclosed for any reason about the insurance producer as permitted under subsection (e) of this section.
4. Immunities.
   1. In the absence of actual malice, an insurer, the authorized representative of the insurer, an insurance producer, the insurance commissioner, or an organization of which the insurance commissioner is a member and that compiles the information and makes it available to other insurance commissioners or regulatory or law enforcement agencies shall not be subject to civil liability, except as provided in this section, and a civil cause of action of any nature shall not arise against these entities or their respective agents or employees, except as provided in this section, as a result of any statement or information required by or provided pursuant to this section or any information relating to any statement that may be requested in writing by the insurance commissioner, from an insurer or insurance producer; or a statement by a terminating insurer or insurance producer to an insurer or insurance producer limited solely and exclusively to whether a termination for cause under subsection (a) of this section was reported to the insurance commissioner, provided that the propriety of any termination for cause under subsection (a) of this section is certified in writing by an officer or authorized representative of the insurer or insurance producer terminating the relationship.
   2. In any action brought against a person that may have immunity under this chapter for making any statement required by this section or providing any information relating to any statement that may be requested by the insurance commissioner, the party bringing the action shall plead specifically in any allegation that subdivision (d)(1) of this section does not apply because the person making the statement or providing the information did so with actual malice.
   3. This chapter shall not abrogate or modify any existing statutory or common law privileges or immunities.
5. Confidentiality.
   1. Any documents, materials or other information in the control or possession of the department that is furnished by an insurer, insurance producer or an employee or agent of the insurer or insurance producer acting on behalf of the insurer or insurance producer, or obtained by the insurance commissioner in an investigation pursuant to this section, shall be confidential by law and privileged, shall not be subject to chapter 2 of title 38, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. The insurance commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the insurance commissioner’s duties.
   2. Neither the insurance commissioner nor any person who received documents, materials or other information while acting under the authority of the insurance commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to this chapter.
   3. In order to assist in the performance of the insurance commissioner’s duties under this chapter, the insurance commissioner:
      1. May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to this chapter, with other state, federal, and international regulatory agencies, with the NAIC, its affiliates or subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information;
      2. May receive documents, materials or information, including confidential and privileged documents, materials or information, from the NAIC, its affiliates or subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information;
      3. May enter into agreements governing sharing and use of information consistent with this subsection;
      4. No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in this chapter;
      5. Nothing in this chapter shall prohibit the insurance commissioner from releasing final, adjudicated actions including for cause terminations that are open to public inspection pursuant to chapter 2 of title 38 to a database or other clearinghouse service maintained by the NAIC, its affiliates or subsidiaries; and
      6. If the department releases to an unauthorized third party any documents, materials or other information provided to the department pursuant to this section, then the department shall be subject to a fine not to exceed one thousand dollars ($1,000) after a hearing on this violation brought in the Superior Court.
6. Penalties for failing to report.  An insurer, the authorized representative of the insurer, or insurance producer that fails to report as required under the provisions of this section or that is found to have reported with actual malice by a court of competent jurisdiction may, after notice and hearing, have its license or certificate of authority suspended or revoked and may be fined in accordance with § 42-14-16 .

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2013, ch. 31, § 2; P.L. 2013, ch. 36, § 2; P.L. 2021, ch. 395, § 6, effective July 14, 2021.

27-2.4-17. Reciprocity.

1. The insurance commissioner shall waive any requirements for a nonresident license applicant with a valid license from his or her home state, except the requirements imposed by § 27-2.4-10 , if the applicant’s home state awards nonresident licenses to residents of this state on the same basis.
2. A nonresident insurance producer’s satisfaction of his or her home state’s continuing education requirements for licensed insurance producers shall constitute satisfaction of this state’s continuing education requirements if the nonresident insurance producer’s home state recognizes the satisfaction of its continuing education requirements imposed upon insurance producers from this state on the same basis.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2003, ch. 80, § 1; P.L. 2003, ch. 81, § 1.

27-2.4-18. Reporting of actions.

1. An insurance producer shall report to the insurance commissioner any administrative action taken against the insurance producer in another jurisdiction or by another governmental agency in this state within thirty (30) days of the final disposition of the matter. This report shall include a copy of the order, consent to order or other relevant legal documents.
2. Within thirty (30) days of the initial pre-hearing date, an insurance producer shall report to the insurance commissioner any criminal prosecution of the insurance producer taken in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing and any other relevant legal documents.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3.

27-2.4-19. Fiduciary capacity of insurance producers — Misappropriation as theft.

That portion of all premiums or moneys which a licensed insurance producer collects from a policyholder and which is to be paid to an insurance company, its agents, or his or her employer because of the assumption of liability through the issuance of insurance contracts, or which the insurance producer collects from an insurance company or its agents and which is to be paid to a policyholder or claimant under any contract of insurance, shall be held by the insurance producer in a fiduciary capacity and shall not be misappropriated or converted to the insurance producer’s own use or illegally withheld by the insurance producer. Any insurance producer who converts or misappropriates these funds shall be held guilty of theft and punishable for theft as provided by law. Nothing contained in this section shall be deemed to require any insurance producer to maintain separate bank accounts or deposits for these funds if and so long as these funds held are reasonably ascertainable from the books of account and records of the insurance producer.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3.

27-2.4-20. Revocation or modification of insurance producer’s contract — Procedures.

1. No company shall cancel the authority of an insurance producer, if the insurance producer is not an employee of the company, and no company shall modify a contract with that insurance producer unless the company gives written notice of its intent to cancel that insurance producer or its intent to modify the contract at least one hundred eighty (180) days before the proposed effective date of any cancellation or at least one hundred eighty (180) days before the proposed effective date of any modification. No company shall allow the license of that insurance producer to expire unless the company gives written notice of its intent to do so at least one hundred eighty (180) days before the proposed effective date of expiration because of cancellation. Except as otherwise provided in this section, any insurance producer receiving notice of cancellation, modification, or expiration may, within sixty (60) days after receipt of the notice, make a written demand for reference to three (3) referees of the question as to whether or not the cancellation, modification, or expiration will affect the renewal, continuation, or replacement of any policies placed with the company through the efforts of the insurance producer, or the services needed by any policyholder doing business with the company as a result of the efforts of the insurance producer, as to justify renewal or continuation of any policies then in effect having been placed with the company by that insurance producer. In the event the referees find that the cancellation, modification, or expiration will affect the renewal, continuation, or replacement of any policies placed with the company through the efforts of the insurance producer, or the services needed by any policyholders doing business with the company as a result of the efforts of the insurance producer, then the referees shall order continuance or renewal of any policies expiring within a period of twelve (12) months of the issuance of the notice, at a rate of compensation to the insurance producer equal to that as provided in the agreement expiring or being cancelled or modified, for one additional policy period equal in length to the most recent policy period of the expiring policy, but in no event for more than one year. The referees shall not order continuance or renewal of any policies if they find that the reason for the cancellation or expiration of the agreement by the company was legitimately based upon one of the following grounds:
   1. The insurance producer was convicted of a dishonest act related to his or her occupation as an insurance agent;
   2. The insurance producer’s license to engage as an insurance producer was revoked; or
   3. The company surrendered its license to do business in the state.
2. An insurance producer making a written demand for a reference shall accompany the written demand with the names and addresses of three (3) persons, where the company shall, within fifteen (15) days, notify the insurance producer of its choice of one of the persons to act as one of the referees and at the same time submit the names and addresses of three (3) persons to the insurance producer, who shall, within fifteen (15) days after receiving these names, notify the company in writing of his her choice of one of the persons to act as a second referee. At the same time the insurance producer shall notify the commissioner, the notice to be on a form prescribed by the commissioner, that both the company and insurance producer have chosen referees. Within ten (10) days of the receipt of this notice the commissioner shall appoint a person to serve as third referee, and shall notify that person, the insurance producer, and the company in writing of this appointment. Each person nominated or appointed as a referee shall be a disinterested person, shall be a resident of the state, and shall be willing to act as a referee. Within ten (10) working days of the appointment of the third referee, who shall serve as chairperson, the three (3) referees shall meet, hear evidence, and reduce their decisions to writing and sign it, and shall deliver a copy of the decision to the insurance producer, to the company, and to the commissioner. In the event any company receiving a written demand for a reference fails to comply with the provisions of this subsection, then the insurance producer shall have the authority to renew or continue any policies placed with that company through the efforts of the insurance producer expiring within a period of thirteen (13) months from the date of the notice of cancellation, modification, or expiration of the agreement, at a rate of compensation to the insurance producer equal to that as provided in the agreement expiring or being cancelled or modified, for one additional policy period equal in length to the most recent policy period of the expiring policy, but in no event for more than one year.
3. Any insurance company and any insurance producer may by written contract agree to modify the provisions of subsections (a) and (b) of this section other than the requirement of a one hundred eighty (180) day notice in the event of cancellation or a one hundred eighty (180) day notice in the event of modification of a contract or of intent to allow the expiration of a license, by provisions presented to and approved by the commissioner which he or she finds after due hearing and investigation will adequately protect both the right of the policyholder to a continuance of insurance and the services of any insurance producer of his or her own choosing and the right of the insurance producer to fair compensation for the insurance placed with a company as a result of the insurance producer’s efforts. The commissioner may make reasonable rules of general application regarding these modified provisions.
4. The decision of the referees may provide for the renewal or continuance of any or all policies expiring within a period of twelve (12) months of the issuance of any notice, at a rate of compensation to the insurance producer equal to that as provided in the agreement expiring or being cancelled or modified, for one additional policy period equal in length to the most recent policy period of the expiring policy, but in no event for more than one year. The decision of the referees may also provide for the continuance of previous contractual provisions, if the referees, or a majority of them, find that the decision will best protect the right of a policyholder to a continuance of insurance and the services of an insurance producer of his or her own choosing and the right of any insurance producer to compensation for the insurance placed with a company as a result of his or her efforts, giving due consideration to the possibility the affected insurance producer has of obtaining similar coverage for policyholders affected from other companies at reasonable compensation. The decisions rendered in accordance with the provisions of this section providing for reference shall be binding on all companies and insurance producer affected by those decisions. If a decision orders the renewal or continuance of any policies, policyholders and the affected insurance producer shall be entitled in all respects to the same services and practices as were in effect prior to reference insofar as amounts and types of coverage, credit terms, commissions paid to the insurance producer, and insurance producer services are also continued.
5. All policies expiring within twelve (12) months of the notice may be renewed for the policy periods as provided in subsection (d) of this section, but no insurance producer or company relying on this section shall again refer the same issue to referees. Where other provisions of the general laws require notice to policyholders before nonrenewal of any coverage, the company shall, at the request of the insurance producer who is unable to replace any policy which has been renewed for one or more policy periods in accordance with this section, comply with those provisions of law.
6. An insurance producer initiating reference under this section and the company receiving written demand shall each be liable for the payment of the reasonable charges and expenses of his or her nominee for referee and one-half (1/2) of the compensation for the reasonable charges and expenses of the third referee. The third referee shall upon the execution of the decision furnish the insurance producer and the company with a written statement specifying in detail his or her charges for compensation and expenses. The insurance producer or the company, if aggrieved by these charges, may petition the commissioner for review. The petition shall set forth with particularity the specific item or charges in dispute. The commissioner shall, within ten (10) days of receipt of the petition, notify the interested parties of the date established for a hearing on the petition and, after the hearing, the commissioner shall approve or disapprove the charges in whole or in part, his or her findings and decisions shall be final and conclusive.
7. In the event a property and casualty insurance producer has a contract with and places such insurance with more than one property and casualty company, then said insurance producer and the company that contracts to provide such insurance to the insurance producer, shall not be subject to this section but shall be subject to the provisions of § 27-2.4-20.1 . However, any insurance producer who, by contractual agreement, either represents only one company or group of affiliated insurance companies or is required by contract to submit risks to a specified company or group of affiliated insurance companies prior to submitting them to other insurance companies, then those contracts shall remain subject only to § 27-2.4-20 .
8. This section shall not apply to agents of title insurers as defined in chapter 2.6 of this title, or to insurance producers who are employees of the insurance company.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2002, ch. 292, § 10; P.L. 2012, ch. 211, § 1; P.L. 2012, ch. 243, § 1.

27-2.4-20.1. Revocation or modification of property and casualty insurance producer’s contract — Procedures.

1. No property and casualty insurance company shall cancel the authority of an insurance producer, having a contract with and placing such insurance with more than one property and casualty insurance company, unless the company gives written notice of its intent to cancel that insurance producer at least fourteen (14) months before the proposed effective date of any cancellation. In such case, no company shall allow the license of that insurance producer to expire unless the company gives written notice of its intent to do so at least fourteen (14) months before the proposed effective date of expiration because of cancellation. In addition, no company shall modify a contract with an insurance producer, unless the company gives written notice of its intent to modify the contract of that insurance producer at least one hundred eighty (180) days before the proposed effective date of the modification.
2. When a property and casualty insurance company cancels the authority of an insurance producer having a contract with and places such insurance with more than one property and casualty insurance company, under the provisions of this section, the company shall continue to renew the expiring policies of the insurance producer who has received notification of cancellation that meets its underwriting guidelines for a period of fourteen (14) months of the issuance of the notice at a rate of compensation to that insurance producer equal to that provided in the expiring contract.
3. The provisions of subsections (a) and (b) do not apply to a property and casualty insurance producer:
   1. Convicted of a dishonest act related to his or her occupation as an insurance agent; or
   2. Whose license to engage as an insurance producer was revoked; or
   3. Whose company surrendered its license to do business in the state; or
   4. Who is an employee of the insurance company.

History of Section. P.L. 2012, ch. 211, § 2; P.L. 2012, ch. 243, § 2.

27-2.4-21. Regulations.

The insurance commissioner may, in accordance with Rhode Island law, promulgate reasonable rules and regulations as are necessary or proper to carry out the purposes of this chapter including, but not limited to, prelicensing requirements for applicants for an insurance producer license.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3; P.L. 2004, ch. 40, § 3; P.L. 2004, ch. 43, § 3.

27-2.4-22. Severability.

If any provisions of this chapter, or the application of a provision to any person or circumstances, shall be held invalid, the remainder of the chapter, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected.

History of Section. P.L. 2001, ch. 14, § 3; P.L. 2001, ch. 15, § 3.

27-2.4-23. Errors and omissions insurance required of resident insurance producers.

1. All holders of resident insurance producer licenses issued by the insurance division of the department of business regulation of the state of Rhode Island shall, as a condition for obtaining and retaining such license, carry and maintain errors and omissions insurance covering the business activities contemplated, in an amount not less than two hundred fifty thousand dollars ($250,000) per claim and five hundred thousand dollars ($500,000) annual aggregate limit. Authorized insurance producers of a licensed firm may meet the requirements of this section with a policy in the name of the licensed firm insuring each licensee employed by, or associated with, the firm.
2. Licensees shall maintain records and keep copies of all errors and omissions policies issued under this subsection.
3. Failure to carry and maintain errors and omissions insurance may result in the suspension or revocation of the resident insurance producer license.
4. This section shall not apply to insurance producers that are employed in that capacity directly by insurance companies.
5. The department of business regulation may grant a written exemption to any producer who shows that he/she is not engaged in the sale, solicitation or negotiation of insurance. Such exemption shall only be valid while the insurance producer is not engaged in the sale, solicitation or negotiation of insurance.

History of Section. P.L. 2006, ch. 92, § 1; P.L. 2006, ch. 154, § 1; P.L. 2007, ch. 85, § 1; P.L. 2007, ch. 211, § 1.

27-2.5-1. Short title.

This chapter may be cited as the “Interstate Compact.”

History of Section. P.L. 2004, ch. 463, § 1.

27-2.5-2. Compact enacted.

The interstate compact on insurance product regulation is hereby enacted into law and entered into with all other jurisdictions legally joining therein in form substantially as follows:

Preamble

This act intended to help states join together to establish an interstate compact to regulate designated insurance products.

Pursuant to terms and conditions of this act, the state of Rhode Island seeks to join with other states and establish the Interstate Insurance Product Regulation Compact, and thus become a member of the Interstate Insurance Product Regulation Commission. The Rhode Island Insurance Commissioner is hereby designated to serve as the representative of this state to the commission.

Interstate Insurance Product Regulation Compact

27-2.6-1. Title and purpose.

1. This chapter shall be known and may be cited as the “Rhode Island Title Insurers Act.”
2. The purpose of this chapter is to provide for the effective regulation and supervision of title insurance and title insurers licensed to write title insurance in this state.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-2. Application of act and construction with other laws.

1. This chapter shall apply to all persons engaged in the business of title insurance in this state.
2. Except where the context otherwise requires, all provisions of the Rhode Island general laws applying to insurance and insurance companies shall apply to title insurance insurers.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-3. Definitions.

As used in this chapter:

1. “Abstract of title” or “abstract” means a written history, synopsis or summary of the recorded instruments affecting the title to real property.
2. “Affiliate” means a specific person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with the person specified.
3. “Bona fide employee of the title insurer or title insurance agent” means an individual who devotes substantially all of his or her time to performing services on behalf of a title insurer or title insurance agent and whose compensation for those services is in the form of salary or its equivalent paid by the title insurer or title insurance agent.
4. “Commissioner” means the director of the department of business regulation, or his or her designee or the commissioner, director or superintendent of insurance in any other state.
5. “Control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position or corporate office held by the person. Control shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, ten percent (10%) or more of the voting securities of another person. This presumption may be rebutted by a showing that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.
6. “Direct operations” means that portion of a title insurer’s operations which are attributable to business written by a bona fide employee.
7. “Escrow” means written instruments, money or other items deposited by one party with a depository, escrow agent or escrowee for delivery to another party upon the performance, of a specified condition or the happening of a certain event.
8. “Escrow, settlement or closing fee” means the consideration for supervising or handling the actual execution, delivery or recording of transfer and lien documents and for disbursing funds.
9. “Foreign title insurer” means any title insurer incorporated or organized under the laws of any other state of the United States, the District of Columbia, or any other jurisdiction of the United States.
10. “Net retained liability” means the total liability retained by a title insurer for a single risk, after taking into account any ceded liability and collateral, acceptable to the commissioner, maintained by the insurer.
11. “Non-U.S. title insurer” means any title insurer incorporated or organized under the laws of any foreign nation or any province or territory.
12. “Person” means any natural person, partnership, association, cooperative, corporation, trust or other legal entity.
13. “Producer” means any person, including any officer, director or owner of five percent (5%) or more of the equity or capital of any person, engaged in this state in the trade, business, occupation or profession of:
    1. Buying or selling interests in real property;
    2. Making loans secured by interests in real property; or
    3. Acting as broker, agent, representative or attorney or a person who buys or sells any interest in real property or who lends or borrows money with the interest as security.
14. “Qualified financial institution” means an institution that is:
    1. Organized or (in the case of a United States branch or agency office of a foreign banking organization) licensed under the laws of the United States or any state and has been granted authority to operate with fiduciary powers;
    2. Regulated, supervised and examined by federal or state authorities having regulatory authority over banks and trust companies;
    3. Insured by the appropriate federal entity; and
    4. Qualified under any additional rules established by the commissioner.
15. “Security” or “security deposit” means funds or other property received by the title insurer as collateral to secure an indemnitor’s obligation under an indemnity agreement pursuant to which the insurer is granted a perfected security interest in the collateral in exchange for agreeing to provide coverage in a title insurance policy for a specific title exception to coverage.
16. “Subsidiary” means an affiliate controlled by a person directly or indirectly through one or more intermediaries.
17. “Title insurance agent” or “agent” means an authorized person, other than a bona fide employee of the title insurer who, on behalf of the title insurer, performs the following acts, in conjunction with the issuance of a title insurance report or policy:
    1. Determines insurability and issues title insurance reports or policies, or both, based upon the performance or review of a search or abstract of title; and
    2. Performs one or more of the following functions:
       1. Collects or disburses premiums, escrow or security deposits or other funds;
       2. Handles escrows, settlements or closings;
       3. Solicits or negotiates title insurance business; or
       4. Records closing documents.
18. “Title insurance business” or “business of title insurance” means“:
    1. Issuing as insurer or offering to issue as insurer, a title insurance policy;
    2. Transacting or proposing to transact by a title insurer any of the following activities when conducted or performed in contemplation of, or in conjunction with, the issuance of a title insurance policy:
       1. Soliciting or negotiating the issuance of a title insurance policy;
       2. Guaranteeing, warranting or otherwise insuring the correctness of title searches for all instruments affecting titles to real property, any interest in real property, cooperative units and proprietary leases and for all liens or charges affecting the same;
       3. Handling of escrows, settlements or closings;
       4. Executing title insurance policies;
       5. Effecting contracts of reinsurance.
    3. Guaranteeing, warranting or insuring searches or examination of title to real property or any interest in real property;
    4. Guaranteeing or warranting the status of title as to ownership of or liens on real property and personal property by any person other than the principals to the transaction; or
    5. Doing or proposing to do any business substantially equivalent to any of the activities listed in this subsection in a manner designed to evade the provisions of this chapter.
19. “Title insurance policy” or “policy” means a contract insuring or indemnifying owners of, or other persons lawfully interested in, real or personal property or any interest in real property, against loss or damage arising from any or all of the following conditions existing and not excepted or excluded:
    1. Defects in or liens or encumbrances on the insured title;
    2. Unmarketability of the insured title;
    3. Invalidity, lack of priority or unenforceability of liens or encumbrances on the stated property;
    4. Lack of legal right of access to the land; or
    5. Unenforceability of rights in title to the land.
20. “Title insurer” or “insurer” means a company organized under laws of this state for the purpose of transacting the business of title insurance and any foreign or non-United States title insurer licensed in this state to transact the business of title insurance.
21. “Title plant” means a set of records consisting of documents, maps, surveys or entries affecting title to real property or any interest in or encumbrance on the property, which have been filed or recorded in the jurisdiction for which the title plant is established or maintained.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-4. Corporate form required.

No person other than a domestic, foreign or non-United States title insurer organized on the stock plan licensed under title 27 as a title insurer shall issue a title insurance policy or otherwise transact the business of title insurance in this state.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-5. Authorized activities of title insurers.

Subject to the exceptions and restrictions contained in this chapter, a title insurer shall have the power to:

1. Do only title insurance business;
2. Reinsure title insurance policies; and
3. Perform ancillary activities, unless prohibited by the commissioner by regulation, including, examining titles to real property and any interest in real property and procuring and furnishing related information and information about relevant personal property, when not in contemplation of, or in conjunction with, the issuance of a title insurance policy.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-6. Limitations on powers.

1. No insurer that transacts any class, type, or kind of business other than title insurance shall be eligible for the issuance or renewal of a license to transact the business of title insurance in this state, nor shall title insurance be transacted, underwritten, or issued by any insurer transacting or licensed to transact any other class, type, or kind of business.
2. A title insure shall not engage in the business of guaranteeing payment of the principal or the interest of bonds or mortgages.
3. 1. Notwithstanding subsection (a) of this section, and to the extent such coverage is lawful within this state, a title insurer is expressly authorized to issue closing or settlement protection to a proposed insured upon request if the title insurer or its title agent issues a preliminary report, binder, or title insurance policy.  Such closing or settlement protection must be  provided in connection with the issuance of any loan policy insuring a lender’s interest in residential property intended for residential occupancy containing four (4) or less units. Nothing  in this section shall prohibit the title insurer from providing such closing or settlement protection  in connection with the issuance of any loan policy insuring a lender’s interest in any other type of  residential or commercial property. The closing or settlement protection shall conform to the terms of coverage and form of instrument as approved by the commissioner and may indemnify a proposed insured solely against loss of settlement funds only because of the following acts of a title insurer’s named title insurance agent:
      1. Theft of settlement funds; and
      2. Failure to comply with written closing instructions by the proposed insured when agreed to by the title insurance agent relating to title insurance coverage.
   2. The fee charged by a title insurer for each party receiving closing protection coverage  shall be filed with, and approved by, the commissioner pursuant to § 27-2.6-16 . The fee shall not  be subject to any agreement requiring a division of fees or premiums collected on behalf of the  title insurer. The single fee shall be for the protection of all parties receiving the benefit of closing  protection, to wit: The buyer(s) or borrower(s) and the lender(s) in connection with the real property transaction giving rise to the issuance of the closing or settlement protection.
   3. A title insurer shall not provide any other coverage that purports to indemnify against improper acts or omissions of a person with regard to escrow, settlement, or closing services, except for an insured closing letter in a form approved by the department.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1; P.L. 2014, ch. 354, § 1; P.L. 2014, ch. 393, § 1.

27-2.6-7. Minimum capital and surplus requirements.

Before being licensed to do insurance business in this state, a title insurer shall establish and maintain a minimum paid-in capital of not less than five hundred thousand dollars ($500,000) and, in addition, paid-in initial surplus of at least five hundred thousand dollars ($500,000).

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-8. Admitted asset standards.

In determining the financial condition of a title insurer doing business under this chapter, the investment provisions of chapters 11 and 11.1 of this title shall apply, except that an investment in a title plant or plants in an amount equal to the actual cost shall be allowed as an admitted asset for title insurers. The aggregate amount of the investment shall not exceed the lesser of twenty percent (20%) of admitted assets or forty percent (40%) of surplus to policyholders, as shown on the most recent annual statement of the title insurer on file with the commissioner.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-9. Reserves.

In determining the financial condition of a title insurer doing business under this chapter, the Rhode Island general laws requiring the establishment of reserves sufficient to cover all known and unknown liabilities including allocated and unallocated loss adjustment expense, shall apply, except that a title insurer shall establish and maintain additional reserves in accordance with regulations promulgated by the insurance commissioner.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-10. Liquidation, dissolution or insolvency.

1. Chapter 14.3 of this title shall apply to all title insurers subject to the Title Insurance Act, except as otherwise provided in this section. In applying the provisions of chapter 14.3 of this title, the court shall consider the unique aspects of title insurance and shall have broad authority to fashion relief that provides for the maximum protection of the title insurance policyholders.
2. Security and escrow funds held by or on behalf of the title insurer shall not become general assets and shall be administered as secured creditor claims defined in chapter 14.3 of this title.
3. Title insurance policies that are in force at the time an order of liquidation is entered shall not be canceled except upon a showing to the court of good cause by the liquidator. The determination of good cause shall be within the discretion of the court. In making this determination, the court shall consider the unique aspects of title insurance and all other relevant circumstances.
4. The court may set appropriate dates that potential claimants must file their claims with the liquidator. The court may set different dates for claims based upon the title insurance policy than for all other claims. In setting dates, the court shall consider the unique aspects of title insurance and all other relevant circumstances.
5. As of the date of the order of insolvency or liquidation, all premiums paid, due or to become due under policies of the title insurers, shall be fully earned. It shall be the obligation of agents, insureds or representatives of the title insurer to pay fully earned premium to the liquidator or rehabilitator.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-11. Diversification requirement.

1. Without the prior written approval of the commissioner, a domestic title insurer shall not accept:
   1. Additional business from a title insurance agent that is not an affiliated company with the insurer if, when added to other business written through the title insurance agent during the same calendar year, that agent’s aggregate premiums written on behalf of the title insurer will exceed twenty percent (20%) of the title insurer’s gross premiums written during the prior calendar year, as shown on the title insurer’s most recent annual statement on file with the commissioner; or
   2. Additional direct operations business from a single source if, when added to other direct operations business from the single source during the same calendar year, the aggregate premiums written on the direct operations business of the single source will exceed twenty percent (20%) of the title insurer’s gross premiums written during the prior calendar year as shown on the title insurers most recent annual statement on file with the commissioner. For purposes of this section a “single source” means a person that refers business to the title insurer and any other person that controls, is controlled by, or is under common control with, that person.
2. In determining whether prior approval may be given, the commissioner shall consider:
   1. The potential that the acceptance of more business from the title agent or source may adversely affect the financial solvency of the title insurer;
   2. The availability of competing title agents or additional sources in the territories in which the title insurer accepts risks;
   3. The number of years the title insurer has been in business;
   4. Reinsurance arrangements mitigating the concentration of business from the agent or source;
   5. The comparative profitability of the agent’s or source’s book of business;
   6. The degree of oversight of the agent’s operations exercised by the title insurer; and
   7. Any other circumstances deemed by the commissioner to be appropriate.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-12. Policyholder treatment.

1. When a title insurance report includes an offer to issue an owner’s policy covering the resale of owner-occupied residential property, the report shall be furnished to the purchaser-mortgagor or its representative as soon as reasonably possible prior to closing. If the report cannot be delivered prior to the day of closing, the title insurer or agent shall document the reasons for the delay. The report furnished to the purchaser-mortgagor shall incorporate the following statement on the first page in bold type:

   “Please read the exemptions and the terms shown or referred to herein carefully. The exemptions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered.

   It is important to note that this form is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land.”

2. A title insurer issuing a lender’s title insurance policy in conjunction with a mortgage loan made simultaneously with the purchase of all or part of the real estate securing the loan, where no owner’s title insurance policy has been requested, shall give written notice to the purchaser-mortgagor at the time the commitment is prepared. The notice shall explain that a lender’s title insurance policy is to be issued protecting the mortgage-lender, and that the policy does not provide title insurance protection to the purchaser-mortgagor as the owner of property being purchased. The notice shall explain what title policy insures against and what possible exposures exist for the purchaser-mortgagor that could be insured against through the purchase of an owner’s policy. The notice shall also explain that the purchaser-mortgagor may obtain an owner’s title insurance policy protecting the property owner at a specified cost or approximate cost, if the proposed coverages or amount of insurance is not then known. A copy of the notice, signed by the purchaser-mortgagor, shall be retained in the relevant underwriting file at least five (5) years after the effective date of the policy.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-13. Duties of title insurers utilizing the services of title insurance agents.

1. The title insurer shall not accept business from a title insurance agent unless there is in force a written contract between the parties that sets forth the responsibilities of each party and, where both parties share responsibility for a particular function, specifies the division of responsibilities.
2. The title insurer shall, on at least a biennial basis, conduct an on-site review of the underwriting, claims, and escrow practices of the agent that shall include a review of the agent’s policy blank inventory and processing operations.
   1. If the title insurance producer is also an attorney, and asserts that any documents requested in connection with the review provided in subsection (b) are prohibited from disclosure by an ethical requirement, the producer shall identify in writing the particular document, the applicable privilege, and provide a redacted copy to the title insurer.
3. A domestic title insurer shall not appoint to its board of directors an officer, director, employee, or controlling shareholder or any title insurance agent who wrote one percent (1%) or more of the title insurer’s direct premiums written during the previous calendar year as shown on the tile insurer’s most recent annual statement on file with the commissioner. This subsection shall not apply to relationships governed by § 27-35-1 et seq.
4. The title insurer shall maintain an inventory of all policy forms or policy numbers allocated to each title insurance agent.
5. The title insurer shall have on file proof that the title insurance agent is licensed by this state.
6. The title insurer shall establish the underwriting guidelines and, where applicable, limitations on title claims settlement authority to be incorporated into contracts with its title insurance agents.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1; P.L. 2014, ch. 488, § 1; P.L. 2014, ch. 521, § 1.

27-2.6-14. Prohibition of rebate and fee splitting.

A title insurer or other person shall not give or receive, directly or indirectly, any consideration for the referral of title insurance business or escrow or other service provided by a title insurer. This section does not affect a title insurer’s ability to pay consideration to persons or entities who provide core services, as defined by the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2607, as amended.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-15. Favored agent of title insurer.

A title insurer shall not participate in any transaction in which it has actual knowledge that a producer or other person requires, directly or indirectly, or through any trustee, director, officer, agent, employee or affiliate, as a condition, agreement or understanding to selling or furnishing any other person a loan, or loan extension, credit, sale, property, contract, lease or service, that the other person shall place a title insurance policy of any kind with the title insurer or through a particular title insurance agent.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-16. Premium rate filings and standards.

No title insurer may charge any rates regulated by the state after the effective date of this act, except in accordance with the premium rate schedule and manuals filed with and approved by the commissioner in accordance with the provisions of chapter 44 of this title.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-17. Form filing.

1. A title insurer or authorized rate service organization shall not deliver or issue for delivery or permit any of its authorized title insurance agents to deliver in this state, any policy form, in connection with title insurance written, unless it has been filed with and approved by the commissioner.
2. Forms covered by this section shall include:
   1. Title insurance policies, including standard form endorsements; and
   2. Title insurance commitments issued prior to the issuance of a title insurance policy;
   3. An insurer may use American Land Title Association (ALTA) approved checklists on endorsements.
3. After notice and opportunity to be heard are given to the insurer or rate service organization which submitted a form for approval, the commissioner may withdraw approval of the form on finding that the use of the form is contrary to the legal requirements applicable at the time of withdrawal. The effective date of withdrawal of approval shall not be less than ninety (90) days after notice of withdrawal is given.
4. Any term or condition related to an insurance coverage provided by an approved title insurance policy or any exception to the coverage, except those ascertained from a search and examination of records relating to a title or inspection or survey of a property to be insured, may only be included in the policy after the term, condition or exception has been filed with the commissioner and approved.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-18. Filing by rating bureaus.

1. A title insurer may satisfy its obligation to file premium rates, rating manuals and forms as required by this chapter by becoming a member of, or a subscriber to, a rate service organization, organized and licensed under the provisions of this code, where the organization makes the filing, and by authorizing the commissioner in writing to accept the filings on the insurer’s behalf.
2. Nothing in this chapter shall be construed as requiring a title insurer to become a member of, or a subscriber to, any rate service organization. Nothing in this chapter shall be construed as prohibiting the filing of deviations from rate service organization filings by any member or subscriber.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-19. Penalties and liabilities.

1. If the commissioner determines that the title insurer has violated this chapter, or any regulation or order promulgated thereunder, after notice and opportunity to be heard, the commissioner may order:
   1. A penalty pursuant to § 42-14-16 for each violation; and
   2. Revocation or suspension of the title insurer’s license.
2. Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided for in the insurance code.
3. Nothing contained in this chapter is intended to or shall in any manner limit or restrict the rights of policyholders, claimants and creditors.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-20. Violations of the Real Estate Settlement Procedures Act (RESPA).

The commissioner or attorney general may bring an action in a court of competent jurisdiction to enjoin violations of RESPA, 12 U.S.C. § 2607, as amended.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.6-21. Severability.

If any provision of this chapter, or the application of the provision to any person or circumstances shall be held invalid, the remainder of the chapter and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected.

History of Section. P.L. 2010, ch. 58, § 1; P.L. 2010, ch. 66, § 1.

27-2.7-1. Definitions.

For purposes of this section, the following terms shall have the following meanings:

1. “Customer” means a person who purchases portable electronics or services;
2. “Department” means the department of business regulation;
3. “Enrolled customer” means a customer who elects coverage under a portable electronics insurance policy issued by a vendor of portable electronics;
4. “Insurance commissioner” means the director of the department of business regulation or his/her designee;
5. “Location” means any physical location in the state of Rhode Island or any website, call center site or similar location directed to residents of the state of Rhode Island;
6. “Portable electronics” means electronic devices that are portable in nature, their accessories and services related to the use of the device;
7. 1. “Portable electronics insurance” means insurance providing coverage for the repair or replacement of portable electronics which may provide coverage for portable electronics against any one or more of the following causes of loss: loss, theft, inoperability due to mechanical failure, malfunction, damage or other similar causes of loss.
   2. “Portable electronics insurance” does not include:
      1. A service contract or extended warranty providing coverage limited to the repair, replacement or maintenance of property for the operational or structural failure of property due to a defect in materials, workmanship, accidental damage from handling, power surges, or normal wear and tear;
      2. A policy of insurance covering a seller’s or a manufacturer’s obligations under a warranty; or
      3. A homeowner’s renter’s, private passenger automobile, commercial multi-peril, or similar policy;
8. “Portable electronics transaction” means:
   1. The sale or lease of portable electronics by a vendor to a customer; or
   2. The sale of a service related to the use of portable electronics by a vendor to a customer.
9. “Supervising entity” means a business entity that is a licensed insurer or insurance producer that is authorized by an insurer to supervise the administration of a portable electronics insurance program.
10. “Vendor” means a person in the business of engaging in portable electronics transactions directly or indirectly.

History of Section. P.L. 2012, ch. 136, § 1; P.L. 2012, ch. 247, § 1.

27-2.7-2. Licensure of vendors.

1. A vendor is required to hold a portable electronics insurance vendor license to sell or offer coverage under a policy of portable electronics insurance.
2. A portable electronics insurance vendor license issued under this chapter shall authorize any employee or authorized representative of the vendor to sell or offer coverage under a policy of portable electronics insurance to a customer at each location at which the entity engages in portable electronics transactions.
3. The supervising entity shall maintain a registry of vendor locations which are authorized to sell or solicit portable electronics insurance coverage in this state. Upon request by the insurance commissioner and with ten (10) days notice to the supervising entity, the registry shall be open to inspection and examination by the insurance commissioner during regular business hours of the supervising entity.
4. Notwithstanding any other provision of law, a license issued pursuant to this section shall authorize the licensee and its employees or authorized representatives to engage in those activities that are permitted in this section.

History of Section. P.L. 2012, ch. 136, § 1; P.L. 2012, ch. 247, § 1.

27-2.7-3. Requirements for sale of portable electronics insurance.

1. At every location where portable electronics insurance is offered to customers, brochures or other written materials must be made available to a prospective customer which:
   1. Disclose that portable electronics insurance may provide a duplication of coverage already provided by a customer’s homeowner’s insurance policy, renter’s insurance policy or other source of coverage;
   2. State that the enrollment by the customer in a portable electronics insurance program is not required in order to purchase or lease portable electronics or services;
   3. Summarize the material terms of the insurance coverage, including:
      1. The identity of the insurer;
      2. The identity of the supervising entity;
      3. The amount of any applicable deductible and how it is to be paid;
      4. Benefits of the coverage; and
      5. Key terms and conditions of coverage such as whether portable electronics may be repaired or replaced with similar make and model reconditioned or non-original manufacturer parts or equipment.
   4. Summarize the process for filing a claim, including a description of how to return portable electronics and the maximum fee applicable in the event the customer fails to comply with any equipment return requirements; and
   5. State that an enrolled customer may cancel enrollment for coverage under a portable electronics insurance policy at any time and the person paying the premium shall receive a refund of any applicable unearned premium.
2. Portable electronics insurance may be offered on a month-to-month or other periodic basis as a group or master commercial inland marine policy issued to a vendor of portable electronics for its enrolled customers.
3. Eligibility and underwriting standards for customers electing to enroll in coverage shall be established for each portable electronics insurance program.

History of Section. P.L. 2012, ch. 136, § 1; P.L. 2012, ch. 247, § 1.

27-2.7-4. Authority of vendors of portable electronics.

1. The employees and authorized representatives of vendors may sell or offer portable electronics insurance to customers and shall not be subject to licensure as an insurance producer under this title provided that:
   1. The vendor obtains a portable electronics insurance vendor license to authorize its employees or authorized representatives to sell or offer portable electronics insurance pursuant to this section;
   2. The insurer issuing the portable electronics insurance either directly supervises or appoints a supervising entity to supervise the administration of the program including development of a training program for employees and authorized representatives of the vendors. The training required by this subdivision shall comply with the following:
      1. The training shall be delivered to employees and authorized representatives of vendors who are directly engaged in the activity of selling or offering portable electronics insurance;
      2. The training may be provided in electronic form. However, if conducted in an electronic form, the supervising entity shall implement a supplemental education program regarding the portable electronics insurance product that is conducted and overseen by licensed employees of the supervising entity; and
      3. Each employee and authorized representative shall receive basic instruction about the portable electronics insurance offered to customers and the disclosures required under § 27-2.7-3 .
   3. No employee or authorized representative of a vendor of portable electronics shall advertise, represent or otherwise hold himself or herself out as a licensed insurance producer.
2. Notwithstanding any other provision of law, employees or authorized representatives of a vendor of portable electronics shall not be compensated based primarily on the number of customers enrolled for portable electronics insurance coverage but may receive compensation for activities under the limited lines license which is incidental to their overall compensation.
3. The charges for portable electronics insurance coverage may be billed and collected by the vendor of portable electronics. Any charge to the enrolled customer for coverage that is not included in the cost associated with the purchase or lease of portable electronics or related services shall be separately itemized on the enrolled customer’s bill. If the portable electronics insurance coverage is included with the purchase or lease of portable electronics or related services the vendor shall clearly and conspicuously disclose to the enrolled customer that the portable electronics insurance coverage is included with the portable electronics or related services. Vendors billing and collecting such charges shall not be required to maintain such funds in a segregated account provided that the vendor is authorized by the insurer to hold such funds in an alternative manner and remits such amounts to the supervising entity within sixty (60) days of receipt. All funds received by a vendor from an enrolled customer for the sale of portable electronics insurance shall be considered funds held in trust by the vendor in a fiduciary capacity for the benefit of the insurer. Vendors may receive compensation for billing and collection services.

History of Section. P.L. 2012, ch. 136, § 1; P.L. 2012, ch. 247, § 1.

27-2.7-5. Suspension or revocation of license.

If a portable electronics insurance vendor or its employee or authorized representative violates any provision of this section, the insurance commissioner may do any of the following:

1. After notice and hearing, impose fines not to exceed five hundred dollars ($500) per violation or five thousand dollars ($5,000) in the aggregate for such conduct.
2. After notice and hearing, impose other penalties that the commissioner deems necessary and reasonable to carry out the purposes of this chapter including:
   1. Suspending the privilege of transacting portable electronics insurance pursuant to this section at specific business locations where violations have occurred; and
   2. Suspending or revoking the ability of individual employees or authorized representatives to act under the license; and
3. Any other penalties appropriate under § 42-14-16 .

History of Section. P.L. 2012, ch. 136, § 1; P.L. 2012, ch. 247, § 1.

27-2.7-6. Termination of portable electronics insurance.

Notwithstanding any other provision of law:

1. An insurer may terminate or otherwise change the terms and conditions of a policy of portable electronics insurance only upon providing the vendor and its enrolled customers with at least thirty (30) days notice. An insurer may not change the terms and conditions of a policy of portable electronics insurance more than once in any six (6) month period.
2. If the insurer changes the terms and conditions, then the insurer shall provide the vendor with a revised policy or endorsement and each enrolled customer with a revised certificate, endorsement, updated brochure, or other evidence indicating a change in the terms and conditions has occurred and a summary of material changes.
3. Notwithstanding subdivision (1) of this section, an insurer may terminate an enrolled customer’s enrollment under a portable electronics insurance policy upon fifteen (15) days notice for discovery of fraud or material misrepresentation in obtaining coverage or in the presentation of a claim thereunder.
4. Notwithstanding subdivision (1) of this section, an insurer may immediately terminate an enrolled customer’s enrollment under a portable electronics insurance policy:
   1. For nonpayment of premium;
   2. If the enrolled customer ceases to have an active service with the vendor of portable electronics; or
   3. If an enrolled customer exhausts the aggregate limit of liability, if any, under the terms of the portable electronics insurance policy and the insurer sends notice of termination to the enrolled customer within thirty (30) calendar days after exhaustion of the limit. However, if notice is not timely sent, enrollment shall continue notwithstanding the aggregate limit of liability until the insurer sends notice of termination to the enrolled customer.
5. When a portable electronics insurance policy is terminated by a vendor, the vendor shall mail or deliver written notice to each enrolled customer advising the enrolled customer of the termination of the policy and the effective date of termination. The written notice shall be mailed or delivered to the enrolled customer at least thirty (30) days prior to the termination.
6. Whenever notice or correspondence with respect to a policy of portable electronics insurance is required pursuant to this section or is otherwise required by law, it shall be in writing and sent within the notice period, if any, specified within the statute or regulation requiring the notice or correspondence. Notwithstanding any other provision of law, notices and correspondence may be sent either by mail or by electronic means as set forth in this subdivision. If the notice or correspondence is mailed, it shall be sent to the vendor of portable electronics at the vendor’s mailing address specified for such purpose and to its affected enrolled customers’ last known mailing addresses on file with the insurer. The insurer or vendor of portable electronics, as the case may be, shall maintain proof of mailing in a form authorized or accepted by the United States postal service or other commercial mail delivery service. If the notice or correspondence is sent by electronic means, it shall be sent to the vendor of portable electronics at the vendor’s electronic mail address specified for such purpose and to its affected enrolled customers’ last known electronic mail address as provided by each enrolled customer to the insurer or vendor of portable electronics, as the case may be. For purposes of this subdivision, an enrolled customer’s provision of an electronic mail address to the insurer or vendor of portable electronics, as the case may be, shall be deemed consent to receive notices and correspondence by electronic means. The insurer or vendor of portable electronics, as the case may be, shall maintain proof that the notice or correspondence was sent.
7. Notice or correspondence required by this section or otherwise required by law may be sent on behalf of an insurer or vendor, as the case may be, by the supervising entity appointed by the insurer.

History of Section. P.L. 2012, ch. 136, § 1; P.L. 2012, ch. 247, § 1.

27-2.7-7. Application for license and fees.

1. A sworn application for a license under this chapter shall be made to and filed with the department on forms prescribed and furnished by the department in accordance with the provisions of § 27-2.4-9(a)(8) .
2. The application shall:
   1. Provide the name, residence address, and other information required by the department for an employee or officer of the vendor that is designated by the applicant as the person responsible for the vendor’s compliance with the requirements of this chapter. However, if the vendor derives more than fifty percent (50%) of its revenue from the sale of portable electronics insurance the information noted above shall be provided for all officers, directors, and shareholder of record having beneficial ownership of ten percent (l0%) or more of any class of securities registered under the federal securities law; and
   2. The location of the applicant’s home office.
3. Any license under this chapter is subject to all applicable provisions of chapter 2.4 of this title, including, but not limited to, notification of change of address, lapse of license, notification of administrative actions, assumed names and basis for suspension or revocation of license; provided however, in the event there is a conflict between the provisions of this chapter and chapter 2.4 of this title, this chapter shall prevail.
4. Any vendor engaging in portable electronics insurance transactions on or before the effective date of this chapter must apply for licensure within ninety (90) days of the application being made available by the department. Any applicant commencing operations after the effective date of this chapter must obtain a license prior to offering portable electronics insurance.
5. Initial licenses issued pursuant to this chapter shall be valid for a period of two (2) calendar years expiring on May 31 of the second (2nd) renewal year. Applicants for an initial license shall pay the full two (2) year fee regardless of the number of months of the initial licensure. Renewal licenses shall be effective for twenty-four (24) months effective and expiring on May 31.
6. Each vendor of portable electronics licensed under this chapter shall pay to the department a fee of two hundred dollars ($200) for an initial license and for each renewal thereof. The department is authorized to institute miscellaneous fees for this license type in accordance with § 27-2.4-4 .

History of Section. P.L. 2012, ch. 136, § 1; P.L. 2012, ch. 247, § 1.

27-3-1 — 27-3-35. Repealed.

27-3-36. Repealed.

27-3-37. Repealed.

27-3-38. Surplus line brokers — License — Affidavit of inability to obtain insurance — Reports and records — Premium tax — Notice to purchasers.

1. The insurance commissioner may issue a surplus line broker’s license to any person authorizing the licensee to procure, subject to the restrictions provided in this section, policies of insurance, except life and health and accident, from eligible surplus lines insurers. Residents of this state must hold a property and casualty insurance producer license to qualify for a surplus lines broker license. This license may be denied, suspended, or revoked by the insurance commissioner whenever, in the commissioner’s judgment, any of the bases under § 27-2.4-14 exist. Before any license is issued by the insurance commissioner and before each renewal of a license, there shall be filed in his or her office a written application by the person desiring the license in the form, and containing any information, that the insurance commissioner may prescribe. For the purposes of carrying out the provisions of the Nonadmitted and Reinsurance Reform Act of 2010, the commissioner is authorized to utilize the national insurance producer database of the National Association of   Insurance Commissioners (NAIC), or any other equivalent uniform national database, for the licensure of a person as a surplus lines producer and for renewal of such license. For insureds whose home state is this state, a person shall not procure a contract of surplus lines insurance with a nonadmitted insurer unless the person possesses a current surplus lines insurance license issued by the commissioner.
2. A Rhode Island resident business entity acting as a surplus line broker may elect to obtain a surplus line broker license. Application shall be made using the uniform business entity application. Prior to approving the application, the commissioner shall find both of the following:
   1. The business entity has paid the appropriate fees.
   2. The business entity has designated a licensed surplus line broker responsible for the business entity’s compliance with the insurance laws and rules of this state.
3. When any policy of insurance is procured under the authority of that license, there shall be executed, both by the licensee and by the insured, affidavits setting forth facts showing that the insured, or a licensed Rhode Island producer, were unable, after diligent effort, to procure from no less than three (3) admitted insurers the full amount of insurance required to protect the property owned or controlled by the insured or the risks insured. Provided, however, the aforementioned affidavit shall not be required when insuring the following interest: amusement parks and devices, environmental improvement and/or remediation sites, vacant property or property under renovation, demolition operations, event cancellation due to weather, railroad liability, discontinued products, fireworks and pyrotechnics, warehouseman’s legal liability, excess property coverage, private flood, and contingent liability. In addition, no such affidavit is required for exempt commercial purchasers as defined by the Nonadmitted and Reinsurance Reform Act of 2010. For purposes of this section, residual market mechanisms shall not be considered authorized insurers. Prior to renewing, continuing, or extending any policy, the licensed surplus line broker must confirm that the insurer is on the insurance commissioner’s list of approval surplus line insurers in this state.
4. The licensee shall keep a complete and separate record of all policies procured from approved surplus lines insurers under the license and these records shall be open to the examination of both the insurance commissioner and tax administrator at all reasonable times and shall show the exact amount of each kind of insurance permitted under this section which has been procured for each insured; the gross premiums charged by the insurers for each kind of insurance permitted under this section which were returned to each insured; the name of the insurer or insurers which issued each of these policies; the effective dates of these policies; and the terms for which these policies were issued. The licensee shall file a yearly report with the insurance commissioner on a form prescribed by the insurance commissioner showing the business procured under the surplus line license for the preceding calendar year, and the report shall be due annually on or before April 1.
5. Every person, firm, or corporation licensed pursuant to the provisions of this section shall file with the insurance commissioner, at the time of the insurance producer license renewal, sufficient information, as determined by the insurance commissioner, whether a licensee or a person acting on the licensee’s behalf, has paid to the tax administrator, for all policies procured by the licensee pursuant to the license during the next preceding calendar year, a tax, computed at the rate of four percent (4%) on the gross premiums charged the insured by the insurers, less the amount of premiums returned to the insured.
6. Every application form for insurance from a surplus lines insurer, every affidavit form executed by the insured, and every policy (on its front and declaration pages) issued by the surplus lines insurer, shall contain in ten-point (10) type the following notice:

   NOTICE

   THIS INSURANCE CONTRACT HAS BEEN PLACED WITH AN INSURER NOT LICENSED TO DO BUSINESS IN THE STATE OF RHODE ISLAND BUT APPROVED AS A SURPLUS LINES INSURER. THE INSURER IS NOT A MEMBER OF THE RHODE ISLAND INSURERS INSOLVENCY FUND. SHOULD THE INSURER BECOME INSOLVENT, THE PROTECTION AND BENEFITS OF THE RHODE ISLAND INSURERS INSOLVENCY FUND ARE NOT AVAILABLE.

History of Section. P.L. 1959, ch. 155, § 1; P.L. 1982, ch. 147, § 1; P.L. 1987, ch. 166, § 11; P.L. 1996, ch. 188, § 3; P.L. 2000, ch. 161, § 1; P.L. 2000, ch. 183, § 1; P.L. 2002, ch. 354, § 1; P.L. 2006, ch. 632, § 1; P.L. 2007, ch. 443, § 1; P.L. 2008, ch. 144, § 2; P.L. 2008, ch. 198, § 2; P.L. 2009, ch. 303, § 2; P.L. 2009, ch. 304, § 2; P.L. 2010, ch. 23, art. 9, § 15; P.L. 2011, ch. 14, § 2; P.L. 2011, ch. 22, § 2; P.L. 2012, ch. 415, § 4; P.L. 2016, ch. 98, § 2; P.L. 2016, ch. 107, § 2.

27-3-38.1. Insurance independently procured — Duty to report and pay tax.

1. Each insured in this state who procures or continues or renews insurance with an insurer not licensed to do an insurance business in this state on properties, risks or exposures located or to be performed in whole or in part in this state, other than insurance procured through a surplus lines licensee, shall, within thirty (30) days after the date the insurance was so procured, continued or renewed, file a written report with the tax administrator, upon forms prescribed by the tax administrator, showing the name and address of the insured or insured’s, name and address of the insurer, the subject of the insurance, a general description of the coverage, the amount of premium currently charged and additional pertinent information reasonably requested by the tax administrator.
2. Where the insurance covers properties, risks or exposures located or to be performed both in and out of this state, the sum payable shall be computed based on: (1) An amount equal to four percent (4%) on that portion of the gross premiums allocated to this state pursuant to § 27-3-38.3 ; plus (2) An amount equal to the portion of the premiums allocated to other states or territories on the basis of the tax rates and fees applicable to properties, risks or exposures located or to be performed outside of this state.
3. Pursuant to applicable sections of the general laws, the commissioner shall participate in a multi-state surplus lines compact or agreement for the purpose of collecting and disbursing to reciprocal states any funds collected pursuant to subdivision (b)(2) of this section applicable to other properties, risks or exposures located or to be performed outside of this state. To the extent that other states where portions of the properties, risks or exposures reside have failed to enter into compact or reciprocal allocation procedure with this state, the net premium tax collected shall be retained by this state.
4. Gross premiums charged for the insurance, less any return premiums, are subject to a tax at the rate of four percent (4%). At the time of filing the report required in subsection (a) of this section, the insured shall file with the tax administrator, in the form that he or she may prescribe, a return under oath or affirmation containing information that may be deemed necessary for the determination of the tax imposed by this section. The insured shall at the same time pay the tax due to the tax administrator.
5. If an independently procured policy covers properties, risks or exposures only partially located or to be performed in this state, the tax payable by the insured shall be computed on the portion of the premium properly attributable to the properties, risks or exposures located or to be performed in this state in the manner provided in § 27-3-38.3 .
6. This section does not abrogate or modify chapter 16 of this title (Unauthorized Insurance Business), or any other provision of this title.

History of Section. P.L. 2002, ch. 65, art. 16, § 1; P.L. 2011, ch. 14, § 2; P.L. 2011, ch. 22, § 2.

27-3-38.2. Definitions.

As used in this chapter:

1. “Admitted insurer” means an insurer licensed to do an insurance business in this state.
2. “Capital” as used in the financial requirements of § 27-3-40 , means funds paid in for stock or other evidence of ownership.
3. “Commissioner” means the insurance commissioner of Rhode Island or his or her designee, deputies or staff, or the commissioner, director or superintendent of insurance in any other state.
4. “Eligible surplus lines insurer” means a nonadmitted insurer with which a surplus lines licensee may place surplus lines insurance pursuant to § 27-3-38 .
5. “Home state” means,
   1. With respect to an insured:
      1. The state in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence; or
      2. If one hundred percent (100%) of the insured risk is located out of the state referred to in subparagraph (i), the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
   2. “Principal place of business” means, with respect to determining the home state of the insured.
      1. the state where the insured maintains its headquarters and where the insured’s high-level officers direct, control and coordinate the business activities; or
      2. if the insured’s high-level officers direct, control and coordinate the business activities in more than one state, the state in which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated; or
      3. if the insured maintains its headquarters or the insured’s high-level officers direct, control and coordinate the business activities outside any state, the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
   3. “Principal residence” means, with respect to determining the home state of the insured, (i) the state where the insured resides for the greatest number of days during a calendar years; or (ii) if the insured’s principal residence is located outside any state, the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.
   4. Affiliated groups.  If more than one insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the term “home state” means the home state, as determined above, of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.
   5. Group insurance.  When the group policyholder pays one hundred percent (100%) of the premium from its own funds, the term “home state” means the home state, as determined above, of the group policyholder. When the group policyholder does not pay one hundred percent (100%) of the premium from its own funds, the term “home state” means the home state, as determined above, of the group member.
6. “Insurer” means any person, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyds insurer, insurance exchange syndicate, fraternal benefit society, and any other legal entity engaged in the business of insurance.
7. “NAIC” means the National Association of Insurance Commissioners.
8. “Nonadmitted insurer” means an insurer not licensed to do an insurance business in this state.
9. “Person” means any natural person or other entity, including, but not limited to, individuals, partnerships, associations, trusts or corporations.
10. “Surplus” as used in the financial requirements of § 27-3-40 , means funds over and above liabilities and capital of the company for the protection of policyholders.
11. “Surplus lines insurance” means any property and casualty insurance in this state on properties, risks or exposures, located or to be performed in this state, permitted to be placed through a surplus lines licensee with a nonadmitted insurer eligible to accept such insurance, pursuant to § 27-3-40 .
12. “Surplus lines licensee” means an individual, firm or corporation licensed under § 27-3-38 to place insurance on properties, risks or exposures located or to be performed in this state with nonadmitted insurers eligible to accept such insurance.

History of Section. P.L. 2011, ch. 14, § 3; P.L. 2011, ch. 22, § 3.

27-3-38.3. Exception to life and health and accident exemption.

The provisions of this chapter do not apply to life and health and accident, as noted in § 27-3-38(a) , and surplus lines brokers may not place insurance in those lines in the surplus market. An exception is hereby made to this prohibition for the procurement of disability insurance with a benefit limit in excess of a benefit limit available from an admitted insurer. For that class of business only, a broker may obtain insurance from the surplus market.

History of Section. P.L. 2019, ch. 103, § 1; P.L. 2019, ch. 136, § 1.

27-3-39. Surplus line broker’s bond.

1. No license to act as a resident surplus line broker in this state shall be issued until a certificate of the general treasurer is deposited with the insurance commissioner on a blank furnished by the insurance commissioner, stating that the licensee has filed with the general treasurer a bond in the penal sum of twenty-five thousand dollars ($25,000) executed by the licensee as principal and by a surety company authorized to transact business in this state as surety, and conditioned upon the licensee faithfully complying with all of the requirements of § 27-3-38 .
2. Any bond required by this section shall be continuous while the principal is licensed to act as a surplus line broker in this state; provided, that before the bond may be cancelled, the insurance commissioner must have been notified in writing by the surety of the proposed cancellation at least thirty (30) days prior to the date cancellation is to become effective; and, provided, that in the event of cancellation, any license covered by the bond shall be suspended by the insurance commissioner pending the substitution of a similar bond for the cancelled bond. The surety shall be released from further liability under any bond covering a license revoked, terminated, or expired as to any acts committed after the date that license is revoked, terminated, or expired. The aggregate liability of the surety for any and all claims or recoveries that arise under any bond shall in no event exceed the amount of the penal sum of the bond. The commissioner may promulgate standards and procedures for collecting under bonds issued pursuant to this section.
3. Authorized surplus line agents or brokers of a licensed firm may meet the requirements of this section with a bond in the name of the licensed firm, continuous in form and in the amounts set forth in subsection (a).

History of Section. P.L. 1959, ch. 155, § 1; P.L. 1993, ch. 180, § 4; P.L. 1994, ch. 404, § 8; P.L. 2000, ch. 161, § 1; P.L. 2011, ch. 14, § 2; P.L. 2011, ch. 22, § 2.

27-3-40. Limitations on placing insurance with approved surplus lines insurers.

1. Surplus lines insurance may be placed by a surplus lines broker if each insurer is authorized to write the type of insurance in its domiciliary jurisdiction;
2. A surplus lines licensee shall not place coverage with a nonadmitted insurer, unless, at the time of placement, the nonadmitted insurer:
   1. Has established satisfactory evidence of good repute and financial integrity; and
   2. Qualifies under one of the following subparagraphs:
      1. Has capital and surplus or its equivalent under the laws of its domiciliary jurisdiction which equals the greater of:
         1. The minimum capital and surplus requirements under the law of this state; or
         2. Fifteen million dollars ($15,000,000); or
      2. For an insurer not domiciled in the United States or its territories, the insurer is listed on the quarterly listing of alien insurers maintained by the NAIC international insurers department or its equivalent
3. The capital and surplus requirements of paragraph (b)(2)(i) above may be satisfied by an insurer possessing less than the minimum capital and surplus upon an affirmative finding of acceptability by the commissioner. The finding shall be based upon such factors as quality of management, capital and surplus of any parent company, company underwriting profit and investment income trends, market availability and company record and reputation within the industry. In no event shall the commissioner make an affirmative finding of acceptability when the nonadmitted insurer’s capital and surplus is less than four million five hundred thousand dollars ($4,500,000);
4. The commissioner is authorized to enter into a multi-state surplus lines agreement to establish additional and alternative nationwide uniform eligibility requirements that shall be applicable to nonadmitted insurers domiciled in another state or territory of the United States.

History of Section. P.L. 1959, ch. 155, § 1; P.L. 1996, ch. 188, § 3; P.L. 2005, ch. 287, § 1; P.L. 2011, ch. 14, § 2; P.L. 2011, ch. 22, § 2.

27-3-41. Service of process.

No person licensed to act as a surplus line broker in the state shall place any risk with any unauthorized insurer unless that insurer has previously, in writing, appointed that broker as an agent for the acceptance of service of process, or unless the unauthorized insurer shall have designated a Rhode Island representative as an agent for the service of process, copies of which shall be filed with the insurance commissioner. The designation of a licensed broker or other representative for the purpose stated shall be cumulative to any other methods which may be provided by law for service of process upon an unauthorized insurer.

History of Section. P.L. 1959, ch. 155, § 1.

27-3-42. Surplus line broker’s fee.

No license or renewal of a license to act as a surplus line broker shall be issued under §§ 27-3-38 and 27-3-39 until there has been paid to the insurance commissioner, for the use of the state, a fee of fifty dollars ($50.00).

History of Section. P.L. 1959, ch. 155, § 1.

27-3-43. Repealed.

27-3-44. Repealed.

27-3-45. Repealed.

27-3-46. Repealed.

27-3-46.1, 27-3-47. Repealed.

27-3-47.1 — 27-3-48.4. Repealed.

27-3-48.5. Repealed.

27-3-49, 27-3-50. Repealed.

27-3-51. Repealed.

27-3.1-1 — 27-3.1-10. Repealed.

27-3.2-1. Purpose.

The purpose of this chapter is to establish requirements and standards for continuing education programs for natural persons licensed as insurance producers pursuant to this title.

History of Section. P.L. 1989, ch. 394, § 1.

27-3.2-2. Applicability.

This chapter applies to resident and nonresident persons licensed to engage in the sale of the following lines of insurance:

1. All lines of life insurance and health insurance;
2. All lines of property and casualty insurance; and
3. All other lines of insurance for which an examination is required for licensing.

History of Section. P.L. 1989, ch. 394, § 1; P.L. 1995, ch. 180, § 1; P.L. 1995, ch. 215, § 1; P.L. 1998, ch. 122, § 2.

27-3.2-3. Exemptions.

This chapter does not apply to:

1. Those natural persons holding resident licenses to sell any kind or kinds of insurance for which an examination is not required by the law of this state;
2. Persons holding a limited or restricted license which is exempted by the insurance commissioner;
3. Non-resident licensees who must meet continuing education requirements established by the insurance department in their home state if the state of their residence, in the opinion of the insurance commissioner, accords substantially similar treatment to residents of this state; or
4. Persons holding a license for twenty-five (25) years and who are age fifty-five (55) at the time of renewal. Provided, further, however, that this chapter shall also not apply to any persons who had held a license for at least twenty (20) years and were at least sixty (60) years of age at the time of renewal as of July 3, 2004.

History of Section. P.L. 1989, ch. 394, § 1; P.L. 2004, ch. 298, § 1; P.L. 2005, ch. 44, § 1; P.L. 2005, ch. 89, § 1.

27-3.2-4. Educational requirements.

Any person holding a license issued pursuant to this title and not exempt under § 27-3.2-3 shall satisfactorily complete continuing education courses in accordance with regulations promulgated by the director.

History of Section. P.L. 1989, ch. 394, § 1; P.L. 1995, ch. 180, § 1; P.L. 1995, ch. 215, § 1; P.L. 2006, ch. 84, § 3; P.L. 2006, ch. 93, § 3.

27-3.2-5. Repealed.

History of Section. P.L. 1989, ch. 394, § 1; P.L. 1990, ch. 97, § 1; P.L. 1990, ch. 353, § 1; P.L. 1995, ch. 180, § 1; P.L. 1995, ch. 215, § 1; P.L. 1998, ch. 238, § 1; P.L. 2002, ch. 292, § 11; Repealed by P.L. 2017, ch. 196, § 5, effective July 18, 2017; P.L. 2017, ch. 322, § 5, effective September 27, 2017.

27-3.2-6. Compliance.

Any person licensed pursuant to this title and not exempt under § 27-3.2-3 shall comply with all of the terms and requirements of this chapter and regulations promulgated hereunder.

History of Section. P.L. 1989, ch. 394, § 1; P.L. 1995, ch. 180, § 1; P.L. 1995, ch. 215, § 1; P.L. 2006, ch. 84, § 3; P.L. 2006, ch. 93, § 3.

27-3.2-7. Penalty.

Any person failing to meet the requirements of this chapter and who has not been granted an extension of time within which to comply pursuant to § 27-3.2-6(c), or who has submitted a false or fraudulent certificate of compliance, shall, after a hearing, which hearing may be waived by that person, be subjected to the suspension of all licenses issued for any kinds of insurance, and no further license shall be issued to that person for any kind or kinds of insurance until the time as that person shall have demonstrated to the satisfaction of the commissioner that he or she has complied with all of the requirements of this chapter and all other laws applicable to the license.

History of Section. P.L. 1989, ch. 394, § 1.

27-3.2-8. Rules and regulations.

The insurance commissioner may make reasonable rules and regulations necessary to effect the purposes of this chapter.

History of Section. P.L. 1989, ch. 394, § 1.

27-3.2-9. Fees.

1. Notwithstanding any provision of the general laws to the contrary, there is established a fee of fifteen dollars ($15.00) per annum for the period commencing July 1, 2002, and ending on June 30, 2003, which shall be paid by all persons licensed pursuant to chapter 2.4 of this title, and shall be deposited as general revenues.
2. Notwithstanding any provision of the general laws to the contrary, for the period commencing July 1, 2003, the fee shall be five dollars ($5.00) per annum, which shall be paid by all persons licensed pursuant to chapter 2.4 of this title, and shall be deposited as general revenues.
3. The fee for approval of a course or program to qualify as a course of continuing education shall be sixty dollars ($60.00), which shall be paid at the time of application and shall be deposited as general revenues.

History of Section. P.L. 1989, ch. 394, § 1; P.L. 1995, ch. 180, § 1; P.L. 1995, ch. 215, § 1; P.L. 1995, ch. 370, art. 40, § 85; P.L. 2002, ch. 65, art. 13, § 25; P.L. 2002, ch. 292, § 11; P.L. 2009, ch. 68, art. 12, § 8.

27-3.2-10. Severability.

If any section, term, or provision of this chapter shall be adjudged invalid for any reason, that judgment shall not affect, impair, or invalidate any remaining section, term, or provision, which shall remain in full force and effect.

History of Section. P.L. 1989, ch. 394, § 1.

27-3.3-1 — 27-3.3-10. Repealed.

27-4-0.1. Definitions.

1. “Annuities” means all agreements to make periodic payments for a certain period or where the making or continuance of all or some of a series of the payments, or the amount of any payment, depends on the continuance of human life, except payments made in connection with a life insurance policy. Amounts paid the insured to provide annuities and proceeds applied under optional modes of settlement or under dividend options may be allocated by the insurer to one or more separate accounts pursuant to provisions of the annuity contract.
2. 1. “Funding agreements” means agreements where an insurer may accept and accumulate funds and make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies. Funding agreements do not constitute annuities as defined in subsection (a) of this section or life insurance as defined in subsection (c) of this section;
   2. Any insurer authorized to issue annuity contracts in Rhode Island may issue one or more funding agreements, in fixed or variable dollar amounts or in both. The issuance of a funding agreement under this section is deemed to be doing insurance business. Funding agreements may be issued to fund:
      1. Benefits under any employee benefit plan as defined in the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002;
      2. The activities of any organization exempt from taxation under § 501(c) of the Internal Revenue Code, 26 U.S.C. § 501(c), or any similar organization in any foreign country;
      3. Any program of the government of the United States, the government of any state or political subdivision of the state, or of a foreign country, or any agency or instrumentality of any foreign government, political subdivision or foreign country;
      4. agreement providing for periodic payments in satisfaction of a claim; or
      5. Any program of any institution that has assets in excess of twenty-five million dollars ($25,000,000).
   3. A funding agreement shall be for a total amount of not less than one million dollars ($1,000,000). An amount under a funding agreement shall not be guaranteed or credited except upon reasonable assumptions as to investment income and expenses and on a basis equitable to all holders of funding agreement of a given class. Funding agreements shall not provide for payments to or by the insurer based on mortality or morbidity contingencies.
   4. Amounts paid to the insurer under funding agreements may be allocated by the insurer to its general account or to one or more separate accounts pursuant to § 27-32-1 .
   5. A funding agreement is a Class 3 claim under § 27-14.3-46 .
   6. Notwithstanding any provision in this title to the contrary, no funding agreement or portion of it, except to the extent the funding agreement may be considered an unallocated annuity contract, in accordance with the definition found in § 27-34.3-5 , and except to the extent the funding agreement or portion of it has been issued to or in connection with a specific employee, union or association of natural persons benefit plan, not protected under the federal Pension Benefit Guaranty Corporation, or a government lottery, and except to the extent the funding agreement or portion of it is not limited or excluded under § 27-34.3-3(b)(2) , shall qualify as a policy or contract as to which coverage is provided pursuant to chapter 34.3 of this title.
   7. The commissioner shall have the authority to regulate the sale and issuance of funding agreements and to promulgate regulations governing the sale and issuance of funding agreements.
3. “Life insurance” means every insurance upon the lives of human beings and every insurance appertaining to that life, including the granting of endowment benefits, additional benefits in the event of death by accident, additional benefits to safeguard the contract from lapse, accelerated payments of part or all of the death benefit, or a special surrender value upon diagnosis of terminal illness, defined as a life expectancy of twelve (12) months or less, or of a medical condition requiring extraordinary medical care or treatment regardless of life expectancy, or a special surrender value upon total and permanent disability of the insured, and optional modes of settlement of proceeds. Amounts paid the insurer for life insurance and proceeds applied under optional modes of settlement or under dividend options may be allocated by the insurer to one or more separate accounts pursuant to provisions contained in the policy.

History of Section. P.L. 1993, ch. 180, § 6; P.L. 2001, ch. 247, § 1; P.L. 2001, ch. 367, § 1.

27-4-1. Discrimination in rates or amounts payable on death.

No life insurance company organized or doing business within this state shall make any distinction or discrimination as to the premiums or rates charged for policies upon the lives of persons insured, except any distinction or discrimination that shall apply to all persons of the same age, sex, general condition of health, and hope of longevity; nor shall any company make or permit the rejection of an individual’s application for life insurance coverage, and the determination of the rate class for that individual, on the basis of a disability unless that disability is relevant to the risk of loss, nor shall any company make or require any rebate, diminution, or discount upon the sum to be paid on any policy in case of the death of the person insured; nor insert in the policy any condition, nor make any stipulation, where the person insured shall bind himself or herself, his or her heirs, executors, administrators, and assigns, to accept any less sum than the full value or amount of the policy in case of a claim accruing on it by reason of the death of the person insured, other than the conditions or stipulations that are imposed upon all persons in similar cases. Any stipulation or condition made or inserted in this manner shall be void.

History of Section. P.L. 1931, ch. 1757, § 6; G.L. 1938, ch. 153, § 6; G.L. 1956, § 27-4-1 ; P.L. 1977, ch. 58, § 1.

27-4-1.1. Denial of applicant based on naloxone prescription.

1. No life insurance company organized or doing business within this state shall:
   1. Deny the application of an individual seeking coverage for any life insurance policy pursuant to this chapter solely on the basis that the applicant has a prescription to carry or possess the drug naloxone;
   2. Otherwise discriminate in the offering, issuance, cancellation, amount of coverage, price, or any other condition of a life insurance policy based solely and without any additional actuarial justification upon the fact that an individual has been issued a prescription for naloxone or has purchased naloxone.
2. Any denial of insurance coverage in violation of the provisions of this section:
   1. Shall be void;
   2. The insurer shall reopen the application and underwriting process for consideration of coverage and the life insurance company shall be deemed to have provided coverage to the eligible person retroactive to the date of the initial application.

History of Section. P.L. 2019, ch. 121, § 1; P.L. 2019, ch. 149, § 1.

27-4-2. Preexisting contracts unaffected by discrimination provisions.

Sections 27-4-1 and 27-4-4 shall not affect any contracts existing on April 24, 1931.

History of Section. P.L. 1931, ch. 1757, § 8; G.L. 1938, ch. 153, § 8; G.L. 1956, § 27-4-2 .

27-4-3. Distinctions by insurance producers as to collections.

It shall not be lawful for any insurance producer of any life insurance company to make any distinction as to the time and manner of collecting dues upon policies.

History of Section. P.L. 1931, ch. 1757, § 9; G.L. 1938, ch. 153, § 9; G.L. 1956, § 27-4-3 .

27-4-4. Penalty for unlawful discrimination.

Any life insurance company, and any officer or agent of any life insurance company, violating any of the provisions of §§ 27-4-1 and 27-4-3 shall be subject to penalties determined in accordance with § 42-14-16 .

History of Section. P.L. 1931, ch. 1757, § 7; G.L. 1938, ch. 153, § 7; G.L. 1956, § 27-4-4 ; P.L. 2007, ch. 134, § 1; P.L. 2007, ch. 210, § 1; P.L. 2008, ch. 475, § 4.

27-4-5. Misrepresentation as to policies — Penalty — Revocation of license.

No life insurance corporation doing business in this state, and no officer, director, or agent of that corporation, shall issue or circulate, or cause or permit to be issued or circulated, any estimate, illustration, circular, or statement of any sort misrepresenting the terms of any policy issued by it, or the benefits or advantages promised by it; nor shall any corporation or agent of the corporation orally or in writing make any misrepresentation or incomplete comparisons regarding the cost or terms or conditions or benefits contained in any policy or contract of insurance to any person insured in any other corporation, for the purpose of inducing or tending to induce that person to lapse, forfeit, or surrender his or her insurance in any other corporation. The director of business regulation is empowered to revoke the license of the corporation or insurance producer violating these provisions or access whatever penalty is appropriate in accordance with § 42-14-16 in accordance with the Administrative Procedures Act, chapter 35 of title 42; the license is not to be reinstated until at least three (3) years have elapsed since the date of revocation, but the license may be renewed after a shorter period after revocation, at the discretion of the director of business regulation.

History of Section. P.L. 1931, ch. 1757, § 10; P.L. 1936, ch. 2423, § 1; G.L. 1938, ch. 153, § 10; impl. am. P.L. 1939, ch. 660, § 120; G.L. 1956, § 27-4-5 ; P.L. 1979, ch. 140, § 1; P.L. 2007, ch. 134, § 1; P.L. 2007, ch. 210, § 1.

27-4-6. Terms to be stated in policy — Rebates prohibited.

1. No life insurance corporation doing business in this state, nor any insurance producer of the corporation, shall permit, offer, or make any contract of insurance or agreement as to any contract other than as plainly expressed in the policy issued on the contract or agreement; nor shall any company or any officer, insurance producer, or representative of the company or producer pay, allow, or give, or offer to pay, allow, or give, directly or indirectly, as inducement to any person to insure, or give, sell, or purchase, or offer to give, sell, or purchase as an inducement or in connection with any insurance, any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accruing on the securities, or any valuable consideration or inducement of any kind not specified in the policy, nor shall any person knowingly receive as an inducement any rebate of premium, or any special favor or advantage in the dividends or other benefits, or any paid employment or contract for services of any kind, or any valuable consideration or inducement of any kind, not specified in the policy.
2. Nothing in this section shall be construed to forbid a company transacting industrial insurance on a weekly payment plan from returning to policyholders who have made premium payments for a period of at least one year, directly to the company at its home or district offices, a percentage of the premium which the company would have paid for the weekly collection of the premiums.

History of Section. P.L. 1931, ch. 1757, § 11; G.L. 1938, ch. 153, § 11; G.L. 1956, § 27-4-6 ; P.L. 2002, ch. 292, § 12.

27-4-6.1. Right to examine and return policy.

Every individual life insurance policy delivered or issued for delivery in this state after July 1, 1978, and every individual annuity contract delivered in this state after January 1, 1995, shall contain a provision, or in a separate rider attached when delivered, stating in substance that the person to whom the policy or contract is issued shall be permitted to return the policy or contract within a minimum of ten (10) days of its delivery to that person and to have a refund of the premium paid, if after examination of the policy or contract the purchaser is not satisfied with it for any reason. Every individual life insurance policy and every individual annuity contract delivered in this state after January 1, 2008, shall contain a provision, or in a separate rider attached when delivered, stating in substance that the person to whom the policy or contract is issued shall be permitted to return the policy or contract within a minimum of twenty (20) days of its delivery to that person and to have a refund of the premium paid, if after examination of the policy or contract the purchaser is not satisfied with it for any reason. The provision shall be set forth in the policy or contract under an appropriate caption and, if not printed on the face page of the policy or contract, adequate notice of the provision shall be printed or stamped conspicuously on the face page. The policy or contract may be returned to the insurer at its home or branch office or to the insurance producer through whom it was applied for, and then shall be void as from the beginning and as if the policy or contract had not been issued.

History of Section. P.L. 1977, ch. 206, § 1; P.L. 1994, ch. 404, § 7; P.L. 2007, ch. 134, § 1; P.L. 2007, ch. 210, § 1; P.L. 2008, ch. 240, § 2; P.L. 2008, ch. 310, § 2.

27-4-6.2. Individual life insurance policy standard provisions.

1. All individual life insurance policies, except as otherwise stated herein, delivered or issued for delivery in this state on or after January 1, 2008 shall contain in substance the following provisions, or provisions which the director deems to be more favorable to policyholders.
   1. Grace period.  A provision that, after payment of the first premium, the policyholder is entitled to a grace period of thirty-one (31) days or of one month following any subsequent premium due date within which to make payment of the premium then due, during which grace period the policy shall continue in full force, and the policy shall further provide that if the death of the insured occurs within the grace period provided in the policy, the insurer may deduct from the policy proceeds the portion of any unpaid premium applicable to the period ending with the last day of the policy month in which such death occurred, and if the death of the insured occurs during a period for which the premium has been paid, the insurer shall add to the policy proceeds a refund of any premium actually paid for any period beyond the end of the policy month in which such death occurred, provided such premium was not waived under any policy provision for waiver of premiums benefit. This subsection shall not apply to single premium or paid-up policies.
   2. Incontestability.  A provision that the policy shall be incontestable after being in force during the lifetime of the insured for a period of two (2) years from its date of issue, and that, if the policy provides that the death benefit provided by the policy may be increased, or other policy provisions changed, upon the application of the policyholder and the production of evidence of insurability, the policy with respect to each such increase or change shall be incontestable after two (2) years from the effective date of such increase or change, except in each case for nonpayment of premiums. At the option of the insurer, provisions relating to benefits for total and permanent disability and additional benefits for accidental death may be excepted.
2. Individual life insurance policies delivered or issued for delivery in this state on or after January 1, 2008 may contain in substance the following provision, or a provision which the director deems to be more favorable to policyholders: Suicide — a provision that excludes death from suicide, sane or insane. The suicide exclusion period for the initial coverage shall not exceed two (2) years from the date of issue of the policy. The policy may allow a separate suicide period, no greater than two (2) years from the date of any increase, for any increase in specified amount that was requested by the owner and subject to evidence of insurability. The suicide limitation shall be limited to the amount of the increase. At a minimum, a refund of all premiums paid, less dividends paid, any indebtedness and any partial withdrawals, shall be paid by the company in the event of death by suicide during the initial suicide exclusion period. For each increase in specified amount, the settlement for suicide shall be the return of all premium paid, reduced as specified above for the initial coverage, applicable to the increased amount.

History of Section. P.L. 2007, ch. 134, § 3; P.L. 2007, ch. 210, § 3; P.L. 2008, ch. 240, § 2; P.L. 2008, ch. 310, § 2.

27-4-7. Privilege against self-incrimination.

No person shall be excused from attending and testifying or producing any books, papers, or other documents, before any court or magistrate, upon any investigation, proceeding, or trial for a violation of any of the provisions of § 27-4-6 , upon the ground or for the reason that the testimony or evidence, documentary or otherwise, required of that person may tend to convict him or her of a crime or subject him or her to a penalty or forfeiture. No person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which that person may testify or produce evidence, documentary or otherwise, and no testimony given or produced shall be received against him or her upon any criminal investigation or proceeding.

History of Section. P.L. 1931, ch. 1757, § 11; G.L. 1938, ch. 153, § 11; G.L. 1956, § 27-4-7 .

27-4-8. Repealed.

27-4-9. Preexisting contracts unaffected by policy terms provisions.

The provisions of §§ 27-4-6 — 27-4-8 shall not affect any contract existing on April 24, 1931.

History of Section. P.L. 1931, ch. 1757, § 11; G.L. 1938, ch. 153, § 11; G.L. 1956, § 27-4-9 .

27-4-10. Effect of misstatements in application for policy.

No misstatement made in procuring a policy of life insurance shall be deemed material or render the policy void unless this matter represented shall have actually contributed to the contingency or event on which the policy is to become due and payable. Whether this matter represented contributed to that contingency or event shall be a question for the jury.

History of Section. P.L. 1931, ch. 1757, § 12; G.L. 1938, ch. 153, § 12; G.L. 1956, § 27-4-10 .

27-4-11. Rights of beneficiaries to proceeds of policy as against creditors — Premiums paid in fraud of creditors.

If a policy of insurance is effected by any person on that person’s own life or on another life in favor of a person other than himself or herself, or, except in cases of transfer with intent to defraud creditors, if a policy of life insurance is assigned or in any way made payable to any person, the lawful beneficiary or assignee of the policy, other than the insured or the person effecting that insurance or the executors or administrators of that insured or the person effecting that insurance, shall be entitled to its proceeds and avails against the creditors and representatives of the insured and of the person effecting the insurance, whether or not the right to change the beneficiary is reserved or permitted, and whether or not the policy is made payable to the person whose life is insured if the beneficiary or assignee shall predecease that person; provided, that, subject to the statute of limitations, the amount of any premiums for that insurance paid with intent to defraud creditors, with interest on it, shall inure to their benefit from the proceeds of the policy. The company issuing the policy shall be discharged of all liability on the policy by payment of its proceeds in accordance with its terms, unless before that payment the company shall have written notice, by or in behalf of a creditor, of a claim to recover for a transfer made or premiums paid with intent to defraud creditors, with a specification of the amount claimed.

History of Section. P.L. 1931, ch. 1757, § 13; G.L. 1938, ch. 153, § 13; P.L. 1947, ch. 1883, § 1; G.L. 1956, § 27-4-11 .

27-4-12. Provision for exemption from encumbrance, transfer, or claims of creditors.

Any policy of life or endowment insurance or any annuity contract may provide that the proceeds of or payments under it shall not be subject to transfer, anticipation, or commutation or encumbrance by any beneficiary other than the insured or the purchaser of the annuity, and shall not be subject to the claims of a creditor of any beneficiary or any legal process against the beneficiary.

History of Section. P.L. 1931, ch. 1757, § 14; G.L. 1938, ch. 153, § 14; G.L. 1956, § 27-4-12 .

27-4-13. Deprivation of court jurisdiction — Limitation of actions.

No life insurance company and no officer or insurance producer of the company shall make, issue, or deliver any policy or contract of insurance containing any condition, stipulation, or agreement depriving the courts of the state of jurisdiction of actions against it, nor limiting the time for commencing any action at law or in equity against it to a period of less than three (3) years from the time when the cause of action shall accrue.

History of Section. P.L. 1931, ch. 1757, § 15; G.L. 1938, ch. 153, § 15; G.L. 1956, § 27-4-13 .

27-4-13.1. Policy loan interest rates.

1. “Published monthly average” means:
   1. Moody’s corporate bond yield average — monthly average corporates, as published by Moody’s Investors Service, Inc. or any successor; or
   2. In the event that the Moody’s corporate bond yield average — monthly average corporates is no longer published, a substantially similar average, established by regulation issued by the commissioner.
2. 1. Policies issued on or after May 25, 1982, shall provide for policy loan interest rates as follows:
      1. A provision permitting a maximum interest rate of not more than eight percent (8%) per annum; or
      2. A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law.
   2. The rate of interest charged on a policy loan made under paragraph (1)(ii) of this subsection shall not exceed the higher of the following:
      1. The published monthly average for the calendar month ending two (2) months before the date on which the rate is determined; or
      2. The rate used to compute the cash surrender values under the policy during the applicable period plus one percent (1%) per annum.
   3. If the maximum rate of interest is determined pursuant to paragraph (1)(ii) of this subsection, the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.
   4. The maximum rate for each policy must be determined at regular intervals at least once every twelve (12) months, but not more frequently than once in any three (3) month period. At the intervals specified in the policy:
      1. The rate being charged may be increased when an increase as determined under subdivision (2) of this subsection would increase that rate by one half of one percent (.5%) or more per annum;
      2. The rate being charged must be reduced when a reduction as determined under subdivision (2) of this subsection would decrease that rate by one half of one percent (.5%) or more per annum.
   5. The life insurer shall:
      1. Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;
      2. Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice does not need to be given to the policyholder when a further premium loan is added, except as provided in paragraph (iii) of this subdivision;
      3. Send to policyholders with loans reasonable advance notice of any increase in the rate; and
      4. Include in the notices required in this subdivision the substance of the pertinent provisions of subdivisions (1) and (3) of this subsection.
   6. No policy shall terminate in a policy year as the sole result of a change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would have terminated if there had been no change during that policy year.
   7. The substance of the pertinent provisions of subdivisions (1) and (3) of this subsection shall be set forth in the policies to which they apply.
   8. For purposes of this section:
      1. The rate of interest on policy loans permitted under this section includes the interest rate charged on the reinstatement of policy loans for the period during and after any lapse of a policy;
      2. “Policy loan” includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they became due;
      3. “Policyholder” includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer; and
      4. “Policy” includes certificates issued by a fraternal benefit society and annuity contracts that provide for policy loans.
   9. No other provision of law shall apply to policy loan interest rates unless made specifically applicable to those rates.
3. The provisions of this section shall not apply to any insurance contract issued before May 25, 1982, unless the policyholder agrees in writing to the applicability of this section.

History of Section. P.L. 1982, ch. 410, § 1; P.L. 2002, ch. 292, § 12.

27-4-14, 27-4-15. Repealed.

27-4-16. Preliminary term policies.

Policies issued by companies doing business in this state may provide for not more than one year preliminary term insurance; provided, that if the premium charged for term insurance under a limited payment life preliminary term policy providing for the payment of all premiums on the policy in less than twenty (20) years from the date of the policy, or under an endowment preliminary term policy, exceeds that charged for life insurance under whole life preliminary term policies of the same company, then the reserve on the policy at the end of any year, including the first, shall not be less than the reserve on a whole life preliminary term policy issued in the same year and at the same age, together with an amount which shall be equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium payment period equal to the difference between the value at the end of that period of a whole life preliminary term policy and the full level net premium reserve at that time of a limited payment life or endowment policy.

History of Section. P.L. 1931, ch. 1757, § 4; G.L. 1938, ch. 153, § 4; G.L. 1956, § 27-4-16 .

27-4-17. Repealed.

History of Section. P.L. 1931, ch. 1757, § 1; G.L. 1938, ch. 153, § 1; P.L. 1947, ch. 1973, § 1; G.L. 1956, § 27-4-17 ; P.L. 1959, ch. 36, § 1; P.L. 1963, ch. 36, § 1; P.L. 1975, ch. 25, § 1; P.L. 1979, ch. 54, § 1; P.L. 1981, ch. 209, § 1; P.L. 1994, ch. 134, § 10; P.L. 2002, ch. 292, § 12; Repealed by P.L. 2013, ch. 17, § 5, effective May 20, 2013; P.L. 2013, ch. 20, § 5, effective May 20, 2013.

27-4-18. Repealed.

History of Section. P.L. 1931, ch. 1757, § 1; G.L. 1938, ch. 153, § 1; P.L. 1947, ch. 1973, § 1; G.L. 1956, § 27-4-18 ; P.L. 2002, ch. 292, § 12; Repealed by P.L. 2013, ch. 17, § 5, effective May 20, 2013; P.L. 2013, ch. 20, § 5, effective May 20, 2013.

27-4-19. Repealed.

History of Section. P.L. 1931, ch. 1757, § 5; G.L. 1938, ch. 153, § 5; impl. am. P.L. 1939, ch. 660, § 120; G.L. 1956, § 27-4-19 ; Repealed by P.L. 2013, ch. 17, § 5, effective May 20, 2013; P.L. 2013, ch. 20, § 5, effective May 20, 2013.

27-4-20. Repealed.

History of Section. P.L. 1931, ch. 1757, § 2; G.L. 1938, ch. 153, § 2; impl. am. P.L. 1939, ch. 660, § 120; G.L. 1956, § 27-4-20 ; Repealed by P.L. 2013, ch. 17, § 5, effective May 20, 2013; P.L. 2013, ch. 20, § 5, effective May 20, 2013.

27-4-21. Repealed.

History of Section. P.L. 1931, ch. 1757, § 3; G.L. 1938, ch. 153, § 3; impl. am. P.L. 1939, ch. 660, § 120; G.L. 1956, § 27-4-21 ; Repealed by P.L. 2013, ch. 17, § 5, effective May 20, 2013; P.L. 2013, ch. 20, § 5, effective May 20, 2013.

27-4-22. Assignment of interest under group life insurance.

Subject to the terms of the policy relating to assignment of incidents of ownership under the policy, a person whose life is insured under a policy of group life insurance may assign any or all incidents of ownership granted that person under the policy, including but not limited to any right to designate a beneficiary, to have an individual policy issued to him or her, and to pay premiums. Any assignment by the insured shall be valid for the purpose of vesting in the assignee, in accordance with any provisions included in the policy as to the time at which it is to be effective, all of the incident of ownership assigned, but without prejudice to the insurer on account of any payment it may make or individual policy it may issue without notice of the assignment.

History of Section. P.L. 1970, ch. 210, § 1; P.L. 2002, ch. 292, § 12.

27-4-22.1. Continuation of group life insurance — Labor disputes — Involuntary layoffs.

1. No group life insurance policy shall be issued or delivered in this state where the premium or any part of the premium is paid or is to be paid in whole or in part by an employer pursuant to the terms of a collective bargaining agreement unless the policy provides that in the event of a cessation of work by the employees covered by the policy as the result of a labor dispute or involuntary layoff, the policy, upon timely payment of the premium, shall continue in effect with respect to all employees insured by the policy on the date of the cessation of work who continue to pay their individual contribution and who assume and pay the contribution from the employer, for the period of cessation of work, under the following conditions:
   1. If the policyholder is not a trustee or the trustees of a fund established or maintained in whole or in part by the employer, the policy shall provide that the employee’s individual contribution shall be the rate in the policy, on the date cessation of work occurs, applicable to an individual in the class to which the employee belongs as set forth in the policy;
   2. If the policyholder is a trustee or the trustees of a fund established or maintained in whole or in part by the employer, the employee’s contribution shall be the amount which he or she and the employer would have been required to contribute to the trust for the employee if (i) the cessation of work had not occurred and (ii) the agreement requiring the employer to make contributions to the trust were in full force;
   3. The policy may provide that the continuation of insurance is contingent upon the collection of individual contributions by the union or unions representing the employees for policies referred to in subdivision (a)(1), and by the policyholder or the policyholder’s agent with respect to policies referred to in subdivision (a)(2);
   4. The policy may provide that the continuation of insurance on each employee is contingent upon timely payment of contributions by the individual and timely payment of the premium by the entity responsible for collecting the individual contributions;
   5. The policy may provide that each individual premium rate shall be increased by an amount up to six percent (6%) of the premium rate of that shown in the policy during the cessation of work in order to cover increased administrative costs and increased mortality and morbidity. If the policy does provide for an increase, this shall have the effect of increasing the employee’s contribution by a similar percent;
   6. Nothing in this section shall be deemed to limit any right which the insurer may have in accordance with the terms of the policy to increase or decrease the premium rates before, during, or after a cessation of work if, in fact, the insurer would have had the right to increase the premium rate had the cessation of work not occurred. If this premium rate change is made, it shall be effective, notwithstanding any other provisions of this section, on a date the insurer shall determine in accordance with the terms of the policy;
   7. The policy may provide that, if a premium is unpaid at the date of cessation of work and the premium became due prior to the cessation of work, the continuation of insurance is contingent upon payment of the premium prior to the date the next premium becomes due under the terms of the policy; and
   8. Nothing contained in this section shall be deemed to require continuation of any group life insurance policy unless or until the greater of (i) one hundred (100) employees and (ii) at least fifty-one percent (51%) of the employees in the group eligible to continue the coverage under this section satisfy all of the requirements to do so.
2. No individual employee shall be eligible to continue coverage under this section after he or she becomes employed full time with the same or any other employer.

History of Section. P.L. 1992, ch. 167, § 1.

27-4-23. Rules and regulations.

The insurance commissioner shall make reasonable rules and regulations necessary to effect the purposes of this chapter.

History of Section. P.L. 1971, ch. 269.

27-4-24. Filing of life insurance policy forms.

1. Any insurance company authorized to do a life insurance and/or annuities business within this state in accordance with the provisions of this title shall file all life insurance policy forms and annuity contract forms used by it in the state with the insurance commissioner. The commissioner may also require any company to file the forms of any rider, endorsement, application blank, and other matter generally used or incorporated by reference in its policies or contracts of insurance or annuities. Any organization, bureau, or association of which the company is a member may, on behalf of the company, make the filings required by this section. If the commissioner finds from an examination of any form filed that it is contrary to the public interest, he or she shall forbid the use of the form, and shall notify the company in writing as provided in § 27-4-24.2 .
2. Alternatively, a carrier may obtain authorization to use a life insurance policy form or annuity contract by obtaining authorization through the Interstate Insurance Product Compact Commission provided in chapter 2.5 of this title, provided that:
   1. The state of Rhode Island has not “opted out” of the compact with regard to the line in question; and
   2. The appropriate filing fee, as set forth in § 42-14-18 and the regulations thereunder, has been paid.

History of Section. P.L. 1973, ch. 264, § 1; P.L. 1994, ch. 404, § 7; P.L. 2005, ch. 173, § 2.

27-4-24.1. Waiting period — Effective date of filings.

1. Each filing shall be on file for a waiting period of thirty (30) days before it becomes effective, which period may be extended by the commissioner for an additional period not to exceed thirty (30) days if the commissioner gives written notice within the waiting period to the insurer or organization which made the filing that he or she needs additional time for the consideration of the filing. Upon written application by the insurer or organization, the commissioner may authorize a filing that he or she has reviewed to become effective before the expiration of the waiting period or any extension. A filing shall be deemed to meet the requirements of this chapter and to become effective unless disapproved by the commissioner, as provided in this chapter, within the waiting period or any extension.
2. Section (a) above does not apply to filings made through the Interstate Insurance Product Commission pursuant to chapter 2.5 of this title.

History of Section. P.L. 1973, ch. 264, § 1; P.L. 2005, ch. 173, § 2.

27-4-24.2. Notice of disapproval.

If within the waiting period or any extension of it as provided in § 27-4-24.1 the commissioner finds that a filing does not meet the requirements of this chapter, the commissioner shall send to the insurer or organization which made that filing written notice of disapproval of that filing specifying in the notice in what respects he or she finds that filing fails to meet the requirements of this chapter and stating that that filing shall not become effective.

History of Section. P.L. 1973, ch. 264, § 1.

27-4-24.3. Suspension or revocation of licenses.

1. The commissioner may revoke or suspend the license of any organization or insurer which fails to comply with an order of the commissioner within the time limited by the order, or any extension of it which the commissioner may grant. The commissioner shall not revoke or suspend the license of any organization or insurer for failure to comply with an order until the time prescribed for an appeal has expired or, if an appeal has been taken, until the order has been affirmed.
2. The commissioner may determine when a suspension of license shall become effective, and it shall remain in effect for the period fixed by the commissioner, unless he or she modifies or rescinds the suspension, or until the order upon which the suspension is based is modified, rescinded, or reversed.
3. No license shall be suspended or revoked except upon a written order of the commissioner, stating the commissioner’s findings, made after a hearing held in accordance with § 42-35-9 upon not less than ten (10) days’ written notice to the insurer or organization.

History of Section. P.L. 1973, ch. 264, § 1; P.L. 2007, ch. 134, § 1; P.L. 2007, ch. 210, § 1.

27-4-24.4. Hearing on decisions of commissioner.

Any organization or insurer aggrieved by any order or decision of the commissioner, or by any rule or regulation promulgated and adopted by the commissioner, may, within thirty (30) days after notice of the order or decision to the organization or insurer, make written request to the commissioner for a hearing on the order or decision. The commissioner shall provide a hearing and issue a decision in accordance with the Administrative Procedures Act, chapter 42-35.

History of Section. P.L. 1973, ch. 264, § 1; P.L. 2007, ch. 134, § 1; P.L. 2007, ch. 210, § 1; P.L. 2008, ch. 475, § 4.

27-4-24.5. Judicial review of orders and decisions.

Any final order or decision of the commissioner, including any order made after a hearing under the provisions of § 27-4-24.3 or 27-4-24.4 , shall be subject to review in accordance with the Administrative Procedures Act, chapter 42-35.

History of Section. P.L. 1973, ch. 264, § 1; P.L. 2007, ch. 134, § 1; P.L. 2007, ch. 210, § 1; P.L. 2008, ch. 475, § 4.

27-4-24.6. Severability.

If any subsection, subdivision, paragraph, sentence, or clause of this chapter is held invalid or unconstitutional, that decision shall not affect the remaining portions of the section or sections.

History of Section. P.L. 1973, ch. 264, § 1; P.L. 2007, ch. 134, § 1; P.L. 2007, ch. 210, § 1.

27-4-25. Physical exam by insurance company.

Any applicant for life insurance with any company organized or doing business within this state shall be provided, upon request, any and all medical reports by a physician or other medical personnel that were performed at the request or the direction of that company. These reports shall only be provided to a physician of the applicant’s choice whether the applicant receives a rating or rejection from a company and the provisions of this section shall also apply to medical examinations performed pursuant to applications for an increase in insurance coverage.

History of Section. P.L. 1981, ch. 412, § 1.

27-4-26. Interest upon proceeds of life insurance policies.

An insurer of a life insurance contract or annuity contract shall pay to the beneficiary or policyholder, respectively, interest on the proceeds at the rate of nine percent (9%) per annum from the date of the death of an insured or annuitant in connection with a death claim on a life insurance policy or annuity contract and from the date of maturity of an endowment contract to the date of payment and the interest shall be added to and be a part of the total sum paid.

History of Section. P.L. 1984, ch. 343, § 1; P.L. 1987, ch. 78, § 15.

27-4-27. Insurable interest.

1. Any individual of competent legal capacity may procure or effect an insurance contract upon his or her life or body for the benefit of any person. Any life insurance company doing business within the state may issue policies of insurance predicated upon the life or lives of any person or persons with the consent of the insured, payable at maturity to any educational, religious, benevolent, or charitable corporation or association which can legally take and receive testamentary legacies and which are exempt from taxation under 26 U.S.C. § 501(c), irrespective of a financial interest on the part of the corporation in the life of the person or persons insured. No person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under the contract are payable to the individual insured or his or her personal representatives, or to a person having, at the time when the contract was made, an insurable interest in the individual insured.
2. If the beneficiary, assignee, or other payee under any contract made in violation of this section receives from the insurer any benefits under that contract accruing upon the death, disablement, or injury of the individual insured, the individual insured or his or her executor or administrator may maintain an action to recover the benefits from the person so receiving them.
3. “Insurable interest” as to personal insurance means that every individual has an insurable interest in the life, body, and health of himself or herself and of other persons as follows:
   1. In the case of individuals related closely by blood or by law, a substantial interest engendered by love and affection;
   2. In the case of other persons, a lawful and substantial economic interest in having the life, health, or bodily safety of the individual insured continue, as distinguished from an interest which would arise only by, or would be enhanced in value by the death, disablement, or injury of the individual insured;
   3. In the case of employees of public and private corporations, with respect to whom the corporate employer or an employer-sponsored trust is the beneficiary under the insurance contract, a lawful and substantial economic interest exists in:
      1. Key employees; and
      2. Employees other than those identified in subdivision (c)(3)(i), and former employees and retirees for the purpose of funding, in the aggregate, all or part of the corporation’s cost for pre-retirement and post-retirement benefits; provided, (A) that the amount of insurance coverage on these employees will be limited to an amount commensurate with employer-provided benefits to those employees, (B) that an insurance program used to finance these employee benefits includes former employees, retirees, or a broad class of employees selected by objective standards related to age, service, sex, or category of employment, and (C) that the proceeds created by that insurance program used for the sole purpose of funding the corporation’s pre-retirement or post-retirement benefit programs; and
   4. An individual party to a contract or option for the purchase or sale of an interest in business, partnership, or firm or of shares of stock of a corporation or of an interest in the shares, has an insurable interest in the life of each individual party to the contract and for the purposes of the contract only, in addition to any insurable interest which may exist as to the life of that individual.
4. Insurance effectuated under a group life insurance policy pursuant to the program described in subdivision (c)(3)(ii) need not comply with the provisions of § 27-4-22 to the extent the provisions of that section would be inconsistent or would conflict with the purposes expressed in subdivision (c)(3)(ii).
5. An insurer shall be entitled to rely upon all statements, declarations, and representations made by an applicant for insurance relative to insurable interest of the applicant in the insured, and no insurer shall incur legal liability except as set forth in the policy by virtue of any untrue statements, declarations, or representations relied upon in good faith by the insurer.

History of Section. P.L. 1990, ch. 263, § 1; P.L. 1992, ch. 373, § 1.

27-4-28. Discretionary clauses.

1. No new or existing policy or certificate may contain any provision:
   1. Purporting to reserve sole discretion to the insurance company to determine eligibility for benefits or interpret the terms of a policy or certificate; or
   2. Specifying or affecting a standard of review upon which a court may review denial of a claim or any other decision made by an insurance company with respect to a policyholder or certificate holder.
2. Any such clause or language included in a contract, policy or certificate issued to or covering a resident of this state that is contrary to or inconsistent with the provisions of this section is void and unenforceable.
3. Nothing in this section prohibits an insurer from including a provision in a contract that informs an insured that as part of its routine operations the insurer applies the terms of its contracts for making decisions, including making determinations regarding eligibility, receipt of benefits and claims, or explaining policies, procedures, and processes, so long as the provision could not give rise to a deferential standard of review by any reviewing court.

History of Section. P.L. 2013, ch. 85, § 1; P.L. 2013, ch. 94, § 1.

27-4-29. Life insurance database.

1. The department of business regulation shall maintain a central database of electronic contact information for each life insurer having policies in force in this state.
2. On and after January 1, 2013, any member of the immediate family of a decedent searching for life insurance policies covering the decedent may file a request with the department for a search pursuant to this section, provided the decedent was a resident or former resident of this state. Any such request shall include a copy of the subject decedent’s death certificate. The right to file a request for a search pursuant to this section may not be assigned.
3. The department shall transmit any such request to all life insurers having policies in force in this state, along with information necessary for responding directly to the person filing the request. Each such insurer shall examine its books and records to make a determination as to the existence of coverage of the subject decedent, and upon a finding that such coverage does exist, shall directly notify the person filing the request.
4. The department may adopt such rules and regulations as may be necessary to implement the provisions of this section.
5. Insurers of credit life insurance are exempt from inclusion in the central database and shall not be subject to the requirements of § 27-4-28 .

History of Section. P.L. 2012, ch. 296, § 1; P.L. 2012, ch. 326, § 1.

27-4-30. Unintentional policy lapse.

1. Each insurer that delivers, or issues for delivery, an individual life insurance policy in this state on or after January 1, 2017, shall notify an applicant, in writing at the time of application for such policy, of such applicant’s right to designate a third party to receive notice of cancellation of the policy based on nonpayment of premium. The applicant may make such designation at the time of application for such policy, or at any time such policy is in force, by submitting a written notice to the insurer containing the name and address of the third-party designee.
2. The insurer’s transmission to the third-party designee of a copy of a notice of cancellation based on nonpayment of premium shall be in addition to the transmission of the original notice to the policyholder. The copy of the notice of cancellation transmitted to the third party shall be governed by the same law and policy provisions that govern the notice being transmitted to the policyholder.
3. The designation of a third party shall not constitute acceptance of any liability on the part of the third party or insurer for services provided to the policyholder.

History of Section. P.L. 2016, ch. 376, § 2; P.L. 2016, ch. 392, § 2.

27-4.1-1. Prepaid legal services plans unaffected.

Nothing in this chapter shall apply to or affect a nonprofit prepaid legal services plan that operates in this state by a nonprofit prepaid legal services corporation subject to chapter 20.3 of this title.

History of Section. P.L. 1986, ch. 431, § 1.

27-4.1-2. Legal services insurance as a form of accident and health insurance — Effect of other laws.

Legal services insurance provides for the mental and emotional welfare of human beings by defraying the costs of legal services; it shall be deemed to be accident and health insurance and shall be classified this way for the purposes of chapters 34.1 and 34.3 of this title. Legal services insurance may only be written pursuant to the provision of this chapter. Except to the extent expressly provided in this chapter, nothing in any other chapter of this title regulating the form, content, or provisions of accident and health insurance policies or the filing and approval of these policies including premium rates shall apply to legal services insurance policies written under and subject to the provisions of this chapter.

History of Section. P.L. 1986, ch. 431, § 1; P.L. 1999, ch. 147, § 3.

27-4.1-3. Authority to transact business.

Any insurance company incorporated by or under the laws of this state or any foreign or alien insurance company duly licensed to do business in this state may transact the business of legal services insurance, if that company is authorized to do property and casualty and/or accident and health insurance business in this state.

History of Section. P.L. 1986, ch. 431, § 1.

27-4.1-4. “Legal services insurance” defined.

“Legal services insurance” is insurance which involves the assumption of a contractual obligation to reimburse the beneficiary against or pay on behalf of the beneficiary all or a portion of his or her fees, costs, or expenses related to or arising out of services performed by or under the supervision of an attorney who is not an employee of or under the control of the insurer directly or indirectly and who is licensed to practice in the state of Rhode Island or any other state where the attorney provides these services. “Legal services insurance” may also include provisions for basic legal services rendered to the beneficiary, by telephone or mail, by one or more attorneys licensed to practice in the state of Rhode Island or any other state where the attorney provides these basic legal services none of whom are employees of or under the control of the insurer directly or indirectly. “Legal services insurance” does not include the provision of or reimbursement for legal services incidental to other insurance coverage. Beneficiaries of legal services shall not be required to select an attorney other than one of the beneficiary’s own choosing except for basic legal advice rendered by telephone or mail as described in this section. Attorneys providing basic legal advice rendered by telephone or mail under legal insurance policies shall refer all beneficiaries to an attorney of the beneficiary’s choice for other than basic legal services and shall be prohibited from taking any of these referrals.

History of Section. P.L. 1986, ch. 431, § 1.

27-4.1-5. Individual and group legal services insurance.

Any insurance company authorized to write legal services insurance in this state shall have the power to issue individual or group legal services insurance policies or may, by providing for the mental and emotional welfare of individuals and members of his or her family by defraying the costs of legal services, include legal services insurance in and as a part of a group accident and health insurance policy. “Group legal services insurance” is that form of voluntary legal services insurance covering not less than ten (10) employees or members, with or without their eligible dependents, written under a master policy issued to any governmental corporation, unit, agency, or department, or to any employer or association of employers, including the trustee or trustees of a fund established by an employer or association of employers, or to a labor union or other similar employee organization, including the trustees of a fund established by a labor union or employee organization. The terms “employee” and “employees” have the meaning given to each term in the policy.

History of Section. P.L. 1986, ch. 431, § 1.

27-4.1-6. Filing of forms and classification of risks and premiums.

No policy of legal services insurance shall be issued or delivered to any person in this state, nor shall any application, certificate of group insurance, rider, or endorsement be used in connection with the policy, until a copy of the form and of the classification of risks and premium rates pertaining to the risks have been filed with the insurance commissioner, nor until the expiration of sixty (60) days after this unless the commissioner gives written approval sooner.

History of Section. P.L. 1986, ch. 431, § 1.

27-4.1-7. Disapproval of forms.

1. The commissioner may, within sixty (60) days after the filing of any form, disapprove the form:
   1. If the benefits provided in the form are unreasonable in relation to the premium charged;
   2. If it contains a provision or provisions which are unjust, unfair, inequitable, misleading, deceptive, or encourage misrepresentation of the policy, or if it fails to include a provision deemed by the commissioner to be necessary for the protection of the interest of the public; or
   3. If it does not comply with the requirements of the law.
2. If the commissioner notifies the insurer that has filed any form that it does not comply with the provisions of this chapter, it shall be unlawful for the insurer to issue that form or use it in connection with any policy. In that notice the commissioner shall specify the reasons for his or her disapproval and state that a hearing will be granted within twenty (20) days after a request in writing by the insurer.
3. The commissioner may for good cause exempt any group insurance policy or class of group insurance policies from the requirements of subsection (a).

History of Section. P.L. 1986, ch. 431, § 1.

27-4.1-8. Hearing and use of disapproved forms.

The commissioner may at any time, after a hearing of which not less than twenty (20) days’ written notice has been given to the insurer, withdraw approval of any form on any of the grounds stated in this chapter. It shall be unlawful for the insurer to issue that form or use it in connection with any policy after the effective date of the withdrawal of approval. The notice of any hearing called under this section shall specify the matter to be considered at the hearing and any decision affirming disapproval or directing withdrawal of approval under this chapter shall be in writing and shall specify the reasons for the decision.

History of Section. P.L. 1986, ch. 431, § 1.

27-4.1-9. Judicial review of actions of commissioner.

The action of the commissioner in disapproving any policy form or withdrawing approval of any policy form shall be subject to review by the superior court for Providence and Bristol counties.

History of Section. P.L. 1986, ch. 431, § 1.

27-4.1-10. Rules and regulations.

The commissioner may make reasonable rules and regulations necessary to effect the purposes of this chapter.

History of Section. P.L. 1986, ch. 431, § 1.

27-4.2-1. Preamble.

1. The Rhode Island department of business regulation, the insurance division, recognizes that licensed insurers routinely enter into reinsurance agreements that yield legitimate relief to the ceding insurer from strain to surplus.
2. It is improper for a licensed insurer, in the capacity of ceding insurer, to enter into reinsurance agreements for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business being reinsured. In substance or effect, the expected potential liability to the ceding insurer remains basically unchanged by the reinsurance transaction, notwithstanding certain risk elements in the reinsurance agreement, such as catastrophic mortality or extraordinary survival. The terms of agreements referred to in this section and described in § 27-4.2-3 would violate:
   1. Applicable sections of the general laws relating to financial statements of insurers, resulting in distorted financial statements which do not properly reflect the financial condition of the ceding insurer;
   2. Applicable sections of the general laws relating to reinsurance reserve credits, resulting in a ceding insurer improperly reducing liabilities or establishing assets for reinsurance ceded; and
   3. Applicable sections of the general laws relating to creating a situation that may be hazardous to policyholders and the people of this state.

History of Section. P.L. 1995, ch. 111, § 2.

27-4.2-2. Applicability.

This chapter shall apply to all domestic life and accident and health insurers and to all other licensed life and accident and health insurers that are not subject to a substantially similar regulation in their domiciliary state. This chapter shall also similarly apply to licensed property and casualty insurers with respect to their accident and health business. This chapter shall not apply to assumption reinsurance, yearly renewable term reinsurance or certain non-proportional reinsurance such as stop loss or catastrophe reinsurance.

History of Section. P.L. 1995, ch. 111, § 2.

27-4.2-3. Accounting requirements.

1. No insurer subject to this chapter shall, for reinsurance ceded, reduce any liability or establish any asset in any financial statement filed with the department if, by the terms of the reinsurance agreement, in substance or effect, any of the following conditions exist:
   1. Renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period are not sufficient to cover anticipated allocable renewal expenses of the ceding insurer on the portion of the business reinsured, unless a liability is established for the present value of the shortfall (using assumptions equal to the applicable statutory reserve basis on the business reinsured). Those expenses include commissions, premium taxes and direct expenses including, but not limited to, billing, valuation, claims and maintenance expected by the company at the time the business is reinsured;
   2. The ceding insurer can be deprived of surplus or assets at the reinsurer’s option or automatically upon the occurrence of some event, such as the insolvency of the ceding insurer, except that termination of the reinsurance agreement by the reinsurer for nonpayment of reinsurance premiums or other amounts due, such as modified coinsurance reserve adjustments, interest and adjustments on funds withheld, and tax reimbursements, shall not be considered to be a deprivation of surplus or assets;
   3. The ceding insurer is required to reimburse the reinsurer for negative experience under the reinsurance agreement, except that neither offsetting experience refunds against current and prior years’ losses under the agreement nor payment by the ceding insurer of an amount equal to the current and prior years’ losses under the agreement upon voluntary termination of in-force reinsurance by the ceding insurer shall be considered a reimbursement to the reinsurer for negative experience. Voluntary termination does not include situations where termination occurs because of unreasonable provisions that allow the reinsurer to reduce its risk under the agreement. An example of this provision is the right of the reinsurer to increase reinsurance premiums or risk and expense charges to excessive levels forcing the ceding company to prematurely terminate the reinsurance treaty;
   4. The ceding insurer must, at specific points in time scheduled in the agreement, terminate or automatically recapture all or part of the reinsurance ceded;
   5. The reinsurance agreement involves the possible payment by the ceding insurer to the reinsurer of amounts other than from income realized from the reinsured policies. For example, it is improper for a ceding company to pay reinsurance premiums, or other fees or charges to a reinsurer that are greater than the direct premiums collected by the ceding company;
   6. The treaty does not transfer all of the significant risk inherent in the business being reinsured. The risk categories considered shall be morbidity, mortality, lapse, credit quality, reinvestment, and disintermediation. These categories are further defined in the regulation promulgated pursuant to this chapter;
   7. 1. The credit quality, reinvestment, or disintermediation risk is significant for business reinsured and the ceding company does not (other than for the classes of business excepted in subdivision (a)(7)(ii) of this section) either transfer the underlying assets to the reinsurer or legally segregate these assets in a trust or escrow account or establish a mechanism satisfactory to the commissioner which legally segregates, by contract or contract provision, the underlying assets;
      2. Notwithstanding the requirements of subdivision (a)(7)(i) of this section, the assets supporting the reserves for the following classes of business and any classes of business which do not have a significant credit quality, reinvestment or disintermediation risk may be held by the ceding company without segregation of these assets:
         1. Health insurance — long term care insurance/long term disability insurance;
         2. Traditional non-par permanent;
         3. Traditional par permanent;
         4. Adjustable premium permanent;
         5. Indeterminate premium permanent;
         6. Universal life fixed premium (no dump-in premiums allowed);
      3. The associated formula for determining the reserve interest rate adjustment must use a formula that reflects the ceding company’s investment earnings and incorporates all realized and unrealized gains and losses reflected in the statutory statement. An acceptable formula shall be set forth in regulations promulgated pursuant to this chapter;
   8. Settlements are made less frequently than quarterly or payments due from the reinsurer are not made in cash within ninety (90) days of the settlement date;
   9. The ceding insurer is required to make representations or warranties not reasonably related to the business being reinsured;
   10. The ceding insurer is required to make representations or warranties about future performance of the business being reinsured; and
   11. The reinsurance agreement is entered into for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business reinsured and, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged.
2. Notwithstanding subsection (a), an insurer subject to this chapter may, with the prior approval of the commissioner, take a reserve credit or establish any asset the commissioner may deem consistent with chapter 1.1 of this title and regulations promulgated under that chapter, including actuarial interpretations or standards adopted by the insurance division of the department of business regulation.
3. 1. Agreements entered into after the effective date of this chapter which involve the reinsurance of business issued prior to the effective date of the agreements, along with any subsequent amendments to it, shall be filed by the ceding company with the commissioner within thirty (30) days from its date of execution. Each filing shall include data detailing the financial impact of the transaction. The ceding insurer’s actuary who signs the financial statement actuarial opinion with respect to valuation of reserves shall consider this chapter and any applicable actuarial standards of practice when determining the proper credit in financial statements filed with the insurance division of the department of business regulation. The actuary should maintain adequate documentation and be prepared upon request to describe the actuarial work performed for inclusion in the financial statements and to demonstrate that the work conforms to this regulation.
   2. Any increase in surplus net of federal income tax resulting from arrangements described in subsection (c)(1) shall be identified separately on the insurer’s statutory financial statement as a surplus item (aggregate write-ins for gains and losses in surplus in the capital and surplus account, of the annual statement) and recognition of the surplus increase as income shall be reflected on a net of tax basis in the annual statement as earnings emerge from the business reinsured.

History of Section. P.L. 1995, ch. 111, § 2.

27-4.2-4. Written agreements.

1. No reinsurance agreement or amendment to any agreement may be used to reduce any liability or to establish any asset in any financial statement filed with the insurance division of the department of business regulation, unless the agreement, amendment, or a binding letter of intent has been duly executed by both parties no later than the “as of date” of the financial statement.
2. In the case of a letter of intent, a reinsurance agreement or an amendment to a reinsurance agreement must be executed within a reasonable period of time, not exceeding ninety (90) days from the execution date of the letter of intent, in order for credit to be granted for the reinsurance ceded.
3. The reinsurance agreement shall contain provisions which provide that:
   1. The agreement shall constitute the entire agreement between the parties with respect to the business being reinsured and that there are no understandings between the parties other than as expressed in the agreement; and
   2. Any change or modification to the agreement shall be null and void unless made by amendment to the agreement and signed by both parties.

History of Section. P.L. 1995, ch. 111, § 2.

27-4.2-5. Repealed.

27-4.2-6. Rules and regulations.

The insurance commissioner shall have the authority to promulgate rules and regulations necessary to carry out the purposes of this chapter.

History of Section. P.L. 1995, ch. 111, § 2.

27-4.2-7. Existing agreements.

Insurers subject to this act shall reduce to zero by December 31, 1997, any reserve credits or assets established with respect to reinsurance agreements entered into prior to the effective date of this act which, under the provisions of this act would not be entitled to recognition of the reserve credits or assets; provided, however, that the reinsurance agreements shall have been in compliance with laws or regulations in existence immediately preceding the effective date of this act.

History of Section. P.L. 2011, ch. 18, § 4; P.L. 2011, ch. 25, § 4.

27-4.3-1. Short title.

This chapter shall be known as the “Standard Nonforfeiture Law for Life Insurance Act.”

History of Section. P.L. 1993, ch. 180, § 1.

27-4.3-1.1. Definitions.

“Operative date of the valuation manual” means January 1 of the first calendar year that the valuation manual as defined in chapter 4.5 of this title is effective.

History of Section. P.L. 2013, ch. 17, § 3; P.L. 2013, ch. 20, § 3.

27-4.3-2. Nonforfeiture benefits.

1. Policies issued on and after January 1, 1994, except as stated in § 27-4.3-9 , shall not be delivered or issued for delivery in this state unless they shall contain in substance the following provisions, or corresponding provisions which in the opinion of the commissioner of insurance are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements specified in this chapter and are essentially in compliance with § 27-4.3-8 :
   1. That in the event of default in any premium payment, the insurance company will grant, upon proper request not later than sixty (60) days after the due date of the premium in default, a paid up nonforfeiture benefit on a plan stipulated in the policy, effective as of the due date, of the amount as specified in this chapter. In lieu of the stipulated paid up nonforfeiture benefit, the insurance company may substitute, upon proper request not later than sixty (60) days after the due date of the premium in default, an actuarially equivalent alternative paid up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits;
   2. That upon surrender of the policy within sixty (60) days after the due date of any premium payment in default after premiums have been paid for at least three (3) full years in the case of ordinary insurance or five (5) full years in the case of industrial insurance, the insurance company will pay, in lieu of any paid up nonforfeiture benefit, a cash surrender value of an amount as specified in this chapter;
   3. That a specified paid up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make an election elects another available option not later than sixty (60) days after the due date of the premium in default;
   4. That if the policy shall have become paid up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the insurance company will pay, upon surrender of the policy within thirty (30) days after any policy anniversary, a cash surrender value of an amount as specified in this chapter;
   5. In the case of policies which cause, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums or which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid up nonforfeiture benefits available under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first twenty (20) policy years or during the term of the policy, whichever is shorter; the values and benefits to be calculated upon the assumption that there are no dividends or paid up additions credited to the policy and that there is no indebtedness to the insurance company on the policy; and
   6. A statement that the cash surrender values and the paid up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered; an explanation of the manner in which the cash surrender values and the paid up nonforfeiture benefits are altered by the existence of any paid up additions credited to the policy or any indebtedness to the insurance company on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated in the policy, a statement that the method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered; and a statement of the method to be used in calculating the cash surrender value and a paid up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which the values and benefits are consecutively shown in the policy.
2. Any of the provisions of subsection (a) not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy.
3. The insurance company shall reserve the right to defer the payment of any cash surrender value for a period of six (6) months after demand for the payment with surrender of the policy.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.3-3. Computation of cash surrender value.

1. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by § 27-4.3-2 , shall be an amount not less than the excess, if any, of the present value, on the anniversary, of the future guaranteed benefits which could have been provided for by the policy, including any existing paid up additions, if there had been no default, over the sum of:
   1. The then present value of the adjusted premiums as defined in § 27-4.3-5 , corresponding to premiums which would have fallen due on and after the anniversary; and
   2. The amount of any indebtedness to the insurance company on the policy.
2. For any policy issued on or after January 1, 1994, which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in subsection (a) shall be an amount not less than the sum of the cash surrender value as defined in subsection (a) for a similar policy issued at the same age without the rider or supplemental policy provision and the cash surrender value as defined in subsection (a) for a policy which provides only the benefits provided by the rider or supplemental policy provision.
3. For any family policy issued on or after January 1, 1994, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse’s attaining age seventy-one (71), the cash surrender value referred to in subsection (a) of this section shall be an amount not less than the sum of the cash surrender value as defined in subsection (a) for a similar policy issued at the same age without the term insurance on the life of the spouse and the cash surrender value as defined in subsection (a) for a policy which provides only the benefits provided by the term insurance on the life of the spouse.
4. Any cash surrender value available within thirty (30) days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid up nonforfeiture benefit, whether or not required by § 27-4.3-2 , shall be an amount not less than the present value, on the anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurance company on the policy.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.3-4. Computation of paid-up nonforfeiture benefits.

Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of the anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value which would have been required by this chapter in the absence of the condition that the premium shall have been paid for at least a specified period.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.3-5. Calculations of adjusted premiums by the nonforfeiture net level premium method.

1. This section shall apply to all policies issued on or after January 1, 1994. Except as provided in subsection (g) of this section, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such a uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of: (1) the then-present value of the future-guaranteed benefits provided for by the policy; (2) one percent (1%) of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years; and (3) one hundred twenty-five percent (125%) of the nonforfeiture, net-level premium as defined in subsection (b); provided, however, that in applying the percentage specified in subdivision (a)(3), no nonforfeiture net-level premium shall be deemed to exceed four percent (4%) of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years. The date of issue of a policy for the purpose of this section shall be the date as of which the rated age of the insured is determined.
2. The nonforfeiture, net-level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the policy and on each anniversary of the policy on which a premium falls due.
3. In the case of policies that cause, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or that provide an option for changes in benefits or premiums, other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any change in the benefits or premiums, the future-adjusted premiums, nonforfeiture, net-level premiums, and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change.
4. Except as otherwise provided in subsection (g), the recalculated future-adjusted premiums for any policy shall be a uniform percentage of the future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid up nonforfeiture benefits, so that the present value, at the time of change to the newly defined benefits or premiums, of all future-adjusted premiums shall be equal to the excess of: (1) the sum of: (i) the then-present value of the then-future-guaranteed benefits provided for by the policy and (ii) the additional expense allowance, if any, over (2) the then-cash-surrender value, if any, or present value of any paid up, nonforfeiture benefit under this policy.
5. The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of: (1) one percent (1%) of the excess, if positive, of the average amount of insurance at the beginning of each of the first ten (10) policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first ten (10) policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and (2) one hundred twenty-five percent (125%) of the increase, if positive, in the nonforfeiture net-level premium.
6. The recalculated, nonforfeiture net-level premium shall be equal to the result obtained by dividing subdivision (f)(1) by subdivision (f)(2) where:
   1. Equals the sum of:
      1. The nonforfeiture net-level premium applicable prior to the change multiplied by the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred, and
      2. The present value of the increase in future-guaranteed benefits provided for by the policy; and
   2. Equals the present value of an annuity of one per annum payable on each anniversary of the policy on, or subsequent to, the date of change on which a premium falls due.
7. Notwithstanding any other provisions of this section to the contrary, in the case of a policy issued on a substandard basis that provides reduced graded amounts of insurance so that, in each policy year, the policy has the same tabular mortality cost as a similar policy issued on the standard basis that provides for a higher uniform amount of insurance, adjusted premiums and present values for the substandard policy may be calculated as if it were issued to provide higher uniform amounts of insurance on the standard basis.
8. All adjusted premiums and present values referred to in this chapter shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1980 Standard Ordinary Mortality Table or, at the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with ten-year (10) select mortality factors; adjusted premiums and present values shall for all policies of industrial insurance be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table; for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this section, for policies issued in that calendar year. Provided, however that:
   1. At the option of the insurance company, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this section, for policies issued in the immediately preceding calendar year;
   2. Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by § 27-4.3-2 , shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of any paid-up nonforfeiture benefit and paid-up dividend additions, if any;
   3. An insurance company may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values;
   4. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1980 Extended-Term Insurance Table for policies of ordinary insurance and not more than the Commissioners 1961 Industrial Extended-Term Insurance Table for policies of industrial insurance;
   5. For insurance issued on a substandard basis, the calculation of any adjusted premiums and present values may be based on appropriate modifications of the tables mentioned in this subsection;
   6. 1. For policies issued prior to the operative date of the valuation manual, any Commissioners Standard Ordinary Mortality Tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the commissioner of insurance for use in determining the minimum nonforfeiture standard, may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without ten-year (10) select mortality factors or for the Commissioners 1980 Extended-Term Insurance Table.
      2. For policies issued on or after the operative date of the valuation manual the valuation manual shall provide the Commissioners Standard Mortality Table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without ten-year (10) Select Mortality Factors or for the Commissioners 1980 Extended-Term Insurance Table. If the commissioner approves by regulation any Commissioners Standard Ordinary Mortality Table adopted by the NAIC for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.
   7. 1. For policies issued prior to the operative date of the valuation manual, any Commissioners Standard Industrial Mortality Tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the commissioner of insurance for use in determining the minimum nonforfeiture standard, may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended-Term Insurance Table.
      2. For policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners Standard Mortality Table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended-Term Insurance Table. If the commissioner approves by regulation any Commissioners Standard Industrial Mortality Table adopted by the NAIC for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.
9. The nonforfeiture interest rate is defined below:
   1. For policies issued prior to the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to one hundred and twenty-five percent (125%) of the calendar year statutory valuation interest rate for the policy as defined in chapter 4.5 of this title, rounded to the nearer one-quarter of one percent (.25%); provided, however, that the nonforfeiture interest rate shall not be less than four percent (4%).
   2. For policies issued on and after the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be provided by the valuation manual.
10. Notwithstanding any other provision in this title to the contrary, any re-filing of nonforfeiture values or their methods of computation for any previously approved policy form that involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require re-filing of any other provisions of that policy form.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2002, ch. 292, § 14; P.L. 2013, ch. 17, § 1; P.L. 2013, ch. 20, § 1; P.L. 2014, ch. 91, § 1; P.L. 2014, ch. 94, § 1.

27-4.3-6. Nonforfeiture benefits for indeterminate premium plans.

In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in §§ 27-4.3-2 — 27-4.3-5 , then:

1. The commissioner of insurance must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insured as the minimum benefits required by §§ 27-4.3-2 — 27-4.3-5 ;
2. The commissioner of insurance must be satisfied that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insured; and
3. The cash surrender values and paid up nonforfeiture benefits provided by the plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this standard nonforfeiture law for life insurance, as determined by regulations promulgated by the commissioner of insurance.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.3-7. Proration of values — Net value of paid-up additions.

Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in §§ 27-4.3-3 — 27-4.3-5 may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, shall not be less than the amounts used to provide the additions. Notwithstanding the provisions of § 27-4.3-3 , additional benefits payable: (1) in the event of death or dismemberment by accident or accidental means, (2) in the event of total and permanent disability, (3) as reversionary annuity or deferred reversionary annuity benefits, (4) as term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this chapter would not apply, (5) as term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if the term insurance expires before the child’s age is twenty-six (26), is uniform in amount after the child’s age is one, and has not become paid-up by reason of the death of a parent of the child, and (6) as other policy benefits additional to life insurance and endowment benefits, and premiums for all additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this chapter, and no additional benefits shall be required to be included in any paid-up nonforfeiture benefits.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.3-8. Consistency of progression of cash surrender values with increasing policy duration.

1. This section, in addition to all other applicable sections of this chapter, shall apply to all policies issued on or after January 1, 1994. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be in an amount which does not differ by more than two tenths of one percent (.2%) of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years, from the sum of: (1) the greater of zero (0) and the basic cash value specified in subsection (b), and (2) the present value of any existing paid up additions less the amount of any indebtedness to the insurance company under the policy.
2. The basic cash value shall be equal to the present value, on the anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the insurance company, if there had been no default, less the then present value of the nonforfeiture factors, as defined in this section, corresponding to premiums which would have fallen due on and after the anniversary; provided, that the effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in § 27-4.3-3 or 27-4.3-5 , whichever is applicable, shall be the same as are the effects specified in § 27-4.3-3 or 27-4.3-5 , whichever is applicable, on the cash surrender values defined in that section.
3. The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in § 27-4.3-5 . Except as is required in this section, the percentage:
   1. Must be the same percentage for each policy year between the second policy anniversary and the later of: (i) the fifth policy anniversary, and (ii) the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two tenths of one percent (.2%) of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years; and
   2. Must be such that no percentage after the later of the two policy anniversaries specified in subdivision (c)(1) may apply to fewer than five (5) consecutive policy years.
4. No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in § 27-4.3-5 , were substituted for the nonforfeiture factors in the calculation of the basic cash value.
5. All adjusted premiums and present values referred to in this section shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy’s compliance with the other sections of this chapter. The cash surrender values referred to in this section shall include any endowment benefits provided for by the policy.
6. Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid up nonforfeiture benefit available under the policy in the event of default in a premium payment, shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in §§ 27-4.3-2 — 27-4.3-5 and 27-4.3-7 . The amounts of any cash surrender values and of any paid up nonforfeiture benefits granted in connection with additional benefits such as those listed subdivisions (1) — (6) of § 27-4.3-7 shall conform with the principles of this section.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2002, ch. 292, § 14.

27-4.3-9. Exceptions.

1. This chapter shall not apply to any of the following:
   1. Reinsurance;
   2. Group insurance;
   3. Pure endowment;
   4. Annuity or reversionary annuity contract;
   5. Term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal of the policy, of twenty (20) years or less expiring before age seventy-one (71), for which uniform premiums are payable during the entire term of the policy;
   6. Term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated as specified in § 27-4.3-5 , is less than the adjusted premium calculated, on a term policy of uniform amount, or renewal of it, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance and for a term of twenty (20) years or less expiring before age seventy-one (71), for which uniform premiums are payable during the entire term of the policy;
   7. A policy, which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in §§ 27-4.3-3 — 27-4.3-5 , exceeds two and one-half percent (2.5%) of the amount of insurance at the beginning of the same policy year; nor
   8. A policy which shall be delivered outside this state through an insurance producer or other representative of the insurance company issuing the policy.
2. For the purposes of determining the applicability of this chapter, the age at expiry for a joint term life insurance policy shall be the age at expiry of the oldest life.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.3-10. Severability.

If any provision of this chapter, or the application of the provision to any person or circumstances, is held invalid, the remainder of the chapter, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected by that invalidity.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.3-11. Rules and regulations.

The director of the department of business regulation may adopt reasonable rules and regulations for the implementation and administration of this chapter.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-1. Short title.

This chapter shall be known as the “Standard Nonforfeiture Law for Individual Deferred Annuities Act.”

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-2. Applicability.

This chapter shall not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer including a partnership or sole proprietorship or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under 26 U.S.C. § 408, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this state through an insurance provider or other representative of the company issuing the contract.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-3. Nonforfeiture requirements.

1. In the case of contracts issued on or after July 7, 2004, no contract of annuity, except as stated in § 27-4.4-2 , shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the commissioner of insurance are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract:
   1. That upon cessation of payment of considerations under contract, or upon written request of the contract owner, the company shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in §§ 27-4.4-5 — 27-4.4-8 and 27-4.4-10 ;
   2. If a contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the company shall pay in lieu of any paid up annuity benefit a cash surrender benefit of such amount as is specified in §§ 27-4.4-5 , 27-4.4-6 , 27-4.4-8 and 27-4.4-10 . The company may reserve the right to defer the payment of the cash surrender benefit for a period not to exceed six (6) months after demand therefore with surrender of the contract after making a written request and receiving written approval of the commissioner. The request shall address the necessity and equitability to all policyholders of the deferral;
   3. A statement of the mortality table, if any, and interest rates used in calculating any minimum paid up annuity, cash surrender, or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of the benefits; and
   4. A statement that any paid-up annuity, cash surrender, or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which the benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract, or any prior withdrawals from or partial surrenders of the contract.
2. Notwithstanding the requirements of this section, any deferred annuity contract may provide that if no considerations have been received under a contract for a period of two (2) full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to the period would be less than twenty dollars ($20.00) monthly, the company may at its option terminate the contract by payment in cash of the then present value of the portion of the paid up annuity benefit, calculated on the basis on the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by the payment shall be relieved of any further obligation under the contract.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2004, ch. 464, § 1; P.L. 2004, ch. 609, § 1; P.L. 2008, ch. 475, § 74.

27-4.4-4. Minimum values.

1. The minimum values as specified in §§ 27-4.4-5 — 27-4.4-8 and 27-4.4-10 of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section.
2. The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to that time at rates of interest as provided in subsection (d) of this section, the net considerations as defined in this section paid prior to that time, decreased by the sum of:
   1. Any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest as provided in subsection (d) of this section; and
   2. The amount of any indebtedness to the company on the contract, including interest due and accrued;
   3. An annual contract charge of fifty dollars ($50.00), accumulated at rates of interest as provided in subsection (d) of this section; and
   4. Any premium tax paid by the company for the contract, accumulated at rates of interest as provided in subsection (d) of this section.
3. The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to eighty-seven and one-half percent (87.5%) of the gross considerations credited to the contract during that contract year.
4. The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of three percent (3%) per annum and the following, which shall be specified in the contract if the interest rate will be reset:
   1. The five (5) year Constant Maturity Treasury Rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest one twentieth of one percent (1/20%), specified in the contract no longer than fifteen (15) months prior to the contract issue date or redetermination date under subdivision (4) of this subsection;
   2. Reduced by one hundred twenty-five (125) basis points;
   3. Where the resulting interest rate is not less than one percent (1%); and
   4. The interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the five (5) year Constant Maturity Treasury Rate to be used at each redetermination date.
5. During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in subsection (d)(2) of this section above by up to an additional one hundred (100) basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The commissioner of insurance may require a demonstration that the present value of the reduction does not exceed the market value of the benefit. Lacking such a demonstration that is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction.
6. The commissioner of insurance may adopt rules to implement the provisions of subsection (e) of this section and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts that the commissioner determines adjustments are justified.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2002, ch. 292, § 15; P.L. 2004, ch. 464, § 1; P.L. 2004, ch. 609, § 1.

27-4.4-5. Computation of present value.

Any paid up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. The present value shall be computed using the mortality table, if any, and the interest rate specified in the contract for determining the minimum paid up annuity benefits guaranteed in the contract.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-6. Calculation of cash surrender value.

For contracts which provide cash surrender benefits, the cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit which would be provided under the contract at maturity arising from consideration paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, the present value being calculated on the basis of an interest rate not more than one percent (1%) higher than the interest rate specified in the contract for accumulating the net considerations to determine the maturity value, decreased by the amount of any indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under the contracts shall be at least equal to the cash surrender benefit.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-7. Calculation of paid-up annuity benefits.

For contracts which do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, the present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net consideration to determine the maturity value, and increased by any existing additional amount credited by the company to the contract. For contracts that do not provide any death benefits prior to the commencement of any annuity payments, the present values shall be calculated on the basis of the interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. In no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-8. Maturity date.

For the purpose of determining the benefits calculated under §§ 27-4.4-6 and 27-4.4-7 , in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant’s seventieth (70th) birthday or the tenth (10th) anniversary of the contract, whichever is later.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-9. Disclosure of limited death benefits.

Any contract that does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that those benefits are not provided.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-10. Inclusion of lapse of time considerations.

Any paid-up annuity, cash surrender, or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-11. Proration of values — Additional benefits.

For any contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross consideration with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of §§ 27-4.4-5 — 27-4.4-8 and 27-4.4-10 , additional benefits payable (1) in the event of total and permanent disability, (2) as reversionary annuity or deferred reversionary annuity benefits, or (3) as other policy benefits additional to life insurance, endowment, and annuity benefits, and consideration for all additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits that may be required by this chapter. The inclusion of the benefits shall not be required in any paid-up benefits, unless the additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.4-12. Rules and regulations.

The commissioner of insurance may adopt reasonable rules and regulations for the implementation of this chapter.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.5-1. Short title and definitions.

1. This chapter shall be known as the “Standard Valuation Law.”
2. For the purpose of this chapter, the following definitions shall apply on or after the operative date of the valuation manual:
   1. “Accident and health insurance” means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the valuation manual.
   2. “Appointed actuary” means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in § 27-4.5-3(b) .
   3. “Commissioner of insurance” means the director of the department of business regulation, or his or her designee.
   4. “Company” means an entity, that: (i) Has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state and has at least one such policy in force or one claim; or (ii) Has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this state.
   5. “Deposit-type contract” means contracts that do not incorporate mortality or morbidity risks and as may be specified in the valuation manual.
   6. “Life insurance” means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual.
   7. “NAIC” means the National Association of Insurance Commissioners.
   8. “Policyholder behavior” means any action a policyholder, contract holder, or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this chapter including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract, but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract.
   9. “Principle-based valuation” means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with § 27-4.5-14 as specified in the valuation manual.
   10. “Qualified actuary” means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the valuation manual.
   11. “Tail risk” means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of very significant size or magnitude.
   12. “Valuation manual” means the manual of valuation instructions adopted by the NAIC as specified in this chapter or as subsequently amended.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2; P.L. 2014, ch. 91, § 2; P.L. 2014, ch. 94, § 2.

27-4.5-2. Reserve valuation.

1. Policies and contracts issued prior to the operative date of the valuation manual:
   1. The commissioner of insurance shall annually value, or cause to be valued, the reserve liabilities, called “reserves” in this chapter, for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurance company doing business in this state issued on or after January 1, 1994, and prior to the operative date of the valuation manual. In calculating the reserves, the commissioner may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves required in this chapter of foreign or alien companies, the commissioner may accept the valuation made or caused to be made by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this chapter.
   2. The provisions set forth in §§ 27-4.5-4 , 27-4.5-4.1 , 27-4.5-5 , 27-4.5-5.1 , 27-4.5-6 , 27-4.5-7 , 27-4.5-8 , 27-4.5-9 , and 27-4.5-10 shall apply to all policies and contracts, as appropriate, subject to this chapter issued on or after January 1, 1994, and prior to the operative date of the valuation manual and the provisions set forth in §§ 27-4.5-13 and 27-4.5-14 shall not apply to any such policies and contracts.
   3. The minimum standard for the valuation of policies and contracts issued prior to January 1, 1994, shall be that provided by the laws in effect immediately prior to that date.
2. Policies and contracts issued on or after the operative date of the valuation manual.
   1. The commissioner shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date of the valuation manual. In lieu of the valuation of the reserves required of a foreign or alien company, the commissioner may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this chapter.
   2. The provisions set forth in §§ 27-4.5-13 and 27-4.5-14 shall apply to all policies and contracts issued on or after the operative date of the valuation manual.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-3. Actuarial opinion of reserves.

1. Actuarial opinion prior to the operative date of the valuation manual:
   1. General.  Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner of insurance by regulation are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The commissioner of insurance by regulation shall define the specifics of this opinion and add any other items deemed to be necessary to its scope.
   2. Actuarial analysis of reserves and assets supporting reserves.
      1. Every life insurance company, except as exempted by shall also annually include in the opinion required by subsection (a) above an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner of insurance by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts.
      2. The commissioner of insurance may provide by regulation for a transition period for establishing any higher reserves that the qualified actuary may deem necessary in order to render the opinion required by this section.
   3. Requirement for opinion under subdivision (2) above.  Each opinion required by subdivision (2) shall be governed by the following provisions:
      1. A memorandum, in form and substance acceptable to the commissioner of insurance as specified by regulation, shall be prepared to support each actuarial opinion; and
      2. If the insurance company fails to provide a supporting memorandum at the request of the commissioner of insurance within a period specified by regulation or the commissioner of insurance determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the regulations or is otherwise unacceptable to the commissioner of insurance, the commissioner of insurance may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner of insurance.
   4. Requirement for all opinions subject to subsection (a).  Every opinion required by subsection (a) shall be governed by the following provisions:
      1. The opinion shall be submitted with the annual statement reflecting the valuation of the reserve liabilities for each year ending on or after December 31, 1994;
      2. The opinion shall apply to all business in force including individual and group health insurance plans, in a form and substance acceptable to the commissioner of insurance as specified by regulation;
      3. The opinion shall be based on standards adopted by the actuarial standards board and on any additional standards as that commissioner of insurance may by regulation prescribe;
      4. In the case of an opinion required to be submitted by a foreign or alien company, the commissioner of insurance may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner of insurance determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state;
      5. For the purposes of this section, “qualified actuary” means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in the regulations;
      6. Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner of insurance, for any act, error, omission, decision, or conduct with respect to the actuary’s opinion;
      7. Disciplinary action by the commissioner of insurance against the company or the qualified actuary shall be defined in regulations by the commissioner of insurance; and
      8. Except as provided in paragraphs (xii), (xiii) and (xiv) below, documents, materials or other information in the possession or control of the department of insurance that are a memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, shall be confidential and privileged, shall not be subject to chapter 35 of title 42, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence as any private/civil action. However, the commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner’s official duties.
      9. Neither the commissioner nor any person who received documents, materials or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to paragraph (viii).
      10. In order to assist in the performance of the commissioner’s duties, the commissioner:
          1. May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to paragraph (viii) with other state, federal and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information;
          2. May receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and
          3. May enter into agreements governing sharing and use of information consistent with paragraphs (viii) through (x).
      11. No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in paragraph (x).
      12. A memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the memorandum, may be subject to subpoena for the purpose of defending an action seeking damages from the actuary submitting the memorandum by reason of an action required by this section or by regulations promulgated hereunder.
      13. The memorandum or other material may otherwise be released by the commissioner with the written consent of the company or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material.
      14. Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.
2. Actuarial opinion of reserves after the operative date of the valuation manual.
   1. General.  Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The valuation manual will prescribe the specifics of this opinion including any items deemed to be necessary to its scope.
   2. Actuarial analysis of reserves and assets supporting reserves.  Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the commissioner, except as exempted in the valuation manual, shall also annually include in the opinion required by subdivision (1) of this section, an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts, including but not limited to the benefits under and expenses associated with the policies and contracts.
   3. Requirements for opinions subject to subdivision 27-4.5-3(b) (2).  Each opinion required by subdivision 27-4.5-3(b) (2) shall be governed by the following provisions:
      1. A memorandum, in form and substance as specified in the valuation manual, and acceptable to the commissioner, shall be prepared to support each actuarial opinion.
      2. If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified in the valuation manual or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner.
      3. The opinion shall apply to all policies and contracts subject to subdivision 27-4.5-3(b)(2) , plus other actuarial liabilities as may be specified in the valuation manual.
      4. The opinion shall be based on standards adopted from time to time by the actuarial standards board or its successor, and on such additional standards as may be prescribed in the valuation manual.
      5. In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.
      6. Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person (other than the insurance company and the commissioner) for any act, error, omission, decision or conduct with respect to the appointed actuary’s opinion.
      7. Disciplinary action by the commissioner against the company or the appointed actuary shall be defined in regulations by the commissioner.
   4. Requirement for all opinions subject to subsection 27-4.5-3(b).  Every opinion shall be governed by the following provisions: (i) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the commissioner. (ii) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2002, ch. 292, § 16; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-4. Computation of minimum standard.

1. The minimum standard for valuation of all policies and contracts issued prior to the effective date of this chapter shall be that provided by the laws in effect immediately prior to that date. Except as otherwise provided in §§ 27-4.5-4 , 27-4.5-4.1 and 27-4.5-10 , the minimum standard for the valuation of all policies and contracts issued on or after the effective date of this chapter and prior to the effective date of the valuation manual shall be the commissioners reserve valuation methods defined in §§ 27-4.5-5 , 27-4.5-5.1 , 27-4.5-8 and 27-4.5-10 and the following tables:
   1. For ordinary policies of life insurance issued on the standard basis:
      1. The Commissioners 1980 Standard Ordinary Mortality Table;
      2. At the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten (10) Year Select Mortality Factors; or
      3. Any ordinary mortality table, adopted after 1980 by the NAIC, which is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for such policies;
   2. For industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in the policies: the 1941 Standard Industrial Mortality Table for policies issued prior to the operative date of § 27-4.3-5.3, and for policies issued on or after the operative date of § 27-4.3-5.3, the Commissioners 1961 Standard Industrial Mortality Table or any industrial mortality table adopted after 1980 by the NAIC that is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for the policies;
2. The valuation of all policies and contracts issued on or after January 1, 2000 shall be subject to §§ 27-4.5-4.1 and 27-4.5-10 and the following tables:
   1. For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in those contracts, the Annuity 2000 Mortality Table or any individual annuity mortality table adopted after 2000 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the insurance commissioner for use in determining the minimum standard of valuation for those contracts;
   2. For all annuities and pure endowments purchased under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under those contracts, the 1994 Group Annuity Reserving Table, or any group annuity mortality table adopted after 2000 by the National Association of Insurance Commissioners that is approved by regulation promulgated by the insurance commissioner for use in determining the minimum standard of valuation for annuities and pure endowments, or any modification of these tables approved by the insurance commissioner; and
3. For group life insurance, life insurance issued on the substandard basis and other special benefits and tables approved by the insurance commissioner.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 1999, ch. 137, § 1; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-4.1. Computation of minimum standard by calendar year of issue.

1. The interest rates used in determining the minimum standard for the valuation of the following shall be calendar year statutory valuation interest rates as defined in this section: (1) life insurance policies issued in a particular calendar year on or after January 1, 1994; (2) individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1994; (3) annuities and pure endowments purchased in a particular calendar year on or after January 1, 1994, under group annuity and pure endowment contracts; and (4) the net increase, if any, in a particular calendar year after January 1, 1994, in amounts held under guaranteed interest contracts;
2. Calendar year statutory valuation interest rates.
   1. The calendar year statutory valuation interest rates, “I”, shall be determined as follows and the results rounded to the nearer one-quarter of one percent (1/4 of 1%):
      1. For life insurance: I=.03+W(R1-.03)+W/2(R2-.09);
      2. For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options: I=.03+W(R-.03); Where R1 is the lesser of R and .09, R2 is the greater of R and .09, R is the reference interest rate defined in this section, W is the weighting factor defined in this section;
      3. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in paragraph (ii) above, the formula for life insurance stated in paragraph (i) above shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of ten (10) years and the formula for single premium immediate annuities stated in paragraph (ii) above shall apply to annuities and guaranteed interest contracts with guarantee duration of ten (10) years or less;
      4. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in paragraph (ii) above shall apply; and
      5. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in paragraph (b)(1)(ii) above shall apply; and
   2. However if the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of one percent (1/2 of 1%), the calendar year statutory valuation interest rate for the life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980 (using the reference interest rate defined in 1979) and shall be determined for each subsequent calendar year regardless of when § 27-4.3-5 becomes operative.
3. Weighting factors.
   1. The weighting factors referred to in the formulas stated above are given in the following tables:
      1. WEIGHTING FACTORS FOR LIFE INSURANCE:

         For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy;

      2. Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options is .80;
      3. Weighting factors for other annuities and for guaranteed interest contracts, except as stated in paragraph (ii) above, shall be as specified in subparagraphs (A), (B) and (C) below, according to the rules and definitions in subparagraphs (D), (E) and (F) below:
         1. For annuities and guaranteed interest contracts valued on an issue year basis:
         2. For annuities and guaranteed interest contracts valued on a change in fund basis, the factors show in paragraph (i) above increased by:
         3. For annuities and guaranteed interest contracts valued on an issue year basis, other than those with no cash settlement options, which do not guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis that do not guarantee interest rates on considerations received more than twelve (12) months beyond the valuation date, the factors shown in paragraph (i) or derived in paragraph (ii) increased by:
         4. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee durations in excess of twenty (20) years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guaranteed duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence;
         5. Plan Type as used in the tables in this subdivision is defined as follows:
            1. Plan Type A: At any time the policyholder may withdraw funds only (I) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (II) without an adjustment but installments over five (5) years or more, or (III) as an immediate life annuity, or (IV) no withdrawal permitted;
            2. Plan Type B: Before expiration of the interest rate guarantee, the policyholder may withdraw funds only (I) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (II) without an adjustment but in installments over five (5) years or more, or (III) no withdrawal permitted. At the end of the interest rate guarantee, funds may be withdrawn without an adjustment in a single sum or installments over less than five (5) years;
            3. Plan Type C: Policyholder may withdraw funds before the expiration of interest rate guarantee in a single sum or installments over less than five (5) years either (I) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (II) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund; and
         6. A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis. As used in this section, “issue year basis of valuation” refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and “change in fund basis of valuation” refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.
4. Reference interest rate.  Reference interest rate referred to in subsection (b) is defined as follows:
   1. For life insurance, the lesser of the average over a period of thirty-six (36) months and the average over a period of twelve (12) months, ending on June 30 of the calendar year preceding the year of issue, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.;
   2. For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or year of purchase, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.;
   3. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in paragraph (2) above, with guarantee duration in excess of ten (10) years, the lesser of the average over a period of thirty-six (36) months and the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.;
   4. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in paragraph (2) above, with guarantee duration of ten (10) years or less, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.;
   5. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.; and
   6. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in subdivision (d)(2), the average over a period of twelve (12) months, ending on June 30 of the calendar year of the change in the fund, of the monthly average of the composite yield on seasoned corporate bonds, as published by Moody’s Investors Service, Inc.
5. Alternative method for determining reference interest rates.  In the event that the monthly average of the composite yield on seasoned corporate bonds is no longer published by Moody’s Investors Service, Inc., or in the event that the National Association of Insurance Commissioners determines that the monthly average of the composite yield on seasoned corporate bonds as published by Moody’s Investors Service, Inc. is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the National Association of Insurance Commissioners and approved by regulation promulgated by the commissioner of insurance, may be substituted.

Guarantee Duration (Years) Weighting Factors 10 or less .50 More than 10, but not more than 20 .45 More than 20 .35

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Guarantee Duration (Years) Weighting Factor for Plan Type A B C 5 or less: .80 .60 .50 More than 5, but not more than 10: .75 .60 .50 More than 10, but not more than 20: .65 .50 .45 More than 20: .45 .35 .35

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Plan Type A B C .15 .25 .05

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Plan Type A B C .05 .05 .05

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History of Section. P.L. 1993, ch. 180, § 1; P.L. 1994, ch. 404, § 11; P.L. 2002, ch. 292, § 16; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-5. Reserve valuation method — Life insurance and endowment benefits.

1. Except as provided in §§ 27-4.5-5.1 , 27-4.5-8 and 27-4.5-10 , reserves according to the commissioners’ reserve valuation method for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of the future guaranteed benefits provided for by the policies therefor, over the then present value of any future modified net premiums. The modified net premiums for any policy shall be the uniform percentage of the respective contract premiums for the benefits such that the present value, at the date of issue of the policy, of all modified net premiums shall be equal to the sum of the then present value of the benefits provided for by the policy and the excess of (1) over (2), as follows:
   1. A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of the policy on which a premium falls due; however, that the net level annual premium shall not exceed the net level annual premium on the nineteen (19) year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of the policy; and
   2. A net one year term premium for the benefits provided for in the first policy year.
2. For any life insurance policy issued on or after January 1, 1994 for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess, and which provides an endowment benefit or a cash surrender value or a combination in an amount greater than the excess premium, the reserve according to the commissioner’s reserve valuation method as of any policy anniversary occurring on or before the assumed ending date, defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than the excess premium, shall, except as provided in § 27-4.5-8 , be the greater of the reserve as of the policy anniversary calculated as described in subsection (a) and the reserve as of the policy anniversary calculated as described in subsection (a), but with:
   1. the value defined in subsection (a) being reduced by fifteen percent (15%) of the amount of such excess first year premium,
   2. all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date,
   3. the policy being assumed to mature on that date as an endowment, and
   4. the cash surrender value provided on that date being considered as an endowment benefit. In making the above comparison the mortality and interest bases stated in §§ 27-4.5-4 and 27-4.5-4.1 shall be used.
3. Reserves according to the commissioner’s reserve valuation method shall be calculated by a method consistent with the principles of the preceding paragraphs of this section for: (1) life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums; (2) group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer including a partnership or sole proprietorship or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under 26 U.S.C. § 408 as now or hereafter amended; (3) disability and accidental death benefits in all policies and contracts; and (4) all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 1994, ch. 404, § 11; P.L. 2002, ch. 292, § 16; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-5.1. Reserve valuation method — Annuity and pure endowment benefits.

1. This section shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under 26 U.S.C. § 408.
2. Reserves according to the commissioner’s annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in those contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by the contracts at the end of each contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of the contract, that become payable prior to the end of each contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in the contracts for determining guaranteed benefits. The valuation considerations are the portions of the gross considerations applied under the terms of the contracts to determine nonforfeiture values.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.5-6. Minimum reserves.

1. In no event shall a company’s aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after January 1, 1994, be less than the aggregate reserves calculated in accordance with the methods set forth in §§ 27-4.5-5 , 27-4.5-5 .1, 27-4.5-8 and 27-4.5-9 and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for the policies.
2. In no event shall the aggregate reserves for all policies, contracts, and benefits be less than the aggregate reserves determined by the appointed actuary to be necessary to render the opinion required by § 27-4.5-3 .

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-7. Optional reserve calculation.

1. Reserves for all policies and contracts issued prior to January 1, 1994, may be calculated, at the option of the company, according to any standards that produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by the laws in effect immediately prior to that date.
2. Reserves for any category of policies, contracts, or benefits as established by the commissioner of insurance, issued on or after the January 1, 1994, may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for the category than those calculated according to the minimum standard provided in this chapter, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be greater than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided in the policies or contracts.
3. A company which adopts at any time a standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided in this chapter may adopt a lower standard of valuation, with the approval of the commissioner of insurance, but not lower than the minimum provided in this chapter; provided that, for the purposes of this section, the holding of additional reserves previously determined by the appointed actuary to be necessary to render the opinion required by § 27-4.5-3 shall not be deemed to be the adoption of a higher standard of valuation.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-8. Reserve calculation — Valuation net premium exceeding the gross premium charged.

1. If in any contract year the gross premium charged by the company on any policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for the policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for the policy or contract, or the reserve calculated by the method actually used for the policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this section are those standards stated in §§ 27-4.5-4 and 27-4.5-4.1 .
2. For any life insurance policy issued on or after January 1, 1994, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess, and which provides an endowment benefit or a cash surrender value or a combination in an amount greater than the excess premium, the provisions of this section shall be applied as if the method actually used in calculating the reserve for the policy were the method described in § 27-4.5-5 , ignoring § 27-4.5-5 (b). The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with § 27-4.5-5, including § 27-4.5-5(b) , and the minimum reserve calculated in accordance with this section.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 1994, ch. 404, § 11; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-9. Reserve calculation — Indeterminate premium plans.

In the case of plan of life insurance that provides for future premium determination, the amounts of which are to be determined by the insurance company based on the then estimates of future experience, or in the case of any plan of life insurance or annuity that is of such a nature that the minimum reserves cannot be determined by the methods described in §§ 27-4.5-5 , 27-4.5-5 .1 and 27-4.5-8 , the reserves that are held under the plan shall:

1. Be appropriate in relation to the benefits and the pattern of premiums for that plan; and
2. Be computed by a method that is consistent with the principles of this chapter, as determined by regulations promulgated by the commissioner of insurance.

   Notwithstanding any other provision in the laws of this state, a policy, contract or certificate providing life insurance under such a plan shall be affirmatively approved by the commissioner before it can be marketed, issued, delivered or used in this state.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-10. Minimum standards for accident and health insurance contracts.

For accident and health insurance contracts issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under § 27-4.5-2(b) . For accident and health insurance contracts issued on or after January 1, 1994 and prior to the operative date of the valuation manual the minimum standard of valuation is the standard adopted by the commissioner by regulation.

History of Section. P.L. 1993, ch. 180, § 1; P.L. 2013, ch. 17, § 2; P.L. 2013, ch. 20, § 2.

27-4.5-11. Rules and regulations.

The commissioner of insurance may adopt reasonable rules and regulations for the implementation and administration of this chapter.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.5-12. Severability.

If any provision of this chapter, or the application of the provision to any person or circumstances, shall be held invalid, the remainder of the chapter, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected by that invalidity.

History of Section. P.L. 1993, ch. 180, § 1.

27-4.5-13. Valuation manual for policies issued on or after the operative date of the valuation manual.

1. For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under § 27-4.5-2(b) , except as provided under subsections (e) or (g) of this section.
2. The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the following have occurred:
   1. The valuation manual has been adopted by the NAIC by an affirmative vote of at least forty-two (42) members, or three-fourths (3/4) of the members voting, whichever is greater.
   2. The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than seventy-five percent (75%) of the direct premiums written as reported in the following annual statements submitted for 2008: life, accident and health annual statements; health annual statements; or fraternal annual statements.
   3. The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least forty-two (42) of the following fifty-five (55) jurisdictions: The fifty (50) States of the United States, American Samoa, the American Virgin Islands, the District of Columbia, Guam, and Puerto Rico.
3. Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual shall be effective on January 1 following the date when all of the following have occurred:
   1. The change to the valuation manual has been adopted by the NAIC by an affirmative vote representing:
      1. At least three-fourths (3/4) of the members of the NAIC voting, but not less than a majority of the total membership, and
      2. Members of the NAIC representing jurisdictions totaling greater than seventy-five percent (75%) of the direct premiums written as reported in the following annual statements most recently available prior to the vote in subsection (c)(1)(i): life, accident and health annual statements; health annual statements; or fraternal annual statements.
   2. The valuation manual becomes effective pursuant to a regulation adopted by the commissioner.
4. The valuation manual must specify all of the following:
   1. Minimum-valuation standards for and definitions of the policies or contracts subject to § 27-4.5-2(b) . Such minimum-valuation standards shall be:
      1. The commissioners reserve valuation method for life insurance contracts, other than annuity contracts, subject to § 27-4.5-2(b) ;
      2. The commissioners annuity reserve valuation method for annuity contracts subject to § 27-4.5-2(b); and
      3. Minimum reserves for all other policies or contracts subject to § 27-4.5-2(b).
   2. Which policies or contracts or types of policies or contracts that are subject to the requirements of a principle-based valuation in § 27-4.5-14 (a) and the minimum-valuation standards consistent with those requirements;
   3. For policies and contracts subject to a principle-based valuation under § 27-4.5-14 :
      1. Requirements for the format of reports to the commissioner under § 27-4.5-14(b)(3) and which shall include information necessary to determine if the valuation is appropriate and in compliance with this chapter;
      2. Assumptions shall be prescribed for risks over which the company does not have significant control or influence.
      3. Procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or modification of such procedures.
   4. For policies not subject to a principle-based valuation under § 27-4.5-14, the minimum valuation standard shall either:
      1. Be consistent with the minimum standard of valuation prior to the operative date of the valuation manual; or
      2. Develop reserves that quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring.
   5. Other requirements, including, but not limited to, those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules and internal controls; and
   6. The data and form of the data required under § 27-4.5-15 , with which the data must be submitted, and may specify other requirements including data analyses and reporting of analyses.
5. In the absence of a specific-valuation requirement or if a specific-valuation requirement in the valuation manual is not, in the opinion of the commissioner, in compliance with this chapter, then the company shall, with respect to such requirements, comply with minimum-valuation standards prescribed by the commissioner by regulation.
6. The commissioner may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a company’s compliance with any requirement set forth in this chapter. The commissioner may rely upon the opinion, regarding provisions contained within this chapter, of a qualified actuary engaged by the commissioner of another state, district or territory of the United States. As used in this subsection, term “engage” includes employment and contracting.
7. The commissioner may require a company to change any assumption or method that, in the opinion of the commissioner, is necessary in order to comply with the requirements of the valuation manual or this chapter; and the company shall adjust the reserves as required by the commissioner. The commissioner may take other disciplinary action as permitted pursuant to § 42-14-16 .

History of Section. P.L. 2013, ch. 17, § 4; P.L. 2013, ch. 20, § 4; P.L. 2014, ch. 91, § 2; P.L. 2014, ch. 94, § 2.

27-4.5-14. Requirements of a principle-based valuation.

1. A company must establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual:
   1. Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. For policies or contracts with significant tail risk, reflects conditions appropriately adverse to quantify the tail risk.
   2. Incorporate assumptions, risk analysis methods and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company’s overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods.
   3. Incorporate assumptions that are derived in one of the following manners:
      1. The assumption is prescribed in the valuation manual.
      2. For assumptions that are not prescribed, the assumptions shall:
         1. Be established utilizing the company’s available experience, to the extent it is relevant and statistically credible; or
         2. To the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience.
   4. Provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve.
2. A company using a principle-based valuation for one or more policies or contracts subject to this section as specified in the valuation manual shall:
   1. Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual.
   2. Provide to the commissioner and the board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to assure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification shall be based on the controls in place as of the end of the preceding calendar year.
   3. Develop, and file with the commissioner upon request, a principle-based valuation report that complies with standards prescribed in the valuation manual.
3. A principle-based valuation may include a prescribed formulaic reserve component.

History of Section. P.L. 2013, ch. 17, § 4; P.L. 2013, ch. 20, § 4.

27-4.5-15. Experience reporting for policies in force on or after the operative date of the valuation manual.

A company shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the valuation manual.

History of Section. P.L. 2013, ch. 17, § 4; P.L. 2013, ch. 20, § 4.

27-4.5-16. Confidentiality.

1. For purposes of this section, “confidential information” shall mean:
   1. A memorandum in support of an opinion submitted under § 27-4-3 and any other documents, materials, and other information, including, but not limited to, all working papers, and copies thereof, created, produced, or obtained by, or disclosed to, the commissioner or any other person in connection with such memorandum;
   2. All documents, materials, and other information, including, but not limited to, all working papers, and copies thereof, created, produced, or obtained by, or disclosed to, the commissioner or any other person in the course of an examination made under § 27-4.5-13(f) ; provided, however, that if an examination report or other material prepared in connection with an examination made under chapter 13.1 of title 27 is not held as private and confidential information under chapter 13.1 of this title, an examination report or other material prepared in connection with an examination made under § 27-4.5-13(f) of this chapter shall not be “confidential information” to the same extent as if such examination report or other material had been prepared in accordance with chapter 13.1 of title 27;
   3. Any reports, documents, materials, and other information developed by a company in support of, or in connection with, an annual certification by the company under § 27-4.5-14(b)(2) evaluating the effectiveness of the company’s internal controls with respect to a principle-based valuation and any other documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced, or obtained by, or disclosed to, the commissioner or any other person in connection with such reports, documents, materials and other information;
   4. Any principle-based valuation report developed under § 27-4.5-14(b)(3) and any other documents, materials, and other information, including, but not limited to, all working papers, and copies thereof, created, produced, or obtained by, or disclosed to, the commissioner or any other person in connection with such report; and
   5. Any documents, materials, data, and other information submitted by a company under § 27-4.5-15 (collectively, “experience data”) and any other documents, materials, data, and other information, including, but not limited to, all working papers, and copies thereof, created or produced in connection with such experience data, in each case that include any potentially company-identifying or personally identifiable information, that is provided to, or obtained by, the commissioner (together with any “experience data,” the “experience materials”) and any other documents, materials, data, and other information, including, but not limited to, all working papers, and copies thereof, created, produced, or obtained by, or disclosed to, the commissioner or any other person in connection with such experience materials.
2. Privilege for, and confidentiality of, confidential information.
   1. Except as provided in this § 27-4.5-16 , a company’s confidential information is confidential by law and privileged and shall not be subject to chapter 2 of title 38, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action; provided, however, that the commissioner is authorized to use the confidential information in the furtherance of any regulatory or legal action brought against the company as a part of the commissioner’s official duties.
   2. Neither the commissioner, nor any person who received confidential information while acting under the authority of the commissioner, shall be permitted or required to testify in any private civil action concerning any confidential information.
   3. In order to assist in the performance of the commissioner’s duties, the commissioner may share confidential information:
      1. With other state, federal, and international regulatory agencies and with the NAIC and its affiliates and subsidiaries; and
      2. In the case of confidential information specified in §§ 27-4.5-16(a)(1) and 27-4.5-16 (a)(4) only, with the actuarial board for counseling and discipline or its successor upon request stating that the confidential information is required for the purpose of professional disciplinary proceedings, and with state, federal, and international law enforcement officials; in the case of subsections (a) and (b), provided, that, such recipient agrees, and has the legal authority to agree, to maintain the confidentiality and privileged status of such documents, materials, data, and other information in the same manner, and to the same extent, as required for the commissioner.
   4. The commissioner may receive documents, materials, data, and other information, including otherwise confidential and privileged documents, materials, data, or information, from the NAIC and its affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign or domestic jurisdictions and from the actuarial board for counseling and discipline or its successor and shall maintain as confidential or privileged any document, material, data, or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or other information.
   5. The commissioner may enter into agreements governing sharing and use of information consistent with § 27-4.5-16(b) .
   6. No waiver of any applicable privilege or claim of confidentiality in the confidential information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in § 27-4.5-16(b) (3).
   7. A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under § 27-4.5-16(b) shall be available and enforced in any proceeding in, and in any court of, this state.
   8. In § 27-4.5-16 “regulatory agency,” “law enforcement agency” and the “NAIC” include, but are not limited to, their employees, agents, consultants, and contractors.
3. Notwithstanding § 27-4.5-16(b) , any confidential information specified in §§ 27-4.5-16(a)(1) and 27-4.5-14(a)(4) :
   1. May be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the related memorandum in support of an opinion submitted under § 27-4.5-3 or principle-based valuation report developed under § 27-4.5-14(b)(3) by reason of an action required by this chapter or by regulations promulgated hereunder;
   2. May otherwise be released by the commissioner with the written consent of the company; and
   3. Once any portion of a memorandum in support of an opinion submitted under § 27-4.5-3 or a principle-based valuation report developed under § 27-4.5-14(b)(3) is cited by the company in its marketing, or is publicly volunteered to or before a governmental agency other than a state insurance department, or is released by the company to the news media, all portions of such memorandum or report shall no longer be confidential.

History of Section. P.L. 2013, ch. 17, § 4; P.L. 2013, ch. 20, § 4; P.L. 2014, ch. 91, § 2; P.L. 2014, ch. 94, § 2.

27-4.5-17. Single state exemption.

1. The commissioner may exempt specific product forms or product lines of a domestic company that is licensed and doing business only in Rhode Island from the requirements of § 27-4.5-13 provided:
   1. The commissioner has issued an exemption in writing to the company and has not subsequently revoked the exemption in writing; and
   2. The company computes reserves using assumptions and methods used prior to the operative date of the valuation manual in addition to any requirements established by the commissioner and promulgated by regulation.
2. For any company granted an exemption under this section, and §§ 27-4.5-3 , 27-4.5-4 , 27-4.5-4.1 , 27-4.5-4 .2, 27-4.5-5 , 27-4.5-5.1 , 27-4.5-6 , 27-4.5-7 , 27-4.5-8 , 27-4.5-9 and 27-4.5-10 shall be applicable. With respect to any company applying this exemption, any reference to § 27-4.5-13 found in §§ 27-4.5-3 , 27-4.5-4, 27-4.5-4.1 , 27-4.5-4.2, 27-4.5-5 , 27-4.5-5.1 , 27-4.5-6 , 27-4.5-7 , 27-4.5-8 , 27-4.5-9 and 27-4.5-10 shall not be applicable.

History of Section. P.L. 2013, ch. 17, § 4; P.L. 2013, ch. 20, § 4.

27-4.6-1. Definitions.

As used in this chapter:

1. “Adjusted RBC report” means an RBC report adjusted by the commissioner in accordance with § 27-4.6-2(e) .
2. “Corrective order” means an order issued by the commissioner specifying corrective actions that the commissioner has determined are required.
3. “Domestic insurer” means any insurance company domiciled in this state.
4. “Foreign insurer” means any insurance company licensed to do business in this state under chapter 2 of this title but is not domiciled in this state.
5. “Life and/or health insurer” means any insurance company licensed under chapters 1 or 2 of this title and: (i) authorized to transact the business of life insurance or annuities as defined in chapter 4 of this title, or (ii) authorized to write policies of accident and sickness as defined in § 27-18-1 , or (iii) a licensed property and casualty insurer writing only accident and health insurance.
6. “NAIC” means the National Association of Insurance Commissioners.
7. “Negative trend” means, with respect to a life and/or health insurer, negative trend over a period of time, as determined in accordance with the “trend test calculation” included in the RBC instructions.
8. “Property and casualty insurer” means all other insurance companies licensed under chapters 1 or 2 of this title but shall not include mono-line mortgage guaranty insurers, financial guaranty insurers and title insurers.
9. “RBC instructions” means the RBC report including risk-based capital instructions adopted by the NAIC, as the RBC instructions may be amended by the NAIC in accordance with the procedures adopted by the NAIC.
10. “RBC level” means an insurer’s company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where:
    1. “Company action level RBC” means, with respect to any insurer, the product of two (2.0) and its authorized control level RBC;
    2. “Regulatory action level RBC” means the product of one and one-half (1.5) and its authorized control level RBC;
    3. “Authorized control level RBC” means the number determined under the risk-based capital formula in accordance with the RBC instructions;
    4. “Mandatory control level RBC” means the product of seven-tenths (.70) and the authorized control level RBC.
11. “RBC plan” means a comprehensive financial plan containing the elements specified in § 27-4.6-3(b) . If the commissioner rejects the RBC plan, and it is revised by the insurer, with or without the commissioner’s recommendation, the plan shall be called the “revised RBC plan.”
12. “RBC report” means the report required in § 27-4.6-2 .
13. “Total adjusted capital” means the sum of:
    1. An insurer’s statutory capital and surplus; and
    2. Those other items, if any, as the RBC instructions may provide.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-2. RBC reports.

1. Every domestic insurer shall, on or prior to each March 1 (the “filing date”), prepare and submit to the commissioner a report of its RBC levels as of the end of the calendar year just ended, in a form and containing any information required by the RBC instructions. In addition, every domestic insurer shall file its RBC report:
   1. With the NAIC in accordance with the RBC instructions; and
   2. With the insurance commissioner in any state in which the insurer is authorized to do business, if the insurance commissioner has notified the insurer of its request in writing, in which case the insurer shall file its RBC report not later than the later of:
      1. Fifteen (15) days from the receipt of notice to file its RBC report with that state; or
      2. The filing date.
2. A life and health insurer’s RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account (and may adjust for the covariance between): (1) the risk with respect to the insurer’s assets; (2) the risk of adverse insurance experience with respect to the insurer’s liabilities and obligations; (3) the interest rate risk with respect to the insurer’s business; and (4) all other business risks and any other relevant risks set forth in the RBC instructions; determined in each case by applying the factors in the manner set forth in the RBC instructions.
3. A property and casualty insurer’s RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account (and may adjust for the covariance between): (1) asset risk; (2) credit risk; (3) underwriting risk; and (4) all other business risks and any other relevant risks set forth in the RBC Instructions; determined in each case by applying the factors in the manner set forth in the RBC instructions.
4. An excess of capital over the amount produced by the risk-based capital requirements contained in this chapter and the formulas, schedules and instructions referenced in this chapter is desirable in the business of insurance. Insurers should seek to maintain capital above the RBC levels required by this chapter. Additional capital is used and useful in the insurance business and helps to secure an insurer against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the risk-based capital requirements contained in this chapter.
5. If a domestic insurer files an RBC report, which in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the insurer of the adjustment. The notice shall contain a statement of the reason for the adjustment. An RBC report adjusted in this manner is referred to as an “adjusted RBC report.”

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-3. Company action level event.

1. “Company action level event” means any of the following events:
   1. The filing of an RBC report by an insurer that indicates that:
      1. The insurer’s total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC;
      2. If a life and/or health insurer, the insurer has total adjusted capital that is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and has a negative trend; or
      3. If a property and casualty insurer, the insurer has total adjusted capital that is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the property and casualty RBC instructions.
   2. The notification by the commissioner to the insurer of an adjusted RBC report that indicates an event in subdivision (a)(1), provided the insurer does not challenge the adjusted RBC report under § 27-4.6-7 ; or
   3. If, pursuant to § 27-4.6-7 , an insurer challenges an adjusted RBC report that indicates the event in subdivision (a)(1), the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge.
2. In the event of a company action level event, the insurer shall prepare and submit to the commissioner an RBC plan that shall:
   1. Identify the conditions that contribute to the company action level event;
   2. Contain proposals of corrective actions that the insurer intends to take and would be expected to result in the elimination of the company action level event;
   3. Provide projections of the insurer’s financial results in the current year and at least the four (4) succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, capital, and/or surplus. (The projections for both new and renewal business might include separate projections for each major line of business and separately identify each significant income, expense, and benefit component);
   4. Identify the key assumptions impacting the insurer’s projections and the sensitivity of the projections to the assumptions; and
   5. Identify the quality of, and problems associated with, the insurer’s business, including, but not limited to: its assets; anticipated business growth and associated surplus strain; extraordinary exposure to risk; mix of business; and use of reinsurance, if any, in each case.
3. The RBC plan shall be submitted:
   1. Within forty-five (45) days of the company action level event; or
   2. If the insurer challenges an adjusted RBC report pursuant to § 27-4.6-7 , within forty-five (45) days after notification to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge.
4. Within sixty (60) days after the submission by an insurer of an RBC plan to the commissioner, the commissioner shall notify the insurer whether the RBC plan shall be implemented or is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines that the RBC plan is unsatisfactory, the notification to the insurer shall set forth the reasons for the determination, and may set forth proposed revisions that will render the RBC plan satisfactory in the judgment of the commissioner. Upon notification from the commissioner, the insurer shall prepare a revised RBC plan, which may incorporate by reference any revisions proposed by the commissioner, and shall submit the revised RBC plan to the commissioner:
   1. Within forty-five (45) days after the notification from the commissioner; or
   2. If the insurer challenges the notification from the commissioner under § 27-4.6-7 , within forty-five (45) days after a notification to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge.
5. In the event of a notification by the commissioner to an insurer that the insurer’s RBC plan or revised RBC plan is unsatisfactory, the commissioner may at the commissioner’s discretion, subject to the insurer’s right to a hearing under § 27-4.6-7 , specify in the notification that the notification constitutes a regulatory action level event.
6. Every domestic insurer that files an RBC plan or revised RBC plan with the commissioner shall file a copy of the RBC plan or revised RBC plan with the insurance commissioner in any state in which the insurer is authorized to do business if:
   1. That state has an RBC provision substantially similar to § 27-4.6-8(a) ; and
   2. The insurance commissioner of that state has notified the insurer of its request for the filing in writing, in which case the insurer shall file a copy of the RBC plan or revised RBC plan in that state no later than the later of:
      1. Fifteen (15) days after the receipt of notice to file a copy of its RBC plan or revised RBC plan with the state; or
      2. The date on which the RBC plan or revised RBC plan is filed under subsections (c) and (d) of this section.

History of Section. P.L. 1996, ch. 187, § 2; P.L. 2010, ch. 49, § 1; P.L. 2010, ch. 65, § 1; P.L. 2021, ch. 162, art. 3, § 2, effective July 6, 2021; P.L. 2021, ch. 230, § 2, effective July 8, 2021; P.L. 2021, ch. 231, § 2, effective July 8, 2021.

27-4.6-4. Regulatory action level event.

1. “Regulatory action level event” means, with respect to any insurer, any of the following events:
   1. The filing of an RBC report by the insurer which indicates that the insurer’s total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;
   2. The notification by the commissioner to an insurer of an adjusted RBC report that indicates the event in subdivision (a)(1), provided the insurer does not challenge the adjusted RBC report under § 27-4.6-7 ;
   3. If, pursuant to § 27-4.6-7 , the insurer challenges an adjusted RBC report that indicates the event in subdivision (a)(1), the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge;
   4. The failure of the insurer to file an RBC report by the filing date, unless the insurer has provided an explanation for that failure which is satisfactory to the commissioner and has cured the failure within ten (10) days after the filing date;
   5. The failure of the insurer to submit an RBC plan to the commissioner within the time period set forth in § 27-4.6-3(c) ;
   6. Notification by the commissioner to the insurer that:
      1. The RBC plan or revised RBC plan submitted by the insurer is, in the judgment of the commissioner, unsatisfactory; and
      2. The notification constitutes a regulatory action level event with respect to the insurer, provided the insurer has not challenged the determination under § 27-4.6-7;
   7. If, pursuant to § 27-4.6-7, the insurer challenges a determination by the commissioner under subdivision (a)(6), the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected those challenges;
   8. Notification by the commissioner to the insurer that the insurer has failed to adhere to its RBC plan or revised RBC plan, but only if that failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the commissioner has stated this in the notification, provided the insurer has not challenged the determination under § 27-4.6-7; or
   9. If, pursuant to § 27-4.6-7, the insurer challenges a determination by the commissioner under subdivision (a)(8), the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the challenge.
2. In the event of a regulatory action level event the commissioner shall:
   1. Require the insurer to prepare and submit an RBC plan or, if applicable, a revised RBC plan;
   2. Perform any examination or analysis as the commissioner deems necessary of the assets, liabilities and operations of the insurer including a review of its RBC plan or revised RBC plan; and
   3. Subsequent to the examination or analysis, issue an order specifying any corrective actions as the commissioner shall determine are required (a “corrective order”).
3. In determining corrective actions, the commissioner may take into account any factors as are deemed relevant with respect to the insurer based upon the commissioner’s examination or analysis of the assets, liabilities and operations of the insurer, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the RBC instructions. The RBC plan or Revised RBC plan shall be submitted:
   1. Within forty-five (45) days after the occurrence of the regulatory action level event;
   2. If the insurer challenges an adjusted RBC report pursuant to § 27-4.6-7 and the challenge is not frivolous in the judgment of the commissioner, within forty-five (45) days after the notification to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge; or
   3. If the insurer challenges a revised RBC plan pursuant to § 27-4.6-7 and the challenge is not frivolous in the judgment of the commissioner, within forty-five (45) days after the notification to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge.
4. The commissioner may retain actuaries and investment experts and other consultants necessary in the judgment of the commissioner to review the insurer’s RBC plan or revised RBC plan, examine or analyze the assets, liabilities and operations of the insurer and formulate the corrective order with respect to the insurer. The fees, costs and expenses relating to consultants shall be borne by the affected insurer or any other party as directed by the commissioner.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-5. Authorized control level event.

1. “Authorized control level event” means any of the following events:
   1. The filing of an RBC report by the insurer which indicates that the insurer’s total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;
   2. The notification by the commissioner to the insurer of an adjusted RBC report that indicates the event in subdivision (a)(1), provided the insurer does not challenge the adjusted RBC report under § 27-4.6-7 ;
   3. If, pursuant to § 27-4.6-7 , the insurer challenges an adjusted RBC report that indicates the event in subdivision (a)(1), notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge;
   4. The failure of the insurer to respond, in a manner satisfactory to the commissioner, to a corrective order (provided the insurer has not challenged the corrective order under § 27-4.6-7); or
   5. If the insurer has challenged a corrective order under § 27-4.6-7 and the commissioner has, after a hearing, rejected the challenge or modified the corrective order, the failure of the insurer to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner.
2. In the event of an authorized control level event with respect to an insurer, the commissioner shall:
   1. Take any actions as are required under § 27-4.6-4 regarding an insurer with respect to which a regulatory action level event has occurred; or
   2. If the commissioner deems it to be in the best interests of the policyholders and creditors of the insurer and of the public, take any actions as are necessary to cause the insurer to be placed under regulatory control under chapter 14.3 of this title, the “Insurers’ Rehabilitation and Liquidation Act.” In the event the commissioner takes actions, the authorized control level event shall be deemed sufficient grounds for the commissioner to take action under chapter 14.3 of this title, and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in chapter 14.3 of this title. In the event the commissioner takes actions under this subdivision pursuant to an adjusted RBC report, the insurer shall be entitled to any protections as are afforded to insurers under the provisions of chapter 14.3 of this title pertaining to summary proceedings.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-6. Mandatory control level event.

1. “Mandatory control level event” means any of the following events:
   1. The filing of an RBC report which indicates that the insurer’s total adjusted capital is less than its mandatory control level RBC;
   2. Notification by the commissioner to the insurer of an adjusted RBC report that indicates the event in subdivision (a)(1), provided the insurer does not challenge the adjusted RBC report under § 27-4.6-7 ; or
   3. If, pursuant to § 27-4.6-7 , the insurer challenges an adjusted RBC report that indicates the event in subdivision (a)(1), notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge.
2. In the event of a mandatory control level event:
   1. Concerning a life insurer, the commissioner shall take any actions as are necessary to place the insurer under regulatory control under chapter 14.3 of this title, the “Insurers’ Rehabilitation and Liquidation Act.” In that event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under chapter 14.3 of this title, and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in chapter 14.3 of this title. If the commissioner takes actions pursuant to an adjusted RBC report, the insurer shall be entitled to the protections of chapter 14.3 of this title pertaining to summary proceedings. Notwithstanding any of these provisions, the commissioner may forego action for up to ninety (90) days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the ninety (90) day period.
   2. Concerning a property and casualty insurer, the commissioner shall take any actions as are necessary to place the insurer under regulatory control under chapter 14.3 of this title, or, in the case of an insurer which is writing no business and which is running-off its existing business, may allow the insurer to continue its run-off under the supervision of the commissioner. In either event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under chapter 14.3 of this title and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in chapter 14.3 of this title. If the commissioner takes actions pursuant to an adjusted RBC report, the insurer shall be entitled to the protections of chapter 14.3 of this title pertaining summary proceedings. Notwithstanding any of these provisions, the commissioner may forego action for up to ninety (90) days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the ninety (90) day period.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-7. Hearings.

Upon:

1. Notification to an insurer by the commissioner of an adjusted RBC report; or (2) notification to an insurer by the commissioner that: (i) the insurer’s RBC plan or revised RBC plan is unsatisfactory; and (ii) that notification constitutes a regulatory action level event with respect to the insurer; or (3) notification to any insurer by the commissioner that the insurer has failed to adhere to its RBC plan or revised RBC plan and that that failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event with respect to the insurer in accordance with its RBC plan or revised RBC plan; or (4) notification to an insurer by the commissioner of a corrective order with respect to the insurer; the insurer shall have the right to a departmental hearing, on a record, at which the insurer may challenge any determination or action by the commissioner. The insurer shall notify the commissioner of its request for a hearing within five (5) days after the notification by the commissioner under subdivision (1), (2), (3) or (4). Upon receipt of the insurer’s request for a hearing, the commissioner shall set a date for the hearing, which date shall be within a reasonable amount of time but no less than ten (10) days after the date of the insurer’s request.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-8. Confidentiality — Prohibition on announcements — Prohibition on use in ratemaking.

1. All RBC reports (to the extent the information in them is not required to be set forth in a publicly available annual statement schedule) and RBC plans (including the results or report or any examination or analysis of an insurer performed pursuant to this chapter and any corrective order issued by the commissioner pursuant to that examination or analysis) with respect to any domestic insurer or foreign insurer which are filed with the commissioner constitute information that might be damaging to the insurer if made available to its competitors, and shall be kept confidential by the commissioner. This information shall not be made public and/or be subject to subpoena, other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner pursuant to this chapter or any other provision of the insurance laws of this state. All RBC reports and RBC plans filed with the insurance commissioner shall not be deemed public records and shall not be subject to the Access to Public Records Act, chapter 2 of title 38.
2. It is the judgment of the legislature that the comparison of an insurer’s total adjusted capital to any of its RBC levels is a regulatory tool which may indicate the need for possible corrective action with respect to the insurer, and is not intended as a means to rank insurers generally. Except as required under the provisions of this chapter, the making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing an assertion, representation or statement with regard to the RBC levels of any insurer, or of any component derived in the calculation, by any insurer, agent, broker or other person engaged in any manner in the insurance business would be misleading and is prohibited; provided, that if any materially false statement with respect to the comparison regarding an insurer’s total adjusted capital to its RBC levels (or any of them) or an inappropriate comparison of any other amount to the insurers’ RBC levels is published in any written publication and the insurer is able to demonstrate to the commissioner with substantial proof the falsity of that statement, or the inappropriateness, then the insurer may publish an announcement in a written publication if the sole purpose of the announcement is to rebut the materially false statement.
3. It is the judgment of the legislature that the RBC instructions, RBC reports, adjusted RBC reports, RBC plans and revised RBC plans are intended solely for use by the commissioner in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers and shall not be used by the commissioner for ratemaking nor considered or introduced as evidence in any rate proceeding nor used by the commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance which an insurer or any affiliate is authorized to write.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-9. Supplemental provisions — Rules — Exemption.

1. The provisions of this chapter are supplemental to any other provisions of the laws of this state, and shall not preclude or limit any other powers or duties of the commissioner under those laws, including, but not limited to, chapter 14.3 and chapter 14.2 of this title.
2. The commissioner may adopt reasonable rules and regulations necessary for the implementation of this chapter.
3. The commissioner may exempt from the application of this chapter any domestic property and casualty insurer which:
   1. Writes direct business only in this state;
   2. Writes direct annual premiums of two million dollars ($2,000,000) or less; and
   3. Assume no reinsurance in excess of five percent (5%) of direct premium written.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-10. Foreign insurers.

1. 1. Any foreign insurer shall, upon the written request of the commissioner, submit to the commissioner an RBC report as of the end of the calendar year just ended the later of:
      1. The date an RBC report would be required to be filed by a domestic insurer under this chapter; or
      2. Fifteen (15) days after the request is received by the foreign insurer.
   2. Any foreign insurer shall, at the written request of the commissioner, promptly submit to the commissioner a copy of any RBC plan that is filed with the insurance commissioner of any other state.
2. In the event of a company action level event, regulatory action level event or authorized control level event with respect to any foreign insurer as determined under the RBC statute applicable in the state of domicile of the insurer (or, if no RBC statute is in force in that state, under the provisions of this chapter), if the insurance commissioner of the state of domicile of the foreign insurer fails to require the foreign insurer to file an RBC plan in the manner specified under that state’s RBC statute (or, if no RBC statute is in force in that state, under § 27-4.6-3 ), the commissioner may require the foreign insurer to file an RBC plan with the commissioner. In that event, the failure of the foreign insurer to file an RBC plan with the commissioner shall be grounds to order the insurer to cease and desist from writing new insurance business in this state.
3. In the event of a mandatory control level event with respect to any foreign insurer, if no domiciliary receiver has been appointed with respect to the foreign insurer under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign insurer, the commissioner may make application to the Superior Court for Providence County permitted under chapter 14.3 of this title with respect to the liquidation of property of foreign insurers found in this state, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-11. Immunity.

There shall be no liability on the part of, and no cause of action shall arise against, the commissioner or the insurance department or its employees or agents for any action taken by them in the performance of their powers and duties under this chapter.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-12. Notices.

All notices by the commissioner to an insurer which may result in regulatory action under this chapter shall be effective upon dispatch if transmitted by registered or certified mail, or in the case of any other transmission shall be effective upon the insurer’s receipt of the notice.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.6-13. Severability.

If any provision of this chapter, or the application of it to any person or circumstance, is held invalid, that determination shall not affect the provisions or applications of this chapter which can be given effect without the invalid provision or application, and to that end the provisions of this chapter are severable.

History of Section. P.L. 1996, ch. 187, § 2.

27-4.7-1. Short title.

This chapter shall be known and may be cited as the “Rhode Island Risk-Based Capital (RBC) for Health Organizations Act”.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-2. Definitions.

As used in this chapter:

1. “Adjusted RBC report” means an RBC report that has been adjusted by the commissioner in accordance with § 27-4.7-3 ;
2. “Corrective order” means an order issued by the commissioner specifying corrective actions which the commissioner has determined are required;
3. “Commissioner” means the director of the department of business regulation;
4. “Domestic health organization” means a health organization domiciled in this state;
5. “Foreign health organization” means a health organization that is licensed or authorized to do business in this state pursuant to this title but is not domiciled in this state;
6. “NAIC” means the National Association of Insurance Commissioners;
7. “Health organization” means a health maintenance organization, limited health service organization, dental or vision plan, hospital, medical, and dental indemnity or service corporation or other managed care organization or any other entity providing a plan of health insurance, health benefits, or health services subject to this title. This definition does not include an organization that is licensed as either a life and health insurer or a property and casualty insurer pursuant to chapter 1 or chapter 2 of this title and that is subject to either the life or property and casualty RBC requirements;
8. “RBC” means risk-based capital;
9. “RBC instructions” means the RBC report, including risk-based capital instructions adopted by the NAIC, as these RBC instructions may be amended by the NAIC in accordance with the procedures adopted by the NAIC;
10. “RBC level” means a health organization’s company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where:
    1. “Company action level RBC” means, with respect to any health organization, the product of two (2.0) and its authorized control level RBC;
    2. “Regulatory action level RBC” means the product of one and one-half (1.5) and its authorized control level RBC;
    3. “Authorized control level RBC” means the number determined under the risk-based capital formula in accordance with the RBC instructions;
    4. “Mandatory control level RBC” means the product of seven tenths (.70) and the authorized control level RBC.
11. “RBC plan” means a comprehensive financial plan containing the elements specified in § 27-4.7-4(b). If the commissioner rejects the RBC plan, and it is revised by the health organization, with or without the commissioner’s recommendation, the plan shall be called the “revised RBC plan”;
12. “RBC report” means the report required in § 27-4.7-3 ;
13. “Total adjusted capital” means the sum of:
    1. A health organization’s statutory capital and surplus (i.e., net worth) as determined in accordance with the statutory accounting applicable to the annual and quarterly financial statements required to be filed by health organizations pursuant to applicable sections of this title; and
    2. Any other items, if any, that the RBC instructions may provide.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-3. RBC reports.

1. A domestic health organization shall, on or prior to each March 1 (the “filing date”), prepare and submit to the commissioner a report of its RBC levels as of the end of the calendar year just ended, in a form and containing any information that is required by the RBC instructions. In addition, a domestic health organization shall file its RBC report:
   1. With the NAIC in accordance with the RBC instructions; and
   2. With the insurance commissioner in any state in which the health organization is authorized to do business, if the insurance commissioner has notified the health organization of its request in writing, in which case the health organization shall file its RBC report not later than the later of:
      1. Fifteen (15) days from the receipt of notice to file its RBC report with that state; or
      2. The filing date.
2. A health organization’s RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take the following into account (and may adjust for the covariance between) determined in each case by applying the factors in the manner set forth in the RBC instructions:
   1. Asset risk;
   2. Credit risk;
   3. Underwriting risk; and
   4. All other business risks and any other relevant risks that are set forth in the RBC instructions.
3. An excess of capital (i.e., net worth) over the amount produced by the risk-based capital requirements contained in this chapter and the formulas, schedules, and instructions referenced in this chapter is desirable in the business of health insurance. Health organizations should seek to maintain capital above the RBC levels required by this chapter. Additional capital is used and useful in the insurance business and helps to secure a health organization against various risks inherent in, or affecting, the business of insurance and not accounted for, or only partially measured by, the risk-based capital requirements contained in this chapter.
4. If a domestic health organization files an RBC report that in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the health organization of the adjustment. The notice shall contain a statement of the reason for the adjustment. An RBC report adjusted in this manner is referred to as an “adjusted RBC report.”

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-4. Company action level event.

1. “Company action level event” means any of the following events:
   1. The filing of an RBC report by a health organization that indicates that the health organization’s total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC;
2. (i) If a health organization has total adjusted capital which is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the health RBC instructions; (2) Notification by the commissioner to the health organization of an adjusted RBC report that indicates an event in subdivision (a)(1) of this section, provided the health organization does not challenge the adjusted RBC report under § 27-4.7-8 ; or (3) If, pursuant to § 27-4.7-8 , a health organization challenges an adjusted RBC report that indicates the event in subdivision (a)(1) of this section, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization’s challenge. (b) In the event of a company action level event, the health organization shall prepare and submit to the commissioner an RBC plan that shall:
   1. Identify the conditions that contribute to the company action level event;
   2. Contain proposals of corrective actions that the health organization intends to take and that would be expected to result in the elimination of the company action level event;
   3. Provide projections of the health organization’s financial results in the current year and at least the two (2) succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory balance sheets, operating income, net income, capital and surplus, and RBC levels. The projections for both new and renewal business might include separate projections for each major line of business and separately identify each significant income, expense, and benefit component;
   4. Identify the key assumptions impacting the health organization’s projections and the sensitivity of the projections to the assumptions; and
   5. Identify the quality of, and problems associated with, the health organization’s business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case. (c) The RBC plan shall be submitted:
      1. Within forty-five (45) days of the company action level event; or
      2. If the health organization challenges an adjusted RBC report pursuant to § 27-4.7-8 within forty-five (45) days after notification to the health organization that the commissioner has, after a hearing, rejected the health organization’s challenge. (d) Within sixty (60) days after the submission by a health organization of an RBC plan to the commissioner, the commissioner shall notify the health organization whether the RBC plan shall be implemented or is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines the RBC plan is unsatisfactory, the notification to the health organization shall set forth the reasons for the determination, and may set forth proposed revisions which will render the RBC plan satisfactory in the judgment of the commissioner. Upon notification from the commissioner, the health organization shall prepare a revised RBC plan, which may incorporate by reference any revisions proposed by the commissioner, and shall submit the revised RBC plan to the commissioner:
         1. Within forty-five (45) days after the notification from the commissioner; or
         2. If the health organization challenges the notification from the commissioner under § 27-4.7-8, within forty-five (45) days after a notification to the health organization that the commissioner has, after a hearing, rejected the health organization’s challenge. (e) In the event of a notification by the commissioner to a health organization that the health organization’s RBC plan or revised RBC plan is unsatisfactory, the commissioner may, at the commissioner’s discretion, subject to the health organization’s right to a hearing under § 27-4.7-8, specify in the notification that the notification constitutes a regulatory action level event. (f) Every domestic health organization that files an RBC plan or revised RBC plan with the commissioner shall file a copy of the RBC plan or revised RBC plan with the insurance commissioner in any state in which the health organization is authorized to do business if:
            1. The state has an RBC provision substantially similar to § 27-4.7-9(a) ; and
            2. The insurance commissioner of that state has notified the health organization of its request for the filing in writing, in which case the health organization shall file a copy of the RBC plan or revised RBC plan in that state no later than the later of:
               1. Fifteen (15) days after the receipt of notice to file a copy of its RBC plan or revised RBC plan with the state; or
               2. The date on which the RBC plan or revised RBC plan is filed under subsections (c) and (d) of this section.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11; P.L. 2010, ch. 49, § 2; P.L. 2010, ch. 65, § 2.

27-4.7-5. Regulatory action level event.

1. “Regulatory action level event” means, with respect to a health organization, any of the following events:
   1. The filing of an RBC report by the health organization that indicates that the health organization’s total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;
   2. Notification by the commissioner to a health organization of an adjusted RBC report that indicates the event in subdivision (a)(1) of this section, provided the health organization does not challenge the adjusted RBC report under § 27-4.7-8 ;
   3. If, pursuant to § 27-4.7-8 , the health organization challenges an adjusted RBC report that indicates the event in subdivision (a)(1) of this section, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization’s challenge;
   4. The failure of the health organization to file an RBC report by the filing date, unless the health organization has provided an explanation for the failure that is satisfactory to the commissioner and has cured the failure within ten (10) days after the filing date;
   5. The failure of the health organization to submit an RBC plan to the commissioner within the time period set forth in § 27-4.7-4(c);
   6. Notification by the commissioner to the health organization that:
      1. The RBC plan or revised RBC plan submitted by the health organization is, in the judgment of the commissioner, unsatisfactory; and
      2. Notification constitutes a regulatory action level event with respect to the health organization, provided the health organization has not challenged the determination under § 27-4.7-8.
   7. If, pursuant to § 27-4.7-8, the health organization challenges a determination by the commissioner under subdivision (6) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the challenge;
   8. Notification by the commissioner to the health organization that the health organization has failed to adhere to its RBC plan or revised RBC plan, but only if the failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the commissioner has stated this in the notification, provided the health organization has not challenged the determination under § 27-4.7-8; or
   9. If, pursuant to § 27-4.7-8, the health organization challenges a determination by the commissioner under subdivision (8) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the challenge.
2. In the event of a regulatory action level event the commissioner shall:
   1. Require the health organization to prepare and submit an RBC plan or, if applicable, a revised RBC plan;
   2. Perform any examination or analysis that the commissioner deems necessary of the assets, liabilities and operations of the health organization including a review of its RBC plan or revised RBC plan; and
   3. Subsequent to the examination or analysis, issue an order specifying any corrective actions that the commissioner determines are required (a “corrective order”).
3. In determining corrective actions, the commissioner may take into account factors the commissioner deems relevant with respect to the health organization based upon the commissioner’s examination or analysis of the assets, liabilities, and operations of the health organization, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the RBC instructions. The RBC plan or revised RBC plan shall be submitted:
   1. Within forty-five (45) days after the occurrence of the regulatory action level event;
   2. If the health organization challenges an adjusted RBC report pursuant to § 27-4.7-8 and the challenge is not frivolous in the judgment of the commissioner, within forty-five (45) days after the notification to the health organization that the commissioner has, after a hearing, rejected the health organization’s challenge; or
   3. If the health organization challenges a revised RBC plan pursuant to § 27-4.7-8 and the challenge is not frivolous in the judgment of the commissioner, within forty-five (45) days after the notification to the health organization that the commissioner has, after a hearing, rejected the health organization’s challenge.
4. The commissioner may retain actuaries and investment experts and other consultants that may be necessary in the judgment of the commissioner to review the health organization’s RBC plan or revised RBC plan, examine or analyze the assets, liabilities, and operations (including contractual relationships) of the health organization and formulate the corrective order with respect to the health organization. The fees, costs, and expenses relating to consultants shall be borne by the affected health organization or any other party as directed by the commissioner.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-6. Authorized control level event.

1. “Authorized control level event” means any of the following events:
   1. The filing of an RBC report by the health organization that indicates that the health organization’s total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;
   2. The notification by the commissioner to the health organization of an adjusted RBC report that indicates the event in subdivision (a)(1) of this section, provided the health organization does not challenge the adjusted RBC report under § 27-4.7-8 ;
   3. If, pursuant to § 27-4.7-8 , the health organization challenges an adjusted RBC report that indicates the event in subdivision (a)(1) of this section, notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization’s challenge;
   4. The failure of the health organization to respond, in a manner satisfactory to the commissioner, to a corrective order (provided the health organization has not challenged the corrective order under § 27-4.7-8); or
   5. If the health organization has challenged a corrective order under § 27-4.7-8 and the commissioner has, after a hearing, rejected the challenge or modified the corrective order, the failure of the health organization to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner.
2. In the event of an authorized control level event with respect to a health organization, the commissioner shall:
   1. Take any actions that are required under § 27-4.7-5 regarding a health organization with respect to which a regulatory action level event has occurred; or
   2. If the commissioner deems it to be in the best interests of the policyholders and creditors of the health organization and of the public, take any actions that are necessary to cause the health organization to be placed under regulatory control pursuant to chapters 14.1, 14.2, and 14.3 of this title. In the event the commissioner takes these actions, the authorized control level event shall be deemed sufficient grounds for the commissioner to take action under chapters 14.1, 14.2, and 14.3 of this title, and the commissioner has the rights, powers, and duties with respect to the health organization that are set forth in chapters 14.1, 14.2, and 14.3 of this title. In the event the commissioner takes actions under this subdivision pursuant to an adjusted RBC report, the health organization is entitled to any protections that are afforded to health organizations under the provisions of chapter 35 of title 42 pertaining to summary proceedings.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-7. Mandatory control level event.

1. “Mandatory control level event” means any of the following events:
   1. The filing of an RBC report which indicates that the health organization’s total adjusted capital is less than its mandatory control level RBC;
   2. Notification by the commissioner to the health organization of an adjusted RBC report that indicates the event in subdivision (a)(1) of this section, provided the health organization does not challenge the adjusted RBC report under § 27-4.7-8 ; or
   3. If, pursuant to § 27-4.7-8 , the health organization challenges an adjusted RBC report that indicates the event in subdivision (a)(1) of this section, notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization’s challenge.
2. In the event of a mandatory control level event, the commissioner shall take any actions that are necessary to place the health organization under regulatory control pursuant to chapters 14.1, 14.2, and 14.3 of this title. In that event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under chapters 14.1, 14.2, and 14.3 of this title, and the commissioner has the rights, powers, and duties with respect to the health organization that are set forth in chapters 14.1, 14.2, and 14.3 of this title. If the commissioner takes actions pursuant to an adjusted RBC report, the health organization is entitled to the protections of chapter 35 of title 42 pertaining to summary proceedings. Notwithstanding any of these provisions, the commissioner may forego action for up to ninety (90) days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the ninety (90) day period.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-8. Hearings.

Upon the occurrence of any of the following events the health organization has the right to a confidential department hearing, on the record, at which the health organization may challenge any determination or action by the commissioner. The health organization shall notify the commissioner of its request for a hearing within five (5) days after the notification by the commissioner under subdivisions (1), (2), (3), or (4) of this section. Upon receipt of the health organization’s request for a hearing, the commissioner shall set a date for the hearing, which shall be no less than ten (10) days nor more than thirty (30) days after the date of the health organization’s request. The events include:

1. Notification to a health organization by the commissioner of an adjusted RBC report;
2. Notification to a health organization by the commissioner that:
   1. The health organization’s RBC plan or revised RBC plan is unsatisfactory; and
   2. Notification constitutes a regulatory action level event with respect to the health organization;
3. Notification to a health organization by the commissioner that the health organization has failed to adhere to its RBC plan or revised RBC plan and that the failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event with respect to the health organization in accordance with its RBC plan or revised RBC plan; or
4. Notification to a health organization by the commissioner of a corrective order with respect to the health organization.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-9. Confidentiality — Prohibition on announcements — Prohibition on use in ratemaking.

1. All RBC reports (to the extent the information is not required to be set forth in a publicly available annual statement schedule) and RBC plans (including the results or report of any examination or analysis of a health organization performed pursuant to this chapter and any corrective order issued by the commissioner pursuant to examination or analysis) with respect to a domestic health organization or foreign health organization that are filed with the commissioner constitute information that might be damaging to the health organization if made available to its competitors, and shall be kept confidential by the commissioner. This information shall not be made public or be subject to subpoena, other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner pursuant to this chapter or any other provision of the insurance laws of this state.
2. It is the judgment of the legislature that the comparison of a health organization’s total adjusted capital to any of its RBC levels is a regulatory tool which may indicate the need for corrective action with respect to the health organization, and is not intended as a means to rank health organizations generally. Except as required under the provisions of this chapter, the making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over a radio or television station, or in any other way, an advertisement, announcement, or statement containing an assertion, representation, or statement with regard to the RBC levels of any health organization, or of any component derived in the calculation, by any health organization, agent, broker, or other person engaged in any manner in the insurance business, would be misleading and is prohibited; provided, that if any materially false statement with respect to the comparison regarding a health organization’s total adjusted capital to its RBC levels (or any of them) or an inappropriate comparison of any other amount to the health organization’s RBC levels is published in any written publication and the health organization is able to demonstrate to the commissioner with substantial proof the falsity of the statement, or the inappropriateness, then the health organization may publish an announcement in a written publication, if the sole purpose of the announcement is to rebut the materially false statement.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-10. Supplemental provisions — Rules — Exemption.

1. The provisions of this chapter are supplemental to any other provisions of the laws of this state, and shall not preclude or limit any other powers or duties of the commissioner under those laws, including, but not limited to, chapters 41, 19, 20, 20.1, 20.2, 20.3, 14.1, 14.2, and 14.3 of this title. The provisions of this chapter shall supersede any provisions of this title in conflict with this chapter.
2. The commissioner may adopt reasonable rules necessary for the implementation of this chapter.
3. The commissioner may exempt from the application of this chapter or modify the requirements of this chapter for:
   1. A domestic health organization that:
      1. Writes direct business only in this state;
      2. Assumes no reinsurance in excess of five percent (5%) of direct premium written; and
      3. Writes direct annual premiums for comprehensive medical business of two million dollars ($2,000,000) or less; or
      4. Is a limited health service organization that covers less than two thousand (2,000) lives; or
   2. A domestic health organization that provides a plan of health insurance, health benefits, or health services to members, eighty-five percent (85%) or greater of which are participants in the RIte Care program administered by the State of Rhode Island, if the health organization has contracts with insurers, hospital or medical service corporations, governments, or other organizations that are sufficient to reasonably assure the performance of its obligations; provided, that in no event shall the net worth or total adjusted capital requirement be less than one hundred thousand dollars ($100,000).

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11; P.L. 2008, ch. 475, § 75.

27-4.7-11. Foreign health organizations.

1. 1. A foreign health organization shall, upon the written request of the commissioner, submit to the commissioner an RBC report as of the end of the calendar year just ended the later of:
      1. The date an RBC report would be required to be filed by a domestic health organization under this chapter;
      2. Fifteen (15) days after the request is received by the foreign health organization.
   2. A foreign health organization shall, at the written request of the commissioner, promptly submit to the commissioner a copy of any RBC plan that is filed with the insurance commissioner of any other state.
2. In the event of a company action level event, regulatory action level event, or authorized control level event with respect to a foreign health organization as determined under the RBC statute applicable in the state of domicile of the health organization (or, if no RBC statute is in force in that state, under the provisions of this chapter), if the insurance commissioner of the state of domicile of the foreign health organization fails to require the foreign health organization to file an RBC plan in the manner specified under that state’s RBC statute (or, if no RBC statute is in force in that state, under § 27-4.7-4 ), the commissioner may require the foreign health organization to file an RBC plan with the commissioner. In that event, the failure of the foreign health organization to file an RBC plan with the commissioner is grounds to order the health organization to cease and desist from writing new insurance business in this state.
3. In the event of a mandatory control level event with respect to a foreign health organization, if no domiciliary receiver has been appointed with respect to the foreign health organization under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign health organization, the commissioner may make application to the superior court of the county of Providence permitted under chapter 14.3 of this title with respect to the liquidation of property of foreign health organizations found in this state, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11; P.L. 2008, ch. 475, § 75.

27-4.7-12. Immunity.

There shall be no liability on the part of, and no cause of action shall arise against, the commissioner or the insurance department or its employees or agents for any action taken by them in the performance of their powers and duties under this chapter.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-13. Severability.

If any provision of this chapter, or its application to any person or circumstance, is held invalid, that determination shall not affect the provisions or applications of this chapter that can be given effect without the invalid provision or application, and to that end the provisions of this chapter are severable.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-14. Notices.

All notices by the commissioner to a health organization that may result in regulatory action under this chapter shall be effective upon dispatch if transmitted by registered or certified mail, or in the case of any other transmission shall be effective upon the health organization’s receipt of notice.

History of Section. P.L. 2000, ch. 178, § 1; P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.7-15. Repealed.

27-4.7-16. Prior notification of discontinuance of health insurance coverage.

1. At any time that a health organization elects to discontinue providing all health benefit plans to either individual or group policyholders in this state, the health organization shall provide written notice of this decision to the director of health and the director of the department of business regulation and to all affected health benefit plan group and individual policyholders at least one hundred eighty (180) days prior to the planned date of discontinuation of all health benefit plans by the health organization. Notice to the director of health and the director of the department of business regulation shall be provided at least five (5) working days prior to the notice to affected enrollees.
2. Any health organization in violation of this notification requirement is subject to an administrative penalty in an amount not less than five hundred dollars ($500) nor more than fifty thousand dollars ($50,000).

History of Section. P.L. 2000, ch. 200, § 11; P.L. 2000, ch. 229, § 11.

27-4.8-1. Group life insurance definitions.

Except as provided in § 27-4.8-2 , no policy of group life insurance shall be delivered in this state unless it conforms to one of the following descriptions:

1. A policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:
   1. The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes thereof. The policy may provide that the term “employees” shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships, or partnerships if the business of the employer and of the affiliated corporations, proprietorships, or partnerships is under common control. The policy may provide that the term “employees” shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term “employees” may include retired employees, former employees, and directors of a corporate employer. A policy issued to insure the employees of a public body may provide that the term “employees” shall include elected or appointed officials.
   2. The premium for the policy shall be paid either from the employer’s funds or from funds contributed by the insured employees, or from both. Except as provided in subsection (1)(iii), a policy on which no part of the premium is to be derived from funds contributed by the insured employees shall insure all eligible employees, except those who reject the coverage in writing.
   3. An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess the drug naloxone.
2. A policy issued to a creditor or its parent holding company or to a trustee or trustees or agent designated by two (2) or more creditors, which creditor, holding company, affiliate, trustee, trustees, or agent shall be deemed the policyholder, to insure debtors of the creditor or creditors subject to the following requirements:
   1. The debtors eligible for insurance under the policy shall be all of the debtors of the creditor or creditors, or all of any class or classes thereof. The policy may provide that the term “debtors” shall include:
      1. Borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction;
      2. The debtors of one or more subsidiary corporations; and
      3. The debtors of one or more affiliated corporations, proprietorships, or partnerships if the business of the policyholder and of the affiliated corporations, proprietorships, or partnerships is under common control.
   2. The premium for the policy shall be paid either from the creditor’s funds, or from charges collected from the insured debtors, or from both. Except as provided in subsection (2)(iii), a policy on which no part of the premium is to be derived from the funds contributed by insured debtors specifically for their insurance shall insure all eligible debtors.
   3. An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion shall not be based solely on the fact that the person has a prescription to carry or possess the drug naloxone.
   4. The amount of the insurance on the life of any debtor shall at no time exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor, except that insurance written in connection with open-end credit having a credit limit exceeding ten thousand dollars ($10,000) may be in an amount not exceeding the credit limit.
   5. The insurance may be payable to the creditor or any successor to the right, title, and interest of the creditor. The payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of the payment and any excess of the insurance shall be payable to the estate of the insured.
   6. Notwithstanding the provisions of the above subsections, insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment on a non-decreasing or level term plan. Insurance on educational credit transaction commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan.
3. A policy issued to a labor union, or similar employee organization, which shall be deemed to be the policyholder, to insure members of the union or organization for the benefit of persons other than the union or organization or any of its officials, representatives, or agents, subject to the following requirements:
   1. The members eligible for insurance under the policy shall be all of the members of the union or organization, or all of any class or classes thereof.
   2. The premium for the policy shall be paid either from funds of the union or organization, or from funds contributed by the insured members specifically for their insurance, or from both. Except as provided in subsection (3)(iii), a policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance shall insure all eligible members, except those who reject the coverage in writing.
   3. An insurer may exclude or limit the coverage on any persons as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess the drug naloxone.
4. A policy issued to a trust or to the trustees of a fund established or adopted by two (2) or more employers, or by one or more labor unions or similar employee organizations, or by one or more employers and one or more labor unions or similar employee organizations, which trust or trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions or organizations for the benefit of person other than the employers or the unions or organizations, subject to the following requirements:
   1. The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions or organizations, or all of any class or classes thereof. The policy may provide that the term “employees” shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships, or partnerships if the business of the employer and of the affiliated corporations, proprietorships, or partnerships is under common control. The policy may provide that the term “employees” shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term “employees” shall include retired employees, former employees, and directors of a corporate employer. The policy may provide that the term “employees” shall include the trustees or their employees, or both, if their duties are principally connected with the trusteeship.
   2. The premium for the policy shall be paid from funds contributed by the employer or employers of the insured persons, or by the union or unions or similar employee organizations, or by both, or from funds contributed by the insured persons or from both the insured persons and the employers or unions or similar employee organizations. Except as provided in subsection (4)(iii), a policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance shall insure all eligible persons, except those who reject the coverage in writing.
   3. An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess the drug naloxone.
5. A policy issued to an association or to a trust or to the trustees of a fund established, created, or maintained for the benefit of members of one or more associations. The association or associations shall have at the outset a minimum of one hundred (100) persons; shall have been organized and maintained in good faith for purposes other than obtaining insurance; shall have been in active existence for at least two (2) years; and shall have a constitution and bylaws that provide that:
   1. The association or associations hold regular meetings not less than annually to further purposes of the members;
   2. Except for credit unions, the association or associations, collect dues or solicit contributions from members; and
   3. The members have voting privileges and representation on the governing board and committees. The policy shall be subject to the following requirements:
      1. The policy may insure members of the association or associations, employees thereof, or employees of members, or one or more of the preceding or all of any class or classes thereof for the benefit of persons other than the employee’s employer.
      2. The premium for the policy shall be paid from funds contributed by the association or associations, or by employer members, or by both, or from funds contributed by the covered persons or from both the covered persons and the association, associations, or employer members.
      3. Except as provided in subsection (5)(iii)(D), a policy on which no part of the premium is to be derived from funds contributed by the covered persons specifically for the insurance shall insure all eligible persons, except those who reject the coverage in writing.
      4. An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess the drug naloxone.
6. A policy issued to a credit union or to a trustee or trustees or agent designated by two (2) or more credit unions, which credit union, trustee, trustees, or agent shall be deemed policyholder, to insure members of the credit union or credit unions for the benefit of persons other than the credit union or credit unions, trustee or trustees, or agent or any of their officials, subject to the following requirements:
   1. The members eligible for insurance shall be all of the members of the credit union or credit unions, or all of any class or classes thereof.
   2. The premium for the policy shall be paid by the policyholder from the credit union’s funds and, except as provided in subsection (6)(iii), shall insure all eligible members.
   3. An insurer may exclude or limit the coverage on any member as to whom evidence of individual insurability is not satisfactory to the insurer; provided, however, that any exclusion or limitation shall not be based solely on the fact that the person has a prescription to carry or possess the drug naloxone.

History of Section. P.L. 2009, ch. 299, § 1; P.L. 2009, ch. 300, § 1; P.L. 2019, ch. 121, § 2; P.L. 2019, ch. 149, § 2; P.L. 2020, ch. 79, art. 2, § 15.

27-4.8-2. Limits of group life insurance.

Group life insurance offered to a resident of this state under a group life insurance policy issued to a group other than one described in section 27-4.8-1 shall be subject to the following requirements:

1. A group life insurance policy shall not be delivered in this state unless the commissioner finds that:
   1. The issuance of the group policy is not contrary to the best interest of the public;
   2. The issuance of the group policy would result in economies of acquisition or administration; and
   3. The benefits are reasonable in relation to the premiums charged.
2. A group life insurance coverage may not be offered in this state by an insurer under a policy issued in another state unless this state or another state having requirements substantially similar to those contained in subdivisions (i), (ii), and (iii) has made a determination that the requirements have been met.
3. The premium for the policy shall be paid either from the policyholder’s funds or from funds contributed by the covered persons, or from both.
4. An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.

History of Section. P.L. 2009, ch. 299, § 1; P.L. 2009, ch. 300, § 1.

27-4.8-3. Notice of compensation.

1. With respect to a program of insurance which, if issued on a group basis, would not qualify under § 27-4.8-1 of this act, the insurer shall cause to be distributed to prospective insureds a written notice that compensation will or may be paid, if compensation of any kind will or may be paid to:
   1. A policyholder or sponsoring or endorsing entity in the case of a group policy; or
   2. A sponsoring or endorsing entity in the case of individual, blanket or franchise policies marketed by means of direct response solicitation.
2. The notice shall be distributed:
   1. Whether compensation is direct or indirect; and
   2. Whether the compensation is paid to or retained by the policyholder or sponsoring or endorsing entity, or paid to or retained by a third-party at the direction of the policyholder or sponsoring or endorsing entity, or an entity affiliated therewith by way of ownership, contract or employment.
3. The notice required by this section shall be placed on or accompany an application or enrollment form provided to prospective insureds.
4. The following terms shall have the meanings indicated:
   1. “Direct response solicitation” means a solicitation through a sponsoring or endorsing entity through the mails, telephone or other mass communications media;
   2. “Sponsoring or endorsing entity” means an organization that has arranged for the offering of a program of insurance in a manner that communicates that eligibility for participation in the program is dependent upon affiliation with the organization or that it encourages participation in the program.

History of Section. P.L. 2009, ch. 299, § 1; P.L. 2009, ch. 300, § 1.

27-4.8-4. Dependent group life insurance.

Except for a policy issued under § 27-4.8-1(2) , a group life insurance policy may be extended to insure the employees or members against loss due to the death of their spouses and dependent children, or any class or classes thereof, subject to the following:

1. The premium for the insurance shall be paid either from funds contributed by the employer, union, association or other person to whom the policy has been issued, or from funds contributed by the covered persons, or from both. Except as provided in subdivision (2), a policy on which no part of the premium for the spouse’s and dependent child’s coverage is to be derived from funds contributed by the covered persons shall insure all eligible employees or members with respect to their spouses and dependent children, or any class or classes thereof.
2. An insurer may exclude or limit the coverage on any spouse or dependent child as to whom evidence of individual insurability is not satisfactory to the insurer.
3. [Deleted by P.L. 2013, ch. 31, § 3, and P.L. 2013, ch. 36, § 3].

History of Section. P.L. 2009, ch. 299, § 1; P.L. 2009, ch. 300, § 1; P.L. 2013, ch. 31, § 3; P.L. 2013, ch. 36, § 3.

27-4.8-5. Group life insurance standard provision.

1. No policy of group life insurance shall be delivered in this state unless it contains in substance the following provisions, or provisions which in the opinion of the commissioner are more favorable to the persons insured, or at least as favorable to the persons insured and more favorable to the policyholder, however:
   1. Subsections (f) to (k) inclusive shall not apply to policies insuring the lives of debtors;
   2. The standard provisions required for individual life insurance policies shall not apply to group life insurance policies; and
   3. If the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision or provisions which, in the opinion of the commissioner, is or are equitable to the insured persons and to the policyholder. Nothing herein shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies.
2. The policy shall contain a provision that the policyholder is entitled to a grace period of thirty-one (31) days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder gives the insurer written notice of discontinuance in advance of the date of discontinuous and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during the grace period.
3. The policy shall contain a provision that the validity of the policy shall not be contested except for nonpayment of premiums after it has been in force for two (2) years from its date of issue; and that no statement made by any person insured under the policy relating to his or her insurability shall be used in contesting the validity of the insurance with respect to which the statement was made after the insurance has been in force prior to the contest for a period of two (2) years during the person’s lifetime nor unless it is contained in a written instrument signed by him or her. This provision shall not preclude the assertion at any time of defenses based upon provisions in the policy that relate to eligibility for coverage.
4. The policy shall contain a provision that a copy of the application, if any, of the policy holder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to the person or, in the event of death or incapacity of the insured person, to his or her beneficiary or personal representative.
5. The policy shall contain a provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his coverage.
6. The policy shall contain a provision specifying an equitable adjustment of premiums or benefits, or both, to be made in the event the age of a person insured has been misstated. The provision to contain a clear statement of the method of adjustment to be made.
7. The policy shall contain a provision that any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured, except that, where the policy contains conditions pertaining to family status, the beneficiary may be the family member specified by the policy terms, subject to the provisions of the policy in the event there is no designated beneficiary, as to all or any part of the sum, living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of the sum not exceeding two thousand dollars ($2000) to any person appearing to the insurer to be equitably entitled to it by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.
8. The policy shall contain a provision that the insurer will issue to the policyholder for delivery to each person insured a certificate setting forth a statement as to the insurance protection to which he or she is entitled, to whom the insurance benefits are payable, a statement as to any dependent’s coverage included in the certificate, and the rights and conditions set forth in subsections (h), (i), (j) and (k) following.
9. The policy shall contain a provision that, if the insurance, or any portion of it, on a person covered under the policy or on the dependent of a person covered, ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policy, the person shall be entitled to have issued to him or her by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits, provided application for the individual policy shall be made, and the first premium paid to the insurer, within thirty-one (31) days after termination and provided further that:
   1. The individual policy shall, at the option of the person, be on any one of the forms then customarily issued by the insurer at the age and for the amount applied for, except that the group policy may exclude the option to elect term insurance;
   2. The individual policy shall be in an amount not in excess of the amount of life insurance that ceases because of termination, less the amount of any life insurance for which the person becomes eligible under the same or any other group policy within thirty-one (31) days after termination, provided that any amount of insurance that shall have matured on or before the date of termination as an endowment payable to the person insured, whether in one sum or in installments or in the form of an annuity, shall not, for the purposes of this provision, be included in the amount that is considered to cease because of termination; and
   3. The premium on the individual policy shall be at the insurer’s then customary rate applicable to the form and amount of the individual policy, to the class of risk to which the person then belongs, and to the individual age attained on the effective date of the individual policy. Subject to the same conditions set forth above, the conversion privilege shall be available:
      1. To a surviving dependent, if any, at the death of an employee or member, with respect to the coverage under the group policy that terminates by reason of the death; and
      2. To the dependent of the employee or member upon termination of coverage of the dependent, while the employee or member remains insured under the group policy, by reason of the dependent ceasing to be a qualified family member under the group policy.
10. The policy shall contain a provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of termination whose insurance terminates, including the insured dependent of a covered person, and who has been so insured for at least five (5) years prior to the termination date shall be entitled to have issued by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by subsection (h) above, except that the group policy may provide that the amount of the individual policy shall not exceed the smaller of:
    1. The amount of the person’s life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which the person is or becomes eligible under a group policy issued or reinstated by the same or another insurer within thirty-one (31) days after termination; or
    2. Ten thousand dollars ($10,000).
11. The policy shall contain a provision that, if a person insured under the group policy, or the insured dependent of a covered person, dies during the period within which the individual would have been entitled to have an individual policy issued in accordance with subsection (h) or (i) above and before the individual policy shall have become effective, the amount of life insurance which he or she would have been entitled to have issued under the individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefore has been made.
12. Where active employment is a condition of insurance, the policy shall contain a provision that an insured may continue coverage during the insured’s total disability by timely payment to the policyholder of that portion, if any, of the premium that would have been required from the insured had total disability not occurred. The continuation shall be on a premium paying basis for a period of six (6) months from the date on which the total disability started, but not beyond the earlier of:
    1. Approval by the insurer of continuation of the coverage under any disability provision which the group insurance policy may contain; or
    2. The discontinuance of the group insurance policy.
13. In the case of a policy insuring the lives of debtors, the policy shall contain a provision that the insurer will furnish to the policyholder for delivery to each debtor insured under the policy a certificate of insurance describing the coverage and specifying that the death benefit shall first be applied to reduce or extinguish the indebtedness.

History of Section. P.L. 2009, ch. 299, § 1; P.L. 2009, ch. 300, § 1; P.L. 2011, ch. 157, § 3; P.L. 2011, ch. 275, § 3.

27-4.8-6. Supplementary bill relating to conversion privileges.

If an individual insured under a group life-insurance policy hereafter delivered in this state becomes entitled under the terms of the policy to have an individual policy of life insurance issued without evidence of insurability, subject to making of application and payment of the first premium within the period specified in the policy, and if the individual is not given notice of the existence of the right at least fifteen (15) days prior to the expiration date of the period, then in that event, the individual shall have an additional period within which to exercise the right, but nothing herein contained shall be construed to continue any insurance beyond the period provided in the policy. This additional period shall expire fifteen (15) days next after the individual is given notice, but in no event shall the additional period extend beyond sixty (60) days after the expiration date of the period provided in the policy. The notice shall clearly set forth the required conversion process. The notice may include the conversion provisions of the policy and certificate, but the notice may not just make reference to these provisions. The notice does not require prior approval, but the insurer is responsible to assure that the notice is clear and provides all the necessary information. If the insurer allows the conversion notice to be delivered by the employer, the insurer shall ensure that no other employer notice is included with the conversion notice. Written notice presented to the individual or mailed by the policy holder to the last-known address of the individual or mailed by the insurer to the last-known address of the individual as furnished by the policyholder shall constitute notice for the purpose of this paragraph.

History of Section. P.L. 2009, ch. 299, § 1; P.L. 2009, ch. 300, § 1; P.L. 2016, ch. 376, § 3; P.L. 2016, ch. 392, § 3.

27-4.9-1. Short title.

This chapter shall be known and may be cited as the “Beneficiaries’ Bill of Rights Act of 2011.”

History of Section. P.L. 2011, ch. 339, § 1; P.L. 2011, ch. 370, § 1.

27-4.9-2. Purpose.

The purpose of this chapter is to require complete and proper disclosure, transparency, and accountability relating to any method of payment for life insurance death benefits and require that beneficiaries are fully informed in bold type and in layman’s language of their options.

History of Section. P.L. 2011, ch. 339, § 1; P.L. 2011, ch. 370, § 1.

27-4.9-3. Definitions.

As used in this section:

1. “Policy” means any policy or certificate of life insurance that provides a death benefit.
2. “Retained asset account” means any mechanism whereby the settlement of proceeds payable under a life insurance policy, including, but not limited to, the payment of cash surrender value, is accomplished by the insurer or an entity acting on behalf of the insurer depositing the proceeds into an account, where those proceeds are retained by the insurer, pursuant to a supplementary contract not involving annuity benefits.

History of Section. P.L. 2011, ch. 339, § 1; P.L. 2011, ch. 370, § 1.

27-4.9-4. General requirements.

1. An insurer may not use a retained asset account as the mode of settlement unless the insurer discloses such option to the beneficiary or the beneficiary’s legal representative prior to the transfer of the death benefit to a retained asset account.
2. A beneficiary shall be informed of his or her rights to receive a lump-sum payment of life insurance proceeds in the form of a bank check or other form of immediate full payment of benefits.

History of Section. P.L. 2011, ch. 339, § 1; P.L. 2011, ch. 370, § 1.

27-4.9-5. Disclosure requirements.

1. A complete listing and clear explanation of all of the life insurance proceeds payment options available to the beneficiary in written or electronic format shall accompany the tender of other than a lump sum payment of a life insurance death benefit.
2. The use of a retained asset account shall require in the description and explanation pursuant to subsection (a) herein the following:
   1. The recommendation to consult a tax, investment, or other financial advisor regarding tax liability and investment options;
   2. The initial interest rate, when and how interest rates may change, and any dividends and other gains that may be paid or distributed to the account holder;
   3. The custodian of the funds or assets of the account;
   4. The coverage guaranteed by the Federal Deposit Insurance Corporation (FDIC), if any, and the amount of such coverage;
   5. The limitations, if any, on the numbers and amounts of withdrawals of funds from the account, including any minimum or maximum benefit payment amounts;
   6. The delays, if any, that the account holder may encounter in completing authorized transactions and the anticipated duration of such delays;
   7. The services provided for a fee, including a list of the fees or the method of their calculation;
   8. The nature and frequency of statements of account;
   9. The payment of some or all of the proceeds of the death benefit may be by the delivery of checks, drafts, or other instruments to access the available funds;
   10. The entire proceeds are available to the account holder by the use of one such check, draft, or other instrument;
   11. The insurer or a related party may derive income, in addition to any fees charged on the account, from the total gains received on the investment of the balance of funds in the account;
   12. The telephone number, address, and other contact information, including website address, to obtain additional information regarding the account; and
   13. The following statement: “For further information, please contact the department of business regulation.”
3. The writings produced to satisfy the requirements of this section shall be in easy-to-understand language and bold or at least twelve (12) point type.

History of Section. P.L. 2011, ch. 339, § 1; P.L. 2011, ch. 370, § 1.

27-4.9-6. Insurer reporting.

1. Insurers shall, on an annual basis, report the following information to the insurance commissioner within the department of business regulation:
   1. The number and dollar balance of retained asset accounts in force at the beginning of the year;
   2. The number and dollar amount of retained asset accounts issued/added during the year;
   3. The number and dollar amount of retained asset accounts closed out/withdrawn during the year;
   4. The number and dollar balance of retained asset accounts in force at the end of the year;
   5. The investment earnings or interest credited to retained asset accounts;
   6. Fees and other charges assessed during the year;
   7. A narrative description of how the accounts are structured. The description shall include:
      1. All of the different interest rates paid to retained asset account holders during the reporting year and the number of times changes were made during the reporting year;
      2. A list of all applicable fees charged by the reporting entity directly or indirectly associated with the retained asset accounts; and
      3. Whether the retained asset accounts were the default method for satisfying life insurance claims;
   8. The number and balance of retained asset accounts in force at the end of the current year and prior year segregated within “aging categories” of “up to twelve (12) months,” “thirteen (13) to twenty-four (24) months,” “twenty-five (25) to thirty-six (36) months,” “thirty-seven (37) to forty-eight (48) months,” “forty-nine (49) to sixty (60) months,” and over sixty (60) months“;
   9. The identity of any entity or financial institution that administers retained asset accounts on the insurer’s behalf;
   10. The number and amounts of retained asset accounts that are transferred annually to the state unclaimed property funds under abandoned property laws; and
   11. Any other information relating to retained asset accounts as prescribed by the department of business regulation.
2. An insurer shall immediately return any remaining balance held in a retained asset account to the beneficiary when the account becomes inactive. A retained asset account shall become inactive for purposes of this subsection if no funds are withdrawn from the account, and if no affirmative directive has been provided to the insurer by the beneficiary, during any continuous three (3) year period.
3. All marketing materials, disclosure statements, and supplemental contract forms utilized in connection with retained asset accounts shall be filed with the state insurance department prior to their use. The commissioner shall disapprove any materials, statements, or forms submitted under this section that are inconsistent with § 27-4.9-5 or are otherwise untrue, deceptive, or misleading.

History of Section. P.L. 2011, ch. 339, § 1; P.L. 2011, ch. 370, § 1.

27-4.9-7. Effective date.

This chapter shall apply to claims for a death benefit under any policy or certificate of life insurance subject to the insurance laws of the state where the beneficiary resides submitted on or after September 1, 2011.

History of Section. P.L. 2011, ch. 339, § 1; P.L. 2011, ch. 370, § 1.

27-4.10-1. Definitions.

As used in this chapter, the term:

1. “Agent” means a person who is the agent of record of a policy or who has a business relationship with the policyholder or insured.
2. “Commissioner” means the director of the department of business regulation and any assistant to the director.
3. “Insured” means an individual who is covered by a policy.
4. “Insurer” means the insurance company that issued or currently insures the policy.
5. “Policy” means an individual life insurance policy owned by an individual who is a resident of this state, regardless of whether the policy has been issued, delivered, or renewed in this state.

History of Section. P.L. 2018, ch. 126, § 1; P.L. 2018, ch. 196, § 1.

27-4.10-2. Notice.

1. The commissioner shall develop, and post on its website, a written notice to inform a policyholder of alternatives to the lapse or surrender of a policy, and of the policyholder’s rights, as an owner of the policy, that are related to the disposition of a policy. The notice must be developed at no cost to insurers, agents, or other licensees and must be written in lay terms.
2. The written notice must contain all of the following:
   1. A statement explaining that life insurance is a critical part of a broader financial plan;
   2. A statement explaining that there are alternatives to the lapse or surrender of a policy;
   3. A general description of the following alternatives to the lapse or surrender of a policy:
      1. Accelerated death benefits available under the policy or as a rider to the policy;
      2. The assignment of the policy as a gift;
      3. The sale and assignment of the policy pursuant to a life settlement contract, including that a life settlement is a regulated transaction in this state pursuant to chapter 72 of title 27;
      4. The replacement of the policy;
      5. The maintenance of the policy pursuant to the terms of the policy or a rider to the policy, or through a life settlement contract;
      6. The maintenance of the policy through loans issued by an insurer or a third party, using the policy or the cash surrender value of the policy as collateral for the loan;
      7. Conversion of the policy from a term policy to a permanent policy;
      8. Conversion of the policy in order to obtain long-term-care health insurance coverage or a long-term-care benefit plan; and
   4. A statement explaining that life insurance, life settlements, or other alternatives to the lapse or surrender of the policy described in the notice may not be available to a particular policyholder depending on a number of circumstances, including the age and health status of the insured or the terms of a life insurance policy, and that the policyholder should contact his or her financial advisor, insurance agent, broker, or attorney to obtain further advice and assistance.
3. An insurer, an agent, or an insurer and its agent must advise a policyholder with the annual benefit statement or otherwise that policyholders considering making changes in the status of the policy should consult a licensed insurance agent or financial advisor and that important information related to policy options, including information about an accelerated death benefit, nursing home benefit, critical illness benefit, and additional benefits may be found on the department of business regulation (DBR) website.

History of Section. P.L. 2018, ch. 126, § 1; P.L. 2018, ch. 196, § 1.

27-5-1. Standard fire insurance policy.

The printed form of a policy of fire insurance, as set forth in § 27-5-3 , shall be known and designated as the “standard fire insurance policy of the state of Rhode Island.”

The printed form of a policy of fire insurance, as set forth in § 27-5-3 , shall be known and designated as the “standard fire insurance policy of the state of Rhode Island.”

The printed form of a policy of fire insurance, as set forth in § 27-5-3 , shall be known and designated as the “standard fire insurance policy of the state of Rhode Island.”

History of Section. G.L. 1896, ch. 183, § 4; G.L. 1909, ch. 222, § 4; G.L. 1923, ch. 258, § 4; G.L. 1938, ch. 154, § 1; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-1 .

27-5-2. Compliance with standard policy required.

Except as provided in § 27-5-9.1 and § 27-65-1(e) , no policy or contract of fire insurance shall be made, issued, or delivered by any insurer or by any insurance producer or representative of an insurance producer on any property in this state, unless it shall conform, as to all provisions, stipulations, agreements, and conditions, with the standard form of policy.

History of Section. G.L. 1896, ch. 183, § 4; G.L. 1909, ch. 222, § 4; G.L. 1923, ch. 258, § 4; G.L. 1938, ch. 154, § 1; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-2 ; 1979, ch. 48, § 1; P.L. 2004, ch. 91, § 2; P.L. 2004, ch. 320, § 2; P.L. 2011, ch. 18, § 2; P.L. 2011, ch. 25, § 2.

27-5-2.1. Repealed.

27-5-3. Form of standard policy.

The form of the standard fire insurance policy of the state of Rhode Island, with permission to substitute for the word “company” or “companies” a more accurate descriptive term for the type of insurer, shall be as follows:

No Space for insertion of name of company or companies issuing the policy and other matter permitted to be stated at the head of the policy. Space for listing amounts of insurance, rates, and premiums for the basic coverages insured under the standard form of policy and for additional coverages or perils insured under endorsements attached. In consideration of the provisions and stipulations herein or added hereto and of dollars premium this company, for the term of from the day of , 20 to the day of , 20 at 12:01 a.m. standard time at location of property involved, to an amount not exceeding dollars, does insure, and legal representatives, to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after a loss, without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair, and without compensation for loss resulting from interruption of business or manufacture, nor in any event for more than the interest of the insured, against all direct loss by fire and lightning, and by removal from the premises endangered by the perils insured against in this policy, except as hereinafter provided, to the property described hereinafter while located or contained as described in this policy, or pro rata for five (5) days at each proper place to which any of the property shall necessarily be removed for preservation from the perils insured against in this policy, but not elsewhere. Assignment of this policy shall not be valid except with the written consent of this company. This policy is made and accepted subject to the foregoing provisions and stipulations and those hereinafter stated, which are hereby made a part of this policy, together with such other provisions, stipulations, and agreements as may be added hereto, as provided in this policy. IN WITNESS WHEREOF, this company has executed and attested these presents; at Secretary President In the event the domicile state of the company issuing the policy requires a Rhode Island company to have a countersignature affixed by a licensed resident agent to a policy issued in that state then in accordance with the provisions of , the form of the standard fire insurance policy shall in lieu of the foregoing execution and attestation clause contain the following execution and attestation clause: IN WITNESS WHEREOF, this company has executed and attested these presents; but this policy shall not be valid unless countersigned by the duly authorized agent of this company at § 27-2-17 Secretary President Countersigned this day of 20 Agent 1 Concealment, This entire policy shall be void if, whether 2 fraud. before or after a loss, the insured will- 3 fully concealed or misrepresented any material 4 fact or circumstance concerning this insurance or the subject 5 thereof, or the interest of the insured therein, or in the case of 6 any fraud or false swearing by the insured relating thereto. 7 Uninsurable This policy shall not cover accounts, bills, 8 and excepted currency, deeds, evidences of debt, money, or 9 property. securities; nor, unless specifically named here- 10 on in writing, bullion or manuscripts. 11 Perils not This company shall not be liable for loss by 12 included. fire or other perils insured against in this 13 policy caused, directly or indirectly, by: (a) 14 enemy attack by armed forces, including action taken by mili- 15 tary, naval, or air forces in resisting an actual or an immedi- ately 16 impending enemy attack; (b) invasion; (c) insurrection; (d) 17 rebellion; (e) revolution; (f) civil war; (g) usurped power; (h) 18 order of any civil authority except acts of destruction at the time 19 of and for the purpose of preventing the spread of fire, provided 20 that this fire did not originate from any of the perils excluded 21 by this policy; (i) neglect of the insured to use all reasonable 22 means to save and preserve the property at and after a loss, or 23 when the property is endangered by fire in neighboring prem- 24 ises; (j) loss by theft. 25 Other insurance may be prohibited or the Other Insurance. 26 amount of insurance may be limited by an 27 endorsement attached hereto. 28 Unless Conditions suspending or restricting insurance. 29 otherwise provided in writing and added hereto this company or companies shall not 30 be liable for loss occurring: 31 (a) While the hazard is increased by any means within the con- 32 trol or knowledge of the insured; or 33 (b) While a described building, whether intended for occupancy 34 by owner or tenant, is vacant or unoccupied beyond a period of 35 sixty (60) consecutive days or 35A thirty (30) consecutive days subsequent to the date on which an 35B order is issued by the local building inspector pursuant to , § 23-27.3-124.2 35C whichever first occurs; or 36 (c) As a result of explosion or riot, unless fire ensues, and in 37 that event for loss by fire only. 38 Any other peril to be insured against or sub- Other perils 39 or subjects. ject of insurance to be covered in this policy 40 shall be by endorsement in writing hereon or 41 added hereto. 42 The extent of the application of insurance Added provisions. 43 under this policy and of the contribution to 44 be made by this company in case of loss, and any other pro- 45 vision or agreement not inconsistent with the provisions of this 46 policy, may be provided for in writing and added hereto, but no 47 provision may be waived except such as by the terms of this 48 policy is subject to change. 49 Waiver No permission affecting this insurance shall 50 provisions. exist, or waiver of any provision is valid, 51 unless granted herein or expressed in writing 52 and added hereto. No provision, stipulation, or forfeiture shall 53 be held to be waived by any requirement or proceeding on the 54 part of this company relating to appraisal or to any examina- 55 tion provided for herein. 56 This policy shall be cancelled at any time Cancellation 57 of policy. at the request of the insured, in which case 58 this company shall, upon demand and sur- 59 render of this policy, refund the excess of the paid premium above 60 the customary short rates for the expired time. This pol- 61 icy may be cancelled at any time by this company by giving 62 to the insured a thirty (30) days’ written notice of cancellation except that when cancellation is for nonpayment of premium, a ten (10) days’ written notice shall be required with 63 or without tender of the excess of the paid premium above the pro 64 rata premium for the expired time. 65 Notice of cancellation shall 66 state that the excess premium (if not tendered) will be promptly 67 re-funded. 68 Mortgagee If loss hereunder is made payable, in whole 69 or in part, to a designated mortgagee not interests and 70 obligations. named herein as the insured, that interest in 71 this policy may be cancelled by giving to that 72 mortgagee a ten (10) days’ written notice of 73 cancellation. 74 If the insured fails to render proof of loss the mortgagee, upon 75 notice, shall render proof of loss in the form herein specified 76 within sixty (60) days thereafter and shall be subject to the pro- 77 visions hereof relating to appraisal and time of payment and of 78 bringing suit. If this company shall claim that no liability ex- 79 isted as to the mortgagor or owner, it shall, to the extent of the pay- 80 ment of loss to the mortgagee, be subrogated to all the mort- 81 gagee’s rights of recovery, but without impairing the mort- gagee’s 82 right to sue; or it may pay off the mortgage debt and require 83 an assignment thereof and of the mortgage. Other provisions 84 relating to the interests and obligations of the mortgagee may 85 be added hereto by agreement in writing. 86 This company shall not be liable for a Pro rata liability. 87 greater proportion of any loss than the 88 amount hereby insured shall bear to the whole insurance cover- 89 ing the property against the peril involved, whether collectible or not. 90 The insured shall give immediate written Requirements in 91 notice to this company of any loss, protect case loss occurs. 92 the property from further damage, forth with 93 separate the damaged and undamaged personal property, put 94 it in the best possible order, furnish a complete inventory of 95 the destroyed, damaged, and undamaged property, showing in 96 detail quantities, costs, actual cash value and amount of loss 97 claimed; and within sixty (60) days after the loss, unless such 98 time is extended in writing by this company, the insured shall 99 render to this company a proof of loss, signed and sworn to by 100 the insured, stating the knowledge and belief of the insured as to 101 the following: the time and origin of the loss, the interest of the 102 insured and of all others in the property, the actual cash value of 103 each item thereof and the amount of loss thereto, all encum- 104 brances thereon, all other contracts of insurance, whether valid 105 or not, covering any of the property, any changes in the title, 106 use, occupation, location, possession, or exposures of the prop- 107 erty since the issuing of this policy, and by whom and for what 108 purpose any building herein described and the several parts 109 thereof were occupied at the time of loss and whether or not it 110 then stood on leased ground, and shall furnish a copy of all the 111 descriptions and schedules in all policies and, if required, veri- 112 fied plans and specifications of any building, fixtures, or machin- 113 ery destroyed or damaged. The insured, as often as may be 114 reasonably required, shall exhibit to any person designated by 115 this company all that remains of any property herein described, 116 and submit to examinations under oath by any person named by 117 this company, and subscribe the same; and, as often as may be 118 reasonably required, shall produce for examination all books of 119 account, bills, invoices, and other vouchers, or certified copies 120 thereof if the originals are lost, at such reasonable time and place as 121 may be designated by this company or its representative, and 122 shall permit extracts and copies thereof to be made. 123 Appraisal. In case the insured and this company shall 124 fail to agree as to the actual cash value or 125 the amount of loss, then, on the written demand of either, each 126 shall select a competent and disinterested appraiser and notify 127 the other of the appraiser selected within twenty (20) days of 128 that demand. The appraisers shall first select a competent and 129 disinterested umpire; and failing for fifteen (15) days to agree 130 upon the umpire, then, on request of the insured or this com- 131 pany, the umpire shall be selected by a judge of a court of 132 record in the state in which the property covered is located. The 133 appraisers shall then appraise the loss, stating separately ac- tual 134 cash value and loss to each item; and, failing to agree, shall 135 submit their differences, only, to the umpire. An award in writ- 136 ing, so itemized, of any two (2) when filed with this company shall 137 determine the amount of actual cash value and loss. Each 138 appraiser shall be paid by the party selecting him or her and 139 the expenses of appraisal and the umpire shall be paid by 140 the parties equally. 141 Company’s It shall be optional with this company to 142 options. take all, or any part, of the property at the 143 agreed or appraised value, and also to re- 144 pair, rebuild, or replace the property destroyed or damaged with 145 another of like kind and quality within a reasonable time, on 146 giving notice of its intention so to do within thirty (30) days 147 after the receipt of the proof of the loss herein required. 148 There can be no abandonment to this com- Abandonment. 149 pany of any property. 150 When loss The amount of loss for which this company 151 payable may be liable shall be payable sixty (60) 152 days after proof of loss, as herein provided, 153 is received by this company and ascertainment of the loss is 154 made either by agreement between the insured and this com- 155 pany expressed in writing or by the filing with this company 156 of an award as herein provided. 157 Suit. No suit or action on this policy for the recov- 158 ery of any claim shall be sustainable in any 159 court of law or equity unless all the requirements of this policy 160 shall have been complied with, and unless commenced within 161 twenty-four (24) months next after inception of the loss. 162 This company may require from the insured Subrogation. 163 an assignment of all rights of recovery. 164 against any party for loss to the extent that payment therefor 165 is made by this company. Standard Fire Insurance Policy of the State of Expires Property Assured No. (COMPANY) It is important that the written portions of all policies covering the same property read exactly alike. If they do not, they should be made uniform at once.

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History of Section. G.L. 1896, ch. 183, § 5; G.L. 1909, ch. 222, § 5; G.L. 1923, ch. 258, § 5; P.L. 1929, ch. 1359, § 2; P.L. 1938, ch. 2631, § 1; G.L. 1938, ch. 154, §§ 1, 2; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-3 ; P.L. 1978, ch. 331, § 1; P.L. 1979, ch. 47, § 1; P.L. 1994, ch. 53, § 1; P.L. 2004, ch. 138, § 1; P.L. 2004, ch. 140, § 1.

27-5-3.1. Exclusion — Nuclear damage.

Insurers issuing the standard fire insurance policy of the state of Rhode Island pursuant to § 27-5-3 are authorized to affix to the policy or include in it a written statement that the policy does not cover loss or damage caused by nuclear reaction or nuclear radiation or radioactive contamination resulting from an insured peril under the policy; provided, that nothing contained in this section shall be construed to prohibit the attachment to any policy of an endorsement or endorsements specifically assuming coverage for loss or damage caused by nuclear reaction or nuclear radiation or radioactive contamination.

History of Section. P.L. 1961, ch. 23, § 1.

27-5-3.2. Property insurance.

1. No lending institution, as defined in § 19-9-1 , doing business in this state, its affiliates or subsidiaries, or a bank holding company, as defined in 12 U.S.C. § 1841, its affiliates or subsidiaries, shall, as a condition of the mortgage or as a term of the mortgage deed, require that the mortgagor carry property insurance on the property which is the subject of the mortgage in excess of the replacement cost of any buildings or appurtenances subject to the mortgage; provided, when in the course of selling, transferring, conveying or assigning a mortgage, the servicing rights of the mortgage are similarly transferred, conveyed or assigned, then and in that event it shall be the responsibility of the holder of the mortgage to notify the insurance producer issuing the property insurance policy and the insurer in writing of that sale, transfer, conveyance, or assignment. This notice shall be made in writing and shall be sent to the insurance producer and the insurer within thirty (30) days of the sale, transfer, conveyance, or assignment by mail. In the event that the holder of a mortgage shall fail to notify the insurance producer and the insurer who issued the property insurance policy that is in force, in writing, of that sale, transfer, conveyance, or assignment within thirty (30) days, the holder shall indemnify and hold the insurance producer harmless.
2. Notwithstanding any provision in this title to the contrary, no such holder of a mortgage shall be entitled to payment of a claim under a property insurance policy for a loss to a covered building which equals less than three thousand five hundred dollars ($3,500), and for which such holder of a mortgage is otherwise entitled to payment, unless no liability exists as to the mortgagor.

History of Section. P.L. 1986, ch. 166, § 1; P.L. 1988, ch. 63, § 1; P.L. 2002, ch. 112, § 1; P.L. 2003, ch. 102, § 1; P.L. 2003, ch. 105, § 1.

27-5-3.3. Resident agent — Banks.

All banks and lending institutions doing business in this state, whether acting under state or federal authority, which include, but are not limited to: (1) a bank, savings bank, or trust company, as defined in this title, its affiliates or subsidiaries, (2) a bank holding company, as defined in 12 U.S.C. § 1841, its affiliates or subsidiaries, (3) mortgage companies, and (4) any other individual, corporation, partnership, or association authorized to take deposits and/or to make loans of money under the provisions of title 19, shall maintain a resident agent in this state who shall have authority to endorse insurance claim checks on behalf of those banks and lending institutions.

History of Section. P.L. 1988, ch. 74, § 1.

27-5-3.4. Cancellation or nonrenewal of standard fire insurance policy.

1. A company issuing any policy of insurance which is subject to cancellation or nonrenewal by the company shall effect cancellation or nonrenewal by serving the notice of it provided by the policy. That notice shall be delivered in hand to the named insured, or be left at his or her last address as shown by the company’s records, or, if its records contain no last address, at his or her last business, residence, or other address known to the company, or be forwarded to that address by first class mail and maintain proof of mailing of the notice to the insured by United States Postal Service certificate of mailing in the ordinary course of the insurer’s business, and this proof of mailing shall be sufficient proof of notice.
2. If a policy is made payable to a mortgagee or any person other than the named insured, notice shall be given as provided in subsection (a) of this section to the payee and to the named insured.
3. Policies subject to cancellation by the named insured upon giving notice to the company may be cancelled by serving notice in the manner provided in subsection (a) of this section upon the company or upon its insurance producer who issued the policy.

History of Section. P.L. 1989, ch. 483, § 1; P.L. 1996, ch. 188, § 4; P.L. 2001, ch. 122, § 4; P.L. 2002, ch. 292, § 22; P.L. 2003, ch. 101, § 1; P.L. 2003, ch. 104, § 1.

27-5-3.5. Earthquake coverage endorsement for property insurance.

Notwithstanding any general or special law to the contrary, all insurance companies authorized to provide condominium unit owner’s, tenant’s, or homeowner’s insurance on owner-occupied, one to four (4) unit dwellings in this state shall, in connection with that insurance, make available to any insured purchasing a policy, at the insured’s option, earthquake coverage. The premium amount and deductible amount for the earthquake coverage shall be shown separately on the declarations page of the policy.

History of Section. P.L. 1990, ch. 126, § 1.

27-5-3.6. Notice concerning flood insurance.

Upon issuance and each renewal of insurance policies covering standard fire insurance as defined in §§ 27-5-3 and 27-5-9.1 , insurers shall provide written notice advising the policy holder that the insurance policy may not cover damages resulting from the flood, that flood insurance may be available through the Federal Emergency Management Agency (FEMA) National Flood Insurance Program, and to contact their insurer or producer for assistance. The notice shall be clear and conspicuous to the policyholder.

History of Section. P.L. 2005, ch. 172, § 1.

27-5-3.7. Repealed.

History of Section. P.L. 2007, ch. 169, § 1; P.L. 2007, ch. 262, § 1; P.L. 2008, ch. 475, §§ 5, 76; P.L. 2009, ch. 15, § 1; P.L. 2009, ch. 42, § 1; Repealed by P.L. 2012, ch. 64, § 1, effective May 14, 2012; P.L. 2012, ch. 83, § 1, effective May 21, 2012. For comparable provisions, see § 27-76-2 .

27-5-3.8. Rhode Island commission on hurricane loss projection methodology.

1. Legislative findings and intent.
   1. Reliable projections of hurricane losses are necessary in order to assure that rates for residential property insurance meet the statutory requirement that rates be neither excessive nor inadequate.
   2. The general assembly recognizes the need for expert evaluation of computer models and other recently developed or improved actuarial methodologies for projecting hurricane losses, in order to resolve conflicts among actuarial professionals, and in order to provide both immediate and continuing improvement in the sophistication of actuarial methods used to set rates charged to consumers.
   3. It is the intent of the general assembly to create the Rhode Island commission on hurricane loss projection methodology as a panel of experts to provide the most actuarially sophisticated guidelines and standards for projection of hurricane losses possible, given the current state of actuarial science.
2. Commission created.
   1. There is created the Rhode Island commission on hurricane loss projection methodology. For the purposes of this section, the term “commission” means the Rhode Island commission on hurricane loss projection methodology. The commission shall be administratively housed within the department of administration, but it shall independently exercise the powers and duties specified in this section.
   2. The commission shall consist of the following eight (8) members:
      1. The director of business regulation, acting as the administrator of insurance, or designee;
      2. The director of the Rhode Island emergency management agency;
      3. A member of the board of directors of the Rhode Island Joint Reinsurance Association appointed by the governor;
      4. Five (5) members directly appointed by the governor, as follows:
         1. An actuary who is employed full-time by a property and casualty insurer that was responsible for at least one percent of the aggregate statewide direct written premium for homeowner’s insurance in the calendar year preceding the member’s appointment to the commission;
         2. An expert in insurance finance who has a background in actuarial science;
         3. An expert in statistics who has a background in insurance;
         4. An expert in computer system design.
         5. An expert in meteorology who specializes in hurricanes.
   3. Members designated under subparagraphs (b)(2)(i)-(iii) shall serve on the commission as long as they maintain the respective offices designated in subparagraphs (b)(2)(i)-(iii). Members under subparagraph (b)(2)(iv)(A)-(E) shall serve for a term of three (3) years, and may be reappointed to the commission. All members may be removed by the governor prior to the expiration of their term for cause. Vacancies on the commission shall be filled in the same manner as the original appointment.
   4. The governor shall annually appoint one of the members of the commission to serve as chair.
   5. Members of the commission shall serve without compensation but shall be reimbursed for per diem and travel expenses.
   6. There shall be no liability on the part of, and no cause of action of any nature shall arise against, any member of the commission for any action taken in the performance of their duties under this section. In addition, the commission may, in writing, waive any potential cause of action for negligence of a consultant, contractor, or contract employee engaged to assist the commission.
3. Adoption and effect of standards and guidelines.
   1. The commission shall consider any actuarial methods, principles, standards, models, or output ranges that have the potential for improving the accuracy of or reliability of the hurricane loss projections used in residential property insurance rate filings. The commission shall, from time to time, adopt findings as to the accuracy or reliability of particular methods, principles, standards, models, or output ranges.
   2. The commission shall adopt revisions to previously adopted actuarial methods, principles, standards, models, or output ranges at least annually.
   3. 1. A trade secret that is used in designing and constructing a hurricane loss model and that is provided pursuant to this section, by a private company, to the commission, is confidential and shall not be deemed a public record pursuant to the provisions of chapter 2 of title 38.
      2. That portion of a meeting of the commission or of a rate proceeding on an insurer’s rate filing at which a trade secret made confidential and exempt by this paragraph is discussed shall be deemed confidential and not open to disclosure pursuant to the open meetings act, but may be discussed at a closed meeting as provided for in chapter 46 of title 42.
4. The Rhode Island commission is hereby authorized to form a multi-state commission with the states of Massachusetts, Connecticut, and any other interested state in furtherance of the goals of this act.

History of Section. P.L. 2007, ch. 131, § 1; P.L. 2008, ch. 475, § 76; P.L. 2015, ch. 52, § 3; P.L. 2015, ch. 53, § 3.

27-5-3.9. Vacant property.

No residential property insurance policy shall exclude coverage for vandalism or malicious mischief unless the dwelling has been vacant for more than sixty (60) consecutive days immediately before the loss.

History of Section. P.L. 2018, ch. 78, § 1; P.L. 2018, ch. 100, § 1.

27-5-4. Items shown at head of policy.

There shall be printed at the head of a fire insurance policy the name of the insurer or insurers issuing the policy, the location of the home office of the insurer or insurers, and a statement whether the insurer or insurers are stock or mutual corporations; and there may be added to the policy any device or devices that the insurer or insurers issuing the policy shall desire; provided, that any company organized under special charter provisions may indicate this upon its policy and may add a statement of the plan under which it operates in this state.

History of Section. G.L. 1896, ch. 183, § 4; G.L. 1909, ch. 222, § 4; G.L. 1923, ch. 258, § 4; G.L. 1938, ch. 154, § 1; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-4 .

27-5-5. Inclusion of regulations of mutual insurer.

If the policy is issued by a mutual insurer having special regulations with respect to the payment by the policyholder of assessments, those regulations shall be printed upon the policy, and any mutual insurer may print upon the policy any regulations that may be appropriate to or required by its form of organization.

History of Section. G.L. 1938, ch. 154, § 1; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-5 .

27-5-6. Binders and temporary insurance.

Binders or other contracts for temporary insurance may be made, orally or in writing, for a period which shall not exceed thirty (30) days, and shall be deemed to include all of the terms of the standard fire insurance policy and all applicable endorsements, approved by the director of business regulation, as may be designated in the contract of temporary insurance; except that the cancellation clause of the standard fire insurance policy, and the clause specifying the hour of the day at which the insurance shall commence, may be superseded by the express terms of the contract of temporary insurance; provided, that all banks and lending institutions doing business in this state, whether acting under state or federal authority, which include, but are not limited to: (1) a bank, savings bank, or trust company, as defined in this title, its affiliates or subsidiaries, (2) a bank holding company as defined in 12 U.S.C. § 1841, its affiliates or subsidiaries, (3) mortgage companies, and (4), any other individual, corporation, partnership, or association authorized to take deposits and/or to make loans of money under the provisions of title 19, shall be required to accept an insurance binder as evidence of insurance from any duly licensed insurance producer or insurance company; provided, that the binders are in writing and in a form acceptable to the mortgagee and indicating that the mortgagee will be listed as a loss payee on the binder or temporary contract and that the mortgagee will be notified by registered or certified mail in the event the binder or temporary insurance is cancelled. If a binder is utilized, a policy shall, at the request of the mortgagee, be produced within thirty (30) days after the real estate closing has been consummated. Any subsequent holder of the mortgage, as a result of the sale, transfer, conveyance, or assignment of the mortgage, shall have its interest automatically protected and covered in accordance with the notice requirements in § 27-5-3.2 .

History of Section. G.L. 1938, ch. 154, § 1; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-6 ; P.L. 1985, ch. 295, § 1; P.L. 1989, ch. 340, § 1.

27-5-6.1. Notice concerning single interest hazard insurance.

No bank or lending institution doing business in this state, whether acting under state or federal authority, which includes, but is not limited to: (1) a bank, savings bank, or trust company, as defined in title 19, its affiliates or subsidiaries, (2) a bank holding company, as defined in 12 U.S.C. § 1841, its affiliates or subsidiaries, (3) mortgage companies and mortgage services, and (4) any other individual, corporation, partnership, or association authorized to take deposits and/or to make loans of money under the provisions of title 19, shall, in connection with a loan secured by residential property situated in the state of Rhode Island of four (4) or fewer units and occupied or to be occupied in whole or in part by the mortgagor, obtain a single interest hazard insurance policy for the property and impose the cost on the mortgagor unless the bank or lending institution shall give the mortgagor written notice of its intent to obtain that coverage and ten (10) days shall have elapsed after the date on which notice is given; provided, that nothing in this section shall require the giving of notice or preclude the bank or lending institution from obtaining that coverage and imposing the cost on the mortgagor where the bank or lending institution has received notice of the nonrenewal or cancellation of the hazard insurance on the property.

History of Section. P.L. 1987, ch. 167, § 1.

27-5-6.2. Escrow accounts for insurance premiums.

All banks and lending institutions doing business in this state, whether acting under state or federal authority, which include, but are not limited to: (1) a bank, savings bank, or trust company, as defined in title 19, its affiliates or subsidiaries, (2) a bank holding company, as defined in 12 U.S.C. § 1841, its affiliates or subsidiaries, (3) mortgage companies and mortgage services, and (4) any other individual, corporation, partnership, or association authorized to take deposits and/or to makes loans of money under the provisions of title 19, that in connection with a loan secured by residential property situated in the state of Rhode Island of four (4) or fewer units and occupied or to be occupied in whole or in part by the mortgagor, require the mortgagor to escrow for hazard insurance premiums, shall pay the annual premium to the insurance company on or before the last to occur of the following dates: (A) ten (10) days after receipt of the annual insurance premium bill, approved in writing by the mortgagor if required by the bank or lending institution provided the bank or lending institution has notified the mortgagor in writing that the mortgagor’s approval is required, or (B) seven (7) days before the effective date of the hazard insurance policy; provided, that no payment shall be required unless the mortgagor has sufficient funds escrowed for payment of the annual premium.

History of Section. P.L. 1987, ch. 167, § 1.

27-5-7. Combination standard form.

Two (2) or more insurers authorized to do the business of fire insurance in this state may, with the approval of the director of business regulation, issue a combination standard form of fire insurance policy which shall contain the following provisions:

1. A provision substantially to the effect that the insurers executing the policy shall be severally liable for the full amount of any loss or damage, according to the terms of the policy, or for specified percentages or amounts of loss or damage, aggregating the full amount of the insurance under the policy; and
2. A provision substantially to the effect that service of process, or of any notice or proof of loss required by the policy, upon any of the insurers executing the policy, shall be deemed to be service upon all of the insurers.

History of Section. G.L. 1923, ch. 258, § 4; P.L. 1929, ch. 1359, § 1; G.L. 1938, ch. 154, § 1; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-7 .

27-5-8. Supplemental contract forms.

Appropriate forms of supplemental contracts or extended coverage endorsements where the interest in the property described in a fire insurance policy shall be insured against one or more of the perils which the insurer is empowered to assume, in addition to the peril covered by the standard fire insurance policy, may be approved by the director of business regulation, and their use in connection with a standard fire insurance policy may be authorized by him or her. The first page of the policy may, in a form approved by the director of business regulation, be rearranged to provide space for the listing of amounts of insurance, rates, and premiums for the basic coverages insured under the standard form of policy, and for additional coverages or perils insured under endorsements attached, and any other data that may be conveniently included for duplication on daily reports for office records.

History of Section. G.L. 1923, ch. 258, § 4; P.L. 1934, ch. 2112, § 1; G.L. 1938, ch. 154, § 1; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-8 .

27-5-9. Standard form not required for reinsurance.

The standard fire insurance policy provided for in this chapter need not be used for effecting reinsurance between insurers.

History of Section. G.L. 1938, ch. 154, § 1; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-9 .

27-5-9.1. Simplified comprehensive policies of insurance.

Simplified policies of insurance providing broad coverage of all or various combinations of risks may be approved by the director of business regulation and issued by insurers notwithstanding those provisions of any other law which specify the contents of insurance policies; provided, that those policies contain provisions assuring to policyholders and claimants protection not less favorable than they would be entitled to under § 27-5-3 or a substantially similar policy which is not subject to this section.

History of Section. P.L. 1979, ch. 48, § 2.

27-5-10. Penalty for nonconforming policy — Validity.

Any insurance company or insurance producer who shall make, issue, or deliver a policy of fire insurance in willful violation of §§ 27-5-1 — 27-5-9 , or any part of those sections, shall forfeit for each offense not less than fifty dollars ($50.00) nor more than two hundred dollars ($200); but the policy shall be binding upon the company issuing it.

History of Section. G.L. 1896, ch. 183, § 6; G.L. 1909, ch. 222, § 6; G.L. 1923, ch. 258, § 6; G.L. 1938, ch. 154, § 3; G.L. 1938, ch. 154, § 2; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-10 .

27-5-11. Enforcement of standard policy requirements.

The director of business regulation shall enforce the provisions of §§ 27-5-1 — 27-5-1 0.

History of Section. P.L. 1935, ch. 2250, § 73; G.L. 1938, ch. 154, § 4; G.L. 1938, ch. 154, § 3; P.L. 1945, ch. 1623, § 1; G.L. 1956, § 27-5-11 .

27-5-12. Declination of premium notes by mutual companies — Provision as to liability.

Every mutual fire insurance company organized under the laws of this state may decline to take premium notes in partial payment for insurance; provided, there is inserted in the body of the policy issued a provision making the assured, his or her or their executors, administrators, or assigns, liable for any assessments provided in the policy, and as shall become necessary in order to pay all losses and expenses not exceeding twenty (20) times the amount of the cash premium paid.

History of Section. G.L. 1896, ch. 181, § 16; G.L. 1909, ch. 219, § 16; G.L. 1923, ch. 255, § 16; G.L. 1938, ch. 150, § 15; P.L. 1944, ch. 1524, § 1; P.L. 1953, ch. 3174, § 2; G.L. 1956, § 27-5-12 .

27-5-13. Mutual membership not acquired by reinsurance.

Any mutual company of this or any other state ceding reinsurance to a similar company shall not, unless the contract of reinsurance provides, become a member of the company accepting the reinsurance, or be entitled to any dividend or expiration return of premium or of unabsorbed premium deposit, or be subject to liability to assessment.

History of Section. G.L. 1938, ch. 150, § 15; P.L. 1944, ch. 1524, § 1; P.L. 1953, ch. 3174, § 2; G.L. 1956, § 27-5-13 .

27-5-14. Reinsurance by mutual insurers — Agreements with policyholders.

1. Whenever any mutual company of this or any other state shall reinsure in a similar company the whole or any portion of a risk covered by its policy or policies of insurance, it may do so either:
   1. By existing methods of reinsurance; or
   2. By agreement with its policyholder or policyholders attached to and made a part of its policy or policies.
2. This agreement shall contain a schedule giving:
   1. The name and location of each reinsuring company; and
   2. The portion of the risk reinsured in each company.
3. This agreement shall also provide that the dividend or return of the premium or premium deposit to be paid or credited upon termination of the policy or policies shall be the sum of:
   1. The dividend or return of the premium or premium deposit to be paid or credited upon that portion of the premium or premium deposit retained by the company issuing the policy or policies; and
   2. The aggregate amount of the dividends or returns of the premium or premium deposit paid or credited upon all portions of the premium or premium deposit ceded to all the reinsuring companies.

History of Section. G.L. 1938, ch. 150, § 15; P.L. 1953, ch. 3174, § 2; G.L. 1956, § 27-5-14 .

27-5-15. Power to create guaranty surplus and special reserve funds.

Any insurance company organized under the laws of this state authorized to transact a fire insurance business may create the funds provided for in §§ 27-5-16 — 27-5-31 , to be known and designated as the guaranty surplus fund and the special reserve fund, and may avail itself of the provisions of this section and §§ 27-5-16 — 27-5-31 , upon complying with the requirements of those sections.

History of Section. P.L. 1907, ch. 1438, § 1; G.L. 1909, ch. 219, § 26; G.L. 1923, ch. 255, § 26; G.L. 1938, ch. 150, § 25; G.L. 1956, § 27-5-15 ; P.L. 2002, ch. 292, § 22.

27-5-16. Resolution to establish surplus and reserve funds — Certification of funds.

Any state fire insurance company desiring to create guaranty surplus and special reserve funds may do so upon the adoption of a resolution by its board of directors, at a regular meeting of its board of directors, to that effect, and filing with the insurance commissioner a copy declaring the intention of the company to create those funds and to do business under the provisions of this chapter. As soon after the filing of a copy of the resolution as is convenient, the insurance commissioner shall make, or cause to be made, an examination of the company, and the commissioner shall make a certificate of the result which shall particularly set forth the amount of surplus funds held by the company at the date of the examination, the whole or any part of which under the provisions of this chapter may be equally divided between and set apart to constitute guaranty surplus and special reserve funds, which certificate shall be recorded in the office of the insurance commissioner.

History of Section. P.L. 1907, ch. 1438, § 2; G.L. 1909, ch. 219, § 27; G.L. 1923, ch. 255, § 27; G.L. 1938, ch. 150, § 27; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-16 .

27-5-17. Restrictions on dividends — Payments into surplus and reserve funds.

After the date of filing the resolution referred to in § 27-5-16 with the insurance commissioner, the company shall not make or declare or pay in any form any dividend upon its capital stock exceeding eight percent (8%) per annum and six percent (6%) per annum upon the surplus funds to be formed under this chapter until after its guaranty surplus fund and its special reserve fund shall have together accumulated to an amount equal to its capital stock. Any part of the surplus profits of the company above its annual dividend may be equally divided between and set apart to constitute the guaranty surplus fund and the special reserve fund, which funds shall be held and used as provided in this chapter and not otherwise. Any company doing business under this chapter that shall declare or pay any dividend contrary to the provisions contained in this section shall forfeit its charter and be liable to be proceeded against by the attorney general for its dissolution.

History of Section. P.L. 1907, ch. 1438, § 3; G.L. 1909, ch. 219, § 28; G.L. 1923, ch. 255, § 28; G.L. 1938, ch. 150, § 27; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-17 .

27-5-18. Computation of profits.

1. In estimating the profit of any company for the purpose of making a division between its guaranty surplus fund and its special reserve fund, until those funds shall together amount to a sum equal to the capital stock of the company, there shall be deducted from the gross assets of the company, including for this purpose the amount of the special reserve fund, the sum of the following items:
   1. The amount of all outstanding claims;
   2. An amount sufficient to meet the liability of the company for the unearned premiums upon its unexpired policies, which amount shall at least equal one half (1/2) of the premiums received on policies having less than one year to run from the date of the policy, and a pro rata proportion of the premiums received on the policies having more than one year to run from the date of the policy, and shall be known as the reinsurance liability;
   3. The amount of its guaranty surplus fund and of its special reserve fund;
   4. The amount of the capital of the company; and
   5. Interest at the rate of eight percent (8%) per annum upon the amount of the capital and six percent (6%) per annum upon the amount of the funds for whatever time shall have elapsed since the last preceding cash dividend.
2. The balance shall constitute the net surplus of the company, any portion of which is subject to an equal division between the funds as provided in this section.

History of Section. P.L. 1907, ch. 1438, § 7; G.L. 1909, ch. 219, § 32; G.L. 1923, ch. 255, § 32; G.L. 1938, ch. 150, § 31; P.L. 1939, ch. 659, § 2; G.L. 1956, § 27-5-18 .

27-5-19. Certification that funds equal capital stock — Subsequent additions.

Whenever any company notifies the insurance commissioner that it has fulfilled the requirements already expressed in this chapter, and that its guaranty surplus fund and its special reserve fund taken together equal its capital stock, the commissioner shall make an examination of the company and make a certificate of the result and file the certificate in his or her office. If the commissioner finds that the combined funds equal the capital stock of the company, after this the company may continue, out of any subsequent profits of its business, to add to those funds; provided, that whenever any addition is made to the special reserve fund, an equal sum shall be carried to the guaranty surplus fund.

History of Section. P.L. 1907, ch. 1438, § 4; G.L. 1909, ch. 219, § 29; G.L. 1923, ch. 255, § 29; G.L. 1938, ch. 150, § 28; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-19 .

27-5-20. Investment of guaranty surplus fund — Liability to payment of losses.

The guaranty surplus fund shall be held and be invested by a state fire insurance company in the same manner as its capital stock and surplus accumulation may be held and be invested, and shall be liable and applicable in the same manner as the capital stock is to the payment generally of the losses of the company.

History of Section. P.L. 1907, ch. 1438, § 5; G.L. 1909, ch. 219, § 30; G.L. 1923, ch. 255, § 30; G.L. 1938, ch. 150, § 29; G.L. 1956, § 27-5-20 .

27-5-21. Deposit of special reserve fund.

The special reserve fund shall be invested according to existing laws relating to investments of capital by fire insurance companies, and shall be deposited as the fund shall accumulate and be invested, with the insurance commissioner of the state, who shall permit the company depositing the fund to change deposits by substituting for those withdrawn others of equal amount and value, and to collect and receive the interest or dividends upon those securities as the interest or dividends may accrue. The fund shall not be regarded as any part of the assets in possession of the company, so as to be or render the company liable for any claim for loss by fire or except as provided in this chapter.

History of Section. P.L. 1907, ch. 1438, § 6; G.L. 1909, ch. 219, § 31; G.L. 1923, ch. 255, § 31; G.L. 1938, ch. 150, § 30; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-21 .

27-5-22. Application of special reserve fund to protection of policyholders.

Whenever the claims upon a fire insurance company shall exceed the amount of its capital stock and of the guaranty surplus fund provided for by this chapter, the company shall notify the insurance commissioner of the fact, who shall then make or cause to be made an examination of the company, and shall issue his or her certificate of the result, showing the amounts of capital, of guaranty surplus fund, of special reserve fund, of reinsurance liability, and of other assets. Upon the issuing of that certificate in duplicate, one copy to be given to the company and one to be recorded in the office of the insurance commissioner, the special reserve fund shall be immediately held to protect all policyholders of the company other than those that are claimants upon it at the date of the certificate, and the special reserve fund together with other assets, certified by the insurance commissioner as equal in value to the amount of the unearned premiums of the company, to be ascertained as provided in this chapter, shall constitute the capital and assets of the company for the protection of policyholders other than the claimants and for the further conduct of its business, and any official certificate of the insurance commissioner shall be binding and conclusive upon all parties interested in the company, whether as stockholders, creditors, or policyholders. Upon the payment to the claimants, who are claimants at the date of the certificate, of the full sum of the capital of the company and of its guaranty surplus fund and of its assets at that date, excepting only the special reserve fund and an amount of its assets equal to the liability of the company for unearned premiums, as certified in this manner by the insurance commissioner, the company shall be forever discharged from any and all further liability to the claimants and to each of them, and the insurance commissioner shall, after issuing his or her certificate, upon the demand of the company, transfer to it all securities that have been deposited with the commissioner by the company as the special reserve fund, and if the amount of the special reserve fund is less than fifty percent (50%) of the full amount of the capital of the company, a requisition shall be issued by the insurance commissioner upon the stockholders to make up the capital to that proportion of its full amount; provided, that any capital impaired in this manner shall be made up at least to the sum of two hundred thousand dollars ($200,000), and in case the company, after the requisition, shall fail to make up its capital at least to the sum of two hundred thousand dollars ($200,000), the special reserve fund shall still be held as security and liable for any and all losses occurring upon policies of the company.

History of Section. P.L. 1907, ch. 1438, § 8; G.L. 1909, ch. 219, § 33; G.L. 1923, ch. 255, § 33; G.L. 1938, ch. 150, § 32; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-22 .

27-5-23. Annual statement of amounts of funds.

A fire insurance company shall, in its annual statement to the insurance commissioner, set forth the amount of its special reserve fund and of its guaranty surplus fund.

History of Section. P.L. 1907, ch. 1438, § 8; G.L. 1909, ch. 219, § 33; G.L. 1923, ch. 255, § 33; G.L. 1938, ch. 150, § 32; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-23 .

27-5-24. Maintenance of surplus fund equal to reserve fund.

If, in consequence of the payment of losses by fires, or of the expenses of the business, or of the interest or dividends payable under the provisions of this chapter to stockholders, or from any cause, the guaranty surplus fund shall be reduced in amount below the amount of the special reserve fund, the directors of the corporation shall make no additions to the special reserve fund until the guaranty surplus fund is equal to the special reserve fund.

History of Section. P.L. 1907, ch. 1438, § 8; G.L. 1909, ch. 219, § 33; G.L. 1923, ch. 255, § 33; G.L. 1938, ch. 150, § 32; G.L. 1956, § 27-5-24 .

27-5-25. Use of special reserve fund to replace capital stock.

If any amount greater than a sum equal to one half (1/2) of its capital stock shall have been deposited with the commissioner by a fire insurance company under the provisions of this chapter, the commissioner shall retain of those securities an amount equal to one half (1/2) of what amount he or she shall hold in excess of a sum equal to one half (1/2) of the capital stock, and the commissioner shall transfer the balance to the company, and the amount transferred to the company shall from the time of the transfer, provided the amount shall not be less than two hundred thousand dollars ($200,000), constitute the capital stock of the company for the further conduct of its business, and the retained securities shall be regarded as the special reserve fund of the company, to which additions may be made, and shall be held in the same manner, and for the same purpose, and under the same conditions as the original special reserve fund of the company was held.

History of Section. P.L. 1907, ch. 1438, § 8; G.L. 1909, ch. 219, § 33; G.L. 1923, ch. 255, § 33; G.L. 1938, ch. 150, § 32; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-25 .

27-5-26. Physical assets for protection of policyholders.

The policy registers, insurance maps, books of record, and other books in use by a fire insurance company in its business, and its policy and other blanks, office furniture, fixtures, and supplies, are not to be considered as assets, but shall be held by the company for its use in the protection of its policyholders.

History of Section. P.L. 1907, ch. 1438, § 8; G.L. 1909, ch. 219, § 33; G.L. 1923, ch. 255, § 33; G.L. 1938, ch. 150, § 32; G.L. 1956, § 27-5-26 .

27-5-27. Making up of impairments of capital.

If, at any time after a special reserve fund has been accumulated by any company, the directors of the company shall present evidence satisfactory to the insurance commissioner that the capital of the company has become impaired, the commissioner shall order the directors to call upon the stockholders to make up that impairment, and the board of directors may then require the necessary payment by the stockholders to make good the whole of that impairment, or they may apply for that purpose the whole or any part of the special reserve fund and require of the stockholders payment of any amount as may be necessary to make up the balance of that impairment not made up out of the special reserve fund. The stock of every stockholder shall be pledged and liable for the amount assessed upon the stockholder to make up that impairment either in whole or in part, and in case any stockholder refuses to pay that assessment the stock standing in his or her name may be sold at public auction after thirty (30) days’ notice in any manner as the directors may provide. If the board of directors elects to make good that impairment or any part of the impairment out of the special reserve fund, the insurance commissioner shall, upon request of the board, transfer to the company so much of the special reserve fund as is necessary for the purpose.

History of Section. P.L. 1907, ch. 1438, § 9; G.L. 1909, ch. 219, § 34; P.L. 1919, ch. 1783, § 1; G.L. 1923, ch. 255, § 34; G.L. 1938, ch. 150, § 33; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-27 .

27-5-28. Maximum single risk insured.

No company doing business under §§ 27-5-15 — 27-5-31 shall insure any larger amount upon any single risk than is permitted by law to a company possessing the same amount of capital irrespective of the fund provided for in this chapter.

History of Section. P.L. 1907, ch. 1438, § 9; G.L. 1909, ch. 219, § 34; P.L. 1919, ch. 1783, § 1; G.L. 1923, ch. 255, § 34; G.L. 1938, ch. 150, § 33; G.L. 1956, § 27-5-28 .

27-5-29. Statement on policy as to surplus and reserve funds.

Every policy issued by a company which has constituted and set apart a guaranty surplus and special reserve fund under §§ 27-5-15 — 27-5-31 , or any prior law of this state, shall have printed on the policy by the company a statement that the policy is issued under and in pursuance of the laws of the state of Rhode Island relating to guaranty surplus and special reserve funds, and every policy shall be deemed to have been issued and received subject to the provisions of this chapter.

History of Section. P.L. 1907, ch. 1438, § 10; G.L. 1909, ch. 219, § 35; G.L. 1923, ch. 255, § 35; G.L. 1938, ch. 150, § 34; G.L. 1956, § 27-5-29 .

27-5-30. Funds established under prior law.

The action of any company organized under the laws of this state authorized to do a fire insurance business in constituting and setting apart guaranty surplus and special reserve funds under the provisions of §§ 26 to 33 of chapter 181 of the General Laws of 1896, or of chapter 307 of the Public Laws of 1896, or under any prior act of the general assembly, is hereby confirmed and approved and those companies may continue to hold and maintain the funds so constituted and set apart, subject to the terms and provisions of §§ 27-5-15 — 27-5-31 ; and provided, that as to all policies issued prior to July 1, 1907, and which by their terms are made subject to §§ 26 to 33 of chapter 181 of the General Laws of 1896 and chapter 307 of the Public Laws of 1896, those sections and acts shall remain in full force and effect.

History of Section. P.L. 1907, ch. 1438, § 11; G.L. 1909, ch. 219, § 36; G.L. 1923, ch. 255, § 36; G.L. 1938, ch. 150, § 35; G.L. 1956, § 27-5-30 .

27-5-31. Termination of surplus and reserve fund method — Return of special reserve fund.

Any company which has established a guaranty surplus fund and special reserve fund may, at a regular meeting of its board of directors, or at a special meeting called for that purpose, adopt a resolution declaring its desire and intention to discontinue those funds and to cease to do business under and in pursuance of the provisions of law relating to those funds, and file a certified copy of that resolution with the insurance commissioner. Upon the adoption and filing of that resolution, all rights of the company to withhold a special reserve fund from its general creditors shall be terminated and the company shall discontinue printing upon its policies or renewals the notice provided for in § 27-5-29 , and after this the provisions of this chapter so far as they relate to those funds shall cease to apply to the company; provided, that the special reserve fund of the company shall continue at the amount prescribed by the provisions of this chapter at the date of the making and filing of the resolution and the guaranty surplus fund may continue at a like amount, but those funds need not be increased on account of any increase in capital of the company or otherwise after the adoption and filing of the resolution and shall be held and invested as provided in §§ 27-5-15 — 27-5-31 , but only for the purpose of assuring to the holders of policies at the time the resolution is filed with the insurance commissioner any rights and privileges as may inure to them under §§ 27-5-15 — 27-5-31 . At the expiration of five (5) years after the adoption and filing of the resolution by the company, the special reserve fund shall be reduced to an amount equal to the unearned premium upon and all losses incurred and unpaid under any remaining policies which were outstanding at the time of the adoption and filing of the resolution. The excess of the special reserve fund above that amount shall be returned by the insurance commissioner to the company, and when all policies which were outstanding at the time of the adoption and filing of the resolution shall have terminated by expiration or by cancellation, the entire balance of the special reserve fund shall be returned to the company.

History of Section. G.L. 1909, cn. 219, § 34; P.L. 1919, ch. 1783, § 1; G.L. 1923, ch. 255, § 34; G.L. 1938, ch. 150, § 33; impl. am. P.L. 1953, ch. 3174, § 5; G.L. 1956, § 27-5-31 .

27-6-1. Purpose.

The purpose of this chapter is to promote the public welfare by regulating insurance rates to the end that they shall not be excessive, inadequate, or unfairly discriminatory, and to authorize and regulate cooperative action among insurers in rate making and in other matters within the scope of this chapter. Nothing in this chapter is intended to prohibit or discourage reasonable competition, or to prohibit or encourage, except to the extent necessary to accomplish the purpose of this section, uniformity in insurance rates, rating systems, or rating plans or practices. This chapter shall be liberally interpreted to carry into effect the provisions of this section.

History of Section. P.L. 1948, ch. 2088, § 1; G.L. 1956, § 27-6-1 .

27-6-2. Applicability.

1. This chapter applies to fire, marine, and inland marine insurance on risks located in this state. Inland marine insurance shall include insurance now or defined by statute, or by interpretation of a statute, or if not defined or interpreted by statute, by ruling of the insurance commissioner, referred to throughout this chapter as “commissioner”, or as established by general custom of the business, as inland marine insurance.
2. This chapter shall not apply:
   1. To reinsurance, other than joint reinsurance to the extent stated in §§ 27-6-37 and 27-6-38 ;
   2. To insurance of vessels or craft, their cargoes, marine builders’ risks, marine protection and indemnity, or other risks commonly insured under marine, as distinguished from inland marine, insurance policies;
   3. To insurance of hulls of aircraft, including their accessories and equipment, or against liability arising out of the ownership, maintenance, or use of aircraft; or
   4. To motor vehicle insurance, or to insurance against liability arising out of the ownership, maintenance, or use of motor vehicles.

History of Section. P.L. 1948, ch. 2088, § 2; G.L. 1956, § 27-6-2 .

27-6-3. Insurers to which chapter applicable — Election between applicable laws.

This chapter applies to all insurers that, under any provision of the laws of this state, write any of the kinds of insurance to which this chapter applies. If any kind of insurance, or subdivision or combination of it, or type of coverage, subject to this chapter, is also subject to regulation by another rate regulatory act of this state, an insurer to which both acts are applicable shall file with the commissioner a designation as to which rate regulatory act shall be applicable to it with respect to that kind of insurance, or subdivision or combination of it, or type of coverage.

History of Section. P.L. 1948, ch. 2088, § 2; G.L. 1956, § 27-6-3 .

27-6-4. Considerations in rate making.

Rates shall be made in accordance with the following provisions:

1. Manual, minimum, or class rates, rating schedules, or rating plans shall be made and adopted, except in the case of specific inland marine rates, on risks specially rated;
2. Rates shall not be excessive, inadequate, or unfairly discriminatory; and
3. Due consideration shall be given to past and prospective loss experience within and outside of this state, to the conflagration and catastrophe hazards, to a reasonable margin for underwriting profit and contingencies, to dividends savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers, to past and prospective expenses both country-wide and those specially applicable to this state, and to all other relevant factors within and outside of this state. In the case of fire insurance rates consideration shall be given to the experience of the fire insurance business during a period of not less than the most recent five (5) year period for which that experience is available.

History of Section. P.L. 1948, ch. 2088, § 3; G.L. 1956, § 27-6-4 .

27-6-5. Uniformity of rates.

Except to the extent necessary to meet the provisions of § 27-6-4 (2), uniformity among insurers in any matters within the scope of § 27-6-4 is neither required or prohibited.

History of Section. P.L. 1948, ch. 2088, § 3; G.L. 1956, § 27-6-5 .

27-6-6. Contracts as to commissions or compensation.

Nothing in this chapter shall abridge or restrict the freedom of contract between insurers and insurance producers with respect to commissions or between insurers and their employees or other persons with respect to compensation for goods or services.

History of Section. P.L. 1948, ch. 2088, § 3; G.L. 1956, § 27-6-6 .

27-6-6.1. Approval of policies.

1. Every insurance company and every rating/advisory organization issuing policies covering fire and marine insurance provided for in this chapter shall file with the director a copy of the form of the policies proposing to use. A policy may not be issued until the director has approved the form.
2. Any policy form, subject to this chapter and filed by an insurer or rating/advisory organization on behalf of its members or subscribers with the director, shall be deemed public information at the time of filing.

History of Section. P.L. 2002, ch. 175, § 1.

27-6-7. Use of rates.

Rates made in accordance with §§ 27-6-4 — 27-6-6 may be used subject to the provisions of this chapter.

History of Section. P.L. 1948, ch. 2088, § 3; G.L. 1956, § 27-6-7 .

27-6-8. Filing of rate schedules and plans.

1. Every insurer shall file with the commissioner, except as to inland marine risks which by general custom of the business are not written according to manual rates or rating plans, every manual, minimum, or class rate, rating schedule or rating plan, and every other rating rule, and every modification of any of these which it proposes to use; provided, that rates other than class rates determined by the application of any rating schedule or rating plan may be modified without additional filing to produce rates for individual risks which are lower than those filed and which evaluate variations in physical or moral hazards, individual risk experience, or expense provisions and which are not inadequate or unfairly discriminatory. Every filing shall state the proposed effective date, and shall indicate the character and extent of the coverage contemplated.
2. When a filing is not accompanied by the information upon which the insurer supports that filing, and the commissioner does not have sufficient information to determine whether that filing meets the requirements of the chapter, the commissioner shall require the insurer to furnish the information upon which it supports that filing. The information furnished in support of a filing may include: (1) the experience or judgment of the insurer or rating organization making the filing, (2) its interpretation of any statistical data it relies upon, (3) the experience of other insurers or rating organizations, or (4) any other relevant factors. A filing and any supporting information shall be open to public inspection. Specific inland marine rates on risks specially rated, made by a rating organization, shall be filed with the commissioner.

History of Section. P.L. 1948, ch. 2088, § 4; G.L. 1956, § 27-6-8 ; P.L. 1968, ch. 286, § 1.

27-6-8.1. Rating for nonbusiness policies.

1. Notwithstanding the requirements of § 27-6-8 , a filing made by an insurer under this section that provides for an overall statewide rate increase or decrease of no more than five percent (5%) in the aggregate for all coverages that are subject to the filing may take effect the date it is filed. The five percent (5%) limitation does not apply on an individual insured basis. No more than one rate filing may be made by an insurer pursuant to the expedited process provided in this subsection during any twelve (12) month period, unless a rate filing, when combined with any other rate filing or filings made by an insurer within the preceding twelve (12) months, does not result in an overall statewide increase or decrease of more than five percent (5%) in the aggregate for all coverages that are subject to the filing.
2. Rate filings falling outside of the limitation provided for in subsection (a) of this section shall be subject to § 27-6-11 , unless those filings are other exempt from those provisions pursuant to another section of the insurance code.
3. A filing submitted pursuant to subsection (a) of this section is considered to comply with state law. However, if the commissioner of insurance determines that the filing is inadequate or unfairly discriminatory, he/she shall issue a written order specifying in detail the provisions of the insurance code the insurer has violated and the reasons the filing is inadequate or unfairly discriminatory and stating a reasonable future date on which the filing is to be considered no longer effective. An order by the commissioner pursuant to this subsection that is issued more than thirty (30) days from the date on which the commissioner received the rate filing is prospective only and does not affect any contract issued or made before the effective date of the order. For purposes of this act, “unfairly discriminatory” means a rate for a risk that is classified in whole or in part on the basis of race, color, creed or national origin.
4. No rate increase within the limitation specified in subsection (a) of this section may be implemented with regard to an individual existing policy, unless the increase is applied at the time of a renewal or conditional renewal of an existing policy and the insurer, at least thirty (30) days in advance of the end of the insured’s policy period, mails or delivers to the named insured, at the address shown in the policy, a written notice that clearly and conspicuously discloses its intention to change the rate. A notice of renewal or conditional renewal that clearly and conspicuously discloses the renewal premium applicable to the policy shall be deemed to be in compliance with this subsection.

History of Section. P.L. 2004, ch. 481, § 2.

27-6-8.2. Premium reduction for fire code safety prevention.

Every schedule of rates, rating plan, or rating system for commercial property insurance filed with the commissioner shall provide for a reduction of, or credit in premium for insureds that install and maintain fire prevention and suppression equipment and/or other equipment that has been demonstrated to minimize or lessens an insured loss from fire including, but not limited to, sprinkler system, alarms, and any other equipment required or recommended by the state of Rhode Island for fire safety and/or prevention. Insurers shall also provide for a reduction of, or credit in premium for the use of building materials and/or building techniques that have been demonstrated to minimize or lessen an insured loss from fire. Any reduction of, or credit in premium required by this section must be actuarially supported and information sufficient to document such support must be included in the filing to the department.

History of Section. P.L. 2008, ch. 391, § 1.

27-6-9. Filings by rating organizations.

An insurer may satisfy its obligation to make the filings referred to in § 27-6-8 by becoming a member of, or subscriber to, a licensed rating organization which makes those filings, and by authorizing the commissioner to accept those filings on its behalf; provided, that nothing contained in this chapter shall be construed as requiring any insurer to become a member of or a subscriber to any rating organization.

History of Section. P.L. 1948, ch. 2088, § 4; G.L. 1956, § 27-6-9 .

27-6-10. Review of filings.

The commissioner shall review filings as soon as reasonably possible after they have been made in order to determine whether they meet the requirements of this chapter.

History of Section. P.L. 1948, ch. 2088, § 4; G.L. 1956, § 27-6-10 .

27-6-11. Waiting period — Effective date of filings.

Subject to the exception specified in § 27-6-10 , each filing shall be on file for a waiting period of thirty (30) days before it becomes effective, which period may be extended by the commissioner for an additional period not to exceed thirty (30) days if the commissioner gives written notice within that waiting period to the insurer or rating organization which made the filing that he or she needs that additional time for the consideration of the filing. Upon written application by the insurer or rating organization, the commissioner may authorize a filing that he or she has reviewed to become effective before the expiration of the waiting period or any extension. A filing shall be deemed to meet the requirements of this chapter and to become effective unless disapproved by the commissioner within the waiting period or any extension; provided, that if the commissioner gives written notice to the insurer or rating organization within the waiting period or any extension that he or she will hold a hearing on the filing, the filing shall not become effective before or until the commissioner issues his or her decision. Upon giving that notice the commissioner shall also give public notice of the hearing by causing a notice to be published in a newspaper of general circulation in the state at least ten (10) days prior to the hearing stating the name of the insurer or rating organization which has made the filing and including a general description of the subject matter and sending a copy of that notice to the consumer protection unit of the department of attorney general. The commissioner shall hold a hearing on major filings. The hearing shall be held and a decision issued by the commissioner as soon as reasonably possible.

History of Section. P.L. 1948, ch. 2088, § 4; G.L. 1956, § 27-6-11 ; P.L. 1968, ch. 286, § 2; P.L. 1971, ch. 191.

27-6-11.1. Costs.

For the purpose of determining whether the filing meets the requirements of this chapter, the director may employ staff personnel and outside consultants, including, but not limited to, those authorized pursuant to § 27-9-52 . The reasonable costs related to the review of rate filings, including the conduct of the hearing, shall be borne by the rating organizations or insurers making the filing.

History of Section. P.L. 2005, ch. 174, § 1.

27-6-12. Effective date of inland marine rates.

Specific inland marine rates on risks specially rated by a rating organization shall become effective when filed and shall be deemed to meet the requirements of this chapter until such time as the commissioner reviews the filing and so long after this as the filing remains in effect.

History of Section. P.L. 1948, ch. 2088, § 4; G.L. 1956, § 27-6-12 .

27-6-13. Suspension or modification of requirements — Examinations as to fairness.

Under the rules and regulations that he or she shall adopt, the commissioner may, by written order, suspend or modify the requirement of filing as to any kind of insurance, or subdivision or combination of it, or as to classes of risks, the rates for which cannot practicably be filed before they are used. Those orders, rules, and regulations shall be made known to insurers and rating organizations affected by them. The commissioner may make an examination as he or she may deem advisable to ascertain whether any rates affected by an order meet the standards set forth in § 27-6-4(2) .

History of Section. P.L. 1948, ch. 2088, § 4; G.L. 1956, § 27-6-13 .

27-6-14. Rates on specific risks exceeding filed rates.

Upon the written consent of the insured, stating the insured’s reasons, filed with and approved by the commissioner, a rate in excess of that provided by an applicable filing may be used on any specific risk.

History of Section. P.L. 1948, ch. 2088, § 4; G.L. 1956, § 27-6-14 .

27-6-15. Compliance with rate filings required.

No insurer shall make or issue a contract or policy at a rate or premium in excess of filings that are in effect for that insurer as provided in this chapter or in accordance with § 27-6-13 or § 27-6-14 . This section shall not apply to contracts or policies for inland marine risks as to which filings are not required.

History of Section. P.L. 1948, ch. 2088, § 4; G.L. 1956, § 27-6-15 .

27-6-16. Review of rates not provided for by filings.

Within ten (10) days after any insurer has made or issued a contract or policy at a rate or premium other than as provided for by any filing made with the commissioner by or in its behalf, the insurer shall notify the commissioner in writing of that action in any form the commissioner may require. The commissioner shall review the notice as soon as reasonably possible after it has been received, in order to determine whether the contract or policy has been written at a rate or premium that meets the requirements of this chapter. When the notice is not accompanied by the information upon which the insurer supports the rate or premium, and the commissioner does not have sufficient information to determine whether the rate or premium meets the requirements of the chapter, the commissioner shall require the insurer to furnish within ten (10) days after receipt of the notice of that requirement, the information upon which it supports the rate or premium. Unless, within thirty (30) days after receipt of the notice or supporting information, the commissioner shall issue an order following a hearing, as provided in § 27-6-19 , the rate or premium charged for the contract or policy shall be deemed to meet the requirements of this chapter; provided, that all contract and policies issued under the provisions of this section shall state that the rate or premium charged has not been reviewed by the commissioner and that it is subject to disapproval or modification as of the effective date of the contracts or policies.

History of Section. P.L. 1948, ch. 2088, § 4; G.L. 1956, § 27-6-16 .

27-6-17. Notice of disapproval within waiting period.

If, within the waiting period or any extension, as provided in § 27-6-11 , the commissioner finds that a filing does not meet the requirements of this chapter, the commissioner shall send to the insurer or rating organization which made that filing written notice of disapproval of that filing specifying in what respects he or she finds that filing fails to meet the requirements of this chapter and stating that that filing shall not become effective.

History of Section. P.L. 1948, ch. 2088, § 5; G.L. 1956, § 27-6-17 .

27-6-18. Disapproval of specific inland marine rates.

If, within thirty (30) days after a specific inland marine rate on a risk specially rated by a rating organization, subject to § 27-6-12 , has become effective, the commissioner finds that the filing does not meet the requirements of this chapter, the commissioner shall send to the rating organization which made the filing written notice of disapproval of the filing specifying in what respects he or she finds that the filing fails to meet the requirements of this chapter and stating when, within a reasonable period after this, the filing shall be deemed no longer effective. This disapproval shall not affect any contract made or issued prior to the expiration of the period set forth in the notice.

History of Section. P.L. 1948, ch. 2088, § 5; G.L. 1956, § 27-6-18 .

27-6-19. Suspension of rates or filings after review period — Removal of discriminatory applications of rates.

If, at any time subsequent to the applicable review period provided for in § 27-6-17 or 27-6-18 , the commissioner finds that a rate or filing does not meet the requirements of this chapter, the commissioner shall, after a hearing held upon not less than ten (10) days written notice, specifying the matters to be considered at the hearing, to every insurer and rating organization which used the rate or made the filing, issue an order specifying in what respects he or she finds that the rate or filing fails to meet the requirements of this chapter, and stating when, within a reasonable period after this, the rate shall no longer be used or the filing shall be deemed no longer effective. This order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in the order. If the commissioner finds that an unfair discrimination exists in the application of a rate or filing to an individual risk the commissioner may, after a hearing held on like notice to the insurer affected and to any rating organization which made the filing, issue an order that the unfair discrimination be removed. Copies of any order issued under this section shall be sent to every affected insurer and rating organization.

History of Section. P.L. 1948, ch. 2088, § 5; G.L. 1956, § 27-6-19 .

27-6-20. Hearings on application by persons aggrieved by filings — Order terminating filing — Removal of discrimination.

1. Any person or organization aggrieved with respect to any rate or filing which is in effect may make written application to the commissioner for a hearing; provided, that the insurer or rating organization that uses the rate or made the filing shall not be authorized to proceed under this section. This application shall specify the grounds to be relied upon by the applicant. If the commissioner shall find that the application is made in good faith, that the applicant would be aggrieved if his or her grounds are established, and that these grounds justify holding a hearing, the commissioner shall, within thirty (30) days after receipt of the application, hold a hearing upon not less than ten (10) days written notice to the applicant and to every insurer and rating organization which uses the rate or made the filing; provided, if a public hearing had been held concerning the rate or filing before it became effective, no hearing shall be held pursuant to this section unless the commissioner shall find that there has been a substantial change of circumstances since that hearing.
2. If, after the hearing, the commissioner finds that the rate or filing does not meet the requirements of this chapter, the commissioner shall issue an order specifying in what respects he or she finds that the rate or filing fails to meet the requirements of this chapter, and stating when, within a reasonable period after this, the rate shall no longer be used or the filing shall be deemed no longer effective. This order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in the order. If the commissioner finds that an unfair discrimination exists in the application of a rate or filing to an individual risk the commissioner may, after a hearing held on like notice to the insurer affected and to any rating organization which made the filing, issue an order that the unfair discrimination be removed. Copies of any order issued under this section shall be sent to every affected insurer and rating organization.

History of Section. P.L. 1948, ch. 2088, § 5; G.L. 1956, § 27-6-20 ; P.L. 1968, ch. 286, § 3.

27-6-21. Competitive rates as evidence of fairness — Profit as evidence of adequacy.

If the insurer making or issuing a contract or policy at a rate or premium less than that provided by any filing, at any hearing held pursuant to §§ 27-6-17 — 27-6-22 , or pursuant to § 27-6-16 , shows to the satisfaction of the commissioner that the rate or premium was used in good faith to meet an equally low or lower net cost to the insured of a competitor, that showing shall be prima facie evidence that the rate or premium used is not unfairly discriminatory, and if the insurer using the rate or premium shall show to the satisfaction of the commissioner that it is writing that kind or class of insurance at a profit, that showing shall be prima facie evidence that the rate or premium used is not inadequate.

History of Section. P.L. 1948, ch. 2088, § 5; G.L. 1956, § 27-6-21 .

27-6-22. Filed schedules and plans not to be disapproved if rates meet requirements.

No manual, minimum, or class rate, rating schedule, rating plan, rating rule, or any modification of any of these which has been filed pursuant to the requirements of §§ 27-6-8 — 27-6-16 shall be disapproved if the rates produced meet the requirements of this chapter.

History of Section. P.L. 1948, ch. 2088, § 5; G.L. 1956, § 27-6-22 .

27-6-23. Licensing of rating organizations.

1. A corporation, an unincorporated association, a partnership, or an individual, whether located within or outside this state, may make an application to the commissioner for a license as a rating organization for those kinds of insurance, or a subdivision or a class of risk or a part or combination of it as are specified in its application and shall file with the application:
   1. A copy of its constitution, its articles of agreement or association or its certificate of incorporation, and its bylaws, rules, and regulations governing the conduct of its business;
   2. A list of its members and subscribers;
   3. The name and address of a resident of this state upon whom notices or orders of the commissioner or process affecting the rating organization may be served; and
   4. A statement of its qualification as a rating organization.
2. If the commissioner finds that the applicant is competent, trustworthy, and otherwise qualified to act as a rating organization and that its constitution, its articles of agreement or association or certificate of incorporation, and its bylaws, rules, and regulations governing the conduct of its business conform to the requirements of law, the commissioner shall issue a license specifying the kinds of insurance, or a subdivision or a class or a risk or part or combination of it, for which the applicant is authorized to act as a rating organization. Every application shall be granted or denied in whole or in part by the commissioner within sixty (60) days of the date of its filing with him or her. Licenses issued pursuant to this section shall remain in effect for three (3) years unless suspended or revoked by the commissioner. The fee for the license shall be three hundred dollars ($300). All in force licenses shall be transitioned into a three (3) year licensing cycle beginning June 1, 2006, to expire every three (3) years thereafter. License fees may be prorated for the initial renewal period as deemed appropriate by the director.
3. Licenses issued pursuant to this section may be suspended or revoked by the commissioner, after hearing upon notice, in the event the rating organization ceases to meet the requirements of this section. Every rating organization shall notify the commissioner promptly of every change in:
   1. Its constitution, its articles of agreement or association or its certificate of incorporation, and its bylaws, rules, and regulations governing the conduct of its business;
   2. Its list of members and subscribers; and
   3. The name and address of the resident of this state designated by it upon whom notices or orders of the commissioner or process affecting the rating organization may be served.

History of Section. P.L. 1948, ch. 2088, § 6; G.L. 1956, § 27-6-23 ; P.L. 1960, ch. 71, art. 1, § 3; P.L. 2005, ch. 174, § 2.

27-6-24. Admission of and services to subscribers.

Subject to rules and regulations which have been approved by the commissioner as reasonable, each rating organization shall permit any insurer, not a member, to be a subscriber to its rating services for any kind of insurance, or subdivision or class of risk or a part or combination of it, for which it is authorized to act as a rating organization. Notice of proposed changes in the rules and regulations shall be given to subscribers. Each rating organization shall furnish its rating services without discrimination to its members and subscribers. The reasonableness of any rule or regulation in its application to subscribers, or the refusal of any rating organization to admit an insurer as a subscriber, shall, at the request of any subscriber or any affected insurer, be reviewed by the commissioner at a hearing held upon at least ten (10) days written notice to the rating organization and to the subscriber or insurer. If the commissioner finds that the rule or regulation is unreasonable in its application to subscribers, the commissioner shall order that the rule or regulation shall not be applicable to subscribers. If the rating organization fails to grant or reject an insurer’s application for subscribership within thirty (30) days after it was made, the insurer may request a review by the commissioner as if the application had been rejected. If the commissioner finds that the insurer has been refused admittance to the rating organization as a subscriber without justification, the commissioner shall order the rating organization to admit the insurer as a subscriber. If the commissioner finds that the action of the rating organization was justified, he or she shall make an order affirming its action.

History of Section. P.L. 1948, ch. 2088, § 6; G.L. 1956, § 27-6-24 .

27-6-25. Regulation by rating organizations of payments by insurers to policyholders or members.

No rating organization shall adopt any rule the effect of which would be to prohibit or regulate the payment of dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers.

History of Section. P.L. 1948, ch. 2088, § 6; G.L. 1956, § 27-6-25 .

27-6-26. Cooperation among rating organizations and insurers — Review of cooperative practices.

Cooperation among rating organizations or among rating organizations and insurers and concert of action among insurers under the same general management or control, in rate making or in other matters within the scope of this chapter, are authorized, provided the filings resulting are subject to all the provisions of this chapter which are applicable to filings generally. The commissioner may review those cooperative activities and practices and if, after a hearing, the commissioner finds that any activity or practice is unfair or unreasonable or inconsistent with the provisions of this chapter, he or she may issue a written order specifying in what respects that activity or practice is unfair or unreasonable or inconsistent with the provisions of this chapter and requiring the discontinuance of that activity or practice.

History of Section. P.L. 1948, ch. 2088, § 6; G.L. 1956, § 27-6-26 .

27-6-27. Examination of policies and records by rating organizations.

Any rating organization may provide for the examination of policies, daily reports, binders, renewal certificates, endorsements, or other evidences of insurance, or the cancellation of insurance, and may make reasonable rules governing their submission. Those rules shall contain a provision that in the event any insurer does not within sixty (60) days furnish satisfactory evidence to the rating organization of the correction of any error or omission previously called to its attention by the rating organization, it shall be the duty of the rating organization to notify the commissioner. All information submitted for examination shall be confidential.

History of Section. P.L. 1948, ch. 2088, § 6; G.L. 1956, § 27-6-27 .

27-6-28. Actuarial and technical services furnished by rating organizations.

Any rating organization may subscribe for or purchase actuarial, technical, or other services, and those services shall be available to all members and subscribers without discrimination.

History of Section. P.L. 1948, ch. 2088, § 6; G.L. 1956, § 27-6-28 .

27-6-29. Adherence to rating organization filings — Deviation filings.

Every member of or subscriber to a rating organization shall adhere to the filings made on its behalf by the organization; except that any insurer which is a member or subscriber may file with the commissioner a deviation from the class rates, schedules, rating plans, or rules respecting any kind of insurance or class of risk within a kind of insurance or combination of it. The deviation filing shall specify the basis for the modification and a copy shall also be sent simultaneously to the rating organization. Any deviation filing shall be on file for a waiting period of thirty (30) days before it becomes effective unless the commissioner reviews and authorizes the filing to become effective before the expiration of that period and shall be subject to the provisions of §§ 27-6-17 — 27-6-22 . Each deviation shall be effective for a period of not less than one year from the date the deviation is filed unless terminated with the approval of the commissioner or in accordance with the provisions of §§ 27-6-17 — 27-6-22 .

History of Section. P.L. 1948, ch. 2088, § 6; G.L. 1956, § 27-6-29 .

27-6-30. Appeals from action of rating organization on changes in filings.

1. Any member of or subscriber to a rating organization may appeal to the commissioner from any action or decision of the rating organization in approving or rejecting any proposed change in or addition to the filings of the rating organization, and the commissioner shall, after a hearing held upon not less than ten (10) days written notice to the appellant and to the rating organization, issue an order approving the action or decision of the rating organization or directing it to give further consideration to the proposal and to take action or make a decision upon it within thirty (30) days, or if the appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, the commissioner may, in the event he or she finds that the action or decision was unreasonable, issue an order directing the rating organization to make an addition to its filings, on behalf of its members and subscribers, in a manner consistent with his or her findings, within a reasonable time after the issuance of the order; provided, if the appeal is from the action of the rating organization with regard to a rate on a proposed change in or addition to its filings relating to the character and extent of coverage, the commissioner shall approve the rate applied by the rating organization or the rate suggested by the appellant if either rate is in accordance with this chapter.
2. The failure of a rating organization to take action or make a decision within thirty (30) days after submission to it of a proposal under this section shall constitute a rejection of that proposal within the meaning of this section.

History of Section. P.L. 1948, ch. 2088, § 7; G.L. 1956, § 27-6-30 .

27-6-31. Rate information furnished to insured.

Every rating organization and every insurer which makes its own rates shall, within a reasonable time after receiving written request for it and upon payment of any reasonable charge it may make, furnish to any insured affected by a rate made by it, or to the authorized representative of that insured, all pertinent information as to that rate.

History of Section. P.L. 1948, ch. 2088, § 8; G.L. 1956, § 27-6-31 .

27-6-32. Review of application of rating system to insured.

Every rating organization and every insurer which makes its own rates shall provide within this state reasonable means where any person aggrieved by the application of its rating system may be heard, in person or by his or her authorized representative, on his or her written request to review the manner in which the rating system has been applied in connection with the insurance afforded that person. If the rating organization or insurer fails to grant or reject that request within thirty (30) days after it is made, the applicant may proceed in the same manner as if the application had been rejected. Any party affected by the action of the rating organization or insurer on his or her request may, within thirty (30) days after written notice of the action, appeal to the commissioner, who, after a hearing held upon not less than ten (10) days written notice to the appellant and to the rating organization or insurer, may affirm or reverse the action.

History of Section. P.L. 1948, ch. 2088, § 8; G.L. 1956, § 27-6-32 .

27-6-33. “Advisory organization” defined.

Every group, association, or other organization of insurers, whether located within or outside of this state, which assists insurers which make their own filings or rating organizations in rate making, by the collection and furnishing of loss or expense statistics, or by the submission of recommendations, but which does not make filings under this chapter, shall be known as an “advisory organization.”

History of Section. P.L. 1948, ch. 2088, § 9; G.L. 1956, § 27-6-33 .

27-6-34. Documents filed by advisory organizations.

Every advisory organization shall file with the commissioner:

1. A copy of its constitution, its articles of agreement or association or its certificate of incorporation, and its bylaws, rules, and regulations governing its activities;
2. A list of its members;
3. The name and address of a resident of this state upon whom notices or orders of the commissioner or process issued at the commissioner’s direction may be served; and
4. An agreement that the commissioner may examine that advisory organization in accordance with the provisions of §§ 27-6-39 and 27-6-40 .

History of Section. P.L. 1948, ch. 2088, § 9; G.L. 1956, § 27-6-34 .

27-6-35. Unlawful practices of advisory organizations.

If, after a hearing, the commissioner finds that the furnishing of any information or assistance by a rating organization involves any act or practice which is unfair or unreasonable or inconsistent with the provisions of this chapter, the commissioner may issue a written order specifying in what respects that act or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter, and requiring the discontinuance of that act or practice.

History of Section. P.L. 1948, ch. 2088, § 9; G.L. 1956, § 27-6-36 .

27-6-36. Use of information from noncomplying advisory organization.

No insurer which makes its own filings or any rating organization shall support its filings by statistics, or adopt rate making recommendations, furnished to it by an advisory organization which has not complied with §§ 27-6-33 — 27-6-35 , or with an order of the commissioner involving those statistics or recommendations issued under § 27-6-35 . If the commissioner finds any insurer or rating organization to be in violation of this section the commissioner may issue an order requiring the discontinuance of that violation.

History of Section. P.L. 1948, ch. 2088, § 9; G.L. 1956, § 27-6-36 .

27-6-37. Provisions applicable to joint underwriting and reinsurance.

Every group, association, or other organization of insurers which engages in joint underwriting or joint reinsurance shall be subject to regulation with respect to it as provided in § 27-6-38 , subject, with respect to joint underwriting, to all other provisions of this chapter and, with respect to joint reinsurance, to §§ 27-6-39 , 27-6-40 , and 27-6-46 — 27-6-52 .

History of Section. P.L. 1948, ch. 2088, § 10; G.L. 1956, § 27-6-37 .

27-6-38. Unlawful practices of joint underwriters or reinsurers.

If, after a hearing, the commissioner finds that any activity or practice of any group, association, or other organization of joint underwriters or insurers is unfair or unreasonable or inconsistent with the provisions of this chapter, the commissioner may issue a written order specifying in what respects that activity or practice is unfair or unreasonable or inconsistent with the provisions of this chapter, and requiring the discontinuance of that activity or practice.

History of Section. P.L. 1948, ch. 2088, § 10; G.L. 1956, § 27-6-38 .

27-6-39. Examination of rating and advisory organizations and underwriting and reinsurance groups.

The commissioner shall, at least once in five (5) years, make or cause to be made an examination of each rating organization licensed in this state as provided in § 27-6-23 and the commissioner may, as often as he or she may deem it expedient, make or cause to be made an examination of each advisory organization referred to in § 27-6-33 and of each group, association, or other organization referred to in § 27-6-37 . The total cost of those examinations shall be borne by the examined organization and shall be one hundred fifty percent (150%) of the total salaries paid to the examining personnel of the banking and insurance division engaged in those examinations less any salary reimbursements and shall be paid to the insurance commissioner to and for the use of the state. This assessment shall be in addition to any taxes and fees payable to the state. The officers, manager, agents, and employees of the rating organization, advisory organization, or group, association, or other organization may be examined at any time under oath and shall exhibit all books, records, accounts, documents, or agreements governing its method of operation. In lieu of any examination the commissioner may accept the report of an examination made by the insurance supervisory official of another state, pursuant to the laws of that state.

History of Section. P.L. 1948, ch. 2088, § 11; G.L. 1956, § 27-6-39 ; P.L. 1960, ch. 71, art. 1, § 3; P.L. 2008, ch. 371, § 2.

27-6-40. Reports on examinations — Hearing and filing.

The commissioner shall prepare a report of any examination held pursuant to § 27-6-39 and shall, within a reasonable time following completion of that report, furnish each rating organization, group, association, or other organization examined with a copy of it. Any rating organization, advisory organization, group, association, or other organization may, within thirty (30) days after the receipt of a copy of the report, request the commissioner for a hearing on the report, which shall be held by the commissioner upon ten (10) days written notice to the rating organization, advisory organization, group, association, or other organization. Following that hearing the commissioner may affirm, modify, or withdraw the report. Any report or modification of the report shall be filed in the office of the commissioner as a public record, or if no hearing is requested within the period of thirty (30) days, the report shall be filed at the expiration of that period.

History of Section. P.L. 1948, ch. 2088, § 11; G.L. 1956, § 27-6-40 .

27-6-41. Collection and compilation of experience statistics.

The commissioner shall promulgate reasonable rules and statistical plans, reasonably adapted to each of the rating systems on file with the commissioner, which may be modified and which shall be used by each insurer in the recording and reporting of its loss and countrywide expense experience, in order that the experience of all insurers may be made available at least annually in the form and detail necessary to aid him or her in determining whether rating systems comply with the standards set forth in §§ 27-6-4 — 27-6-7 . Those rules and plans may also provide for the recording and reporting of expense experience items that are specially applicable to this state and are not susceptible of determination by a prorating of countrywide expense experience. In promulgating those rules and plans, the commissioner shall give due consideration to the rating systems on file with the commissioner and, in order that those rules and plans may be as uniform as is practicable among the several states, to the rules and to the form of the plans used for the rating systems in other states. No insurer shall be required to record or report its loss experience on a classification basis that is inconsistent with the rating system filed by it. The commissioner may designate one or more rating organizations or other agencies to assist him or her in gathering that experience and making compilations of the experience, and those compilations shall be made available, subject to reasonable rules promulgated by the commissioner, to insurers and rating organizations.

History of Section. P.L. 1948, ch. 2088, § 12; G.L. 1956, § 27-6-41 .

27-6-42. Interchange of rating plan data.

Reasonable rules and plans may be promulgated by the commissioner for the interchange of data necessary for the application of rating plans.

History of Section. P.L. 1948, ch. 2088, § 12; G.L. 1956, § 27-6-42 .

27-6-43. Cooperation with other states.

In order to further uniform administration of rate regulatory laws, the commissioner and every insurer and rating organization may exchange information and experience data with insurance supervisory officials, insurers, and rating organizations in other states and may consult with them with respect to rate making and the application of rating systems.

History of Section. P.L. 1948, ch. 2088, § 12; G.L. 1956, § 27-6-43 .

27-6-44. Rules and regulations.

The commissioner may make reasonable rules and regulations necessary to effect the purposes of this chapter.

History of Section. P.L. 1948, ch. 2088, § 12; G.L. 1956, § 27-6-44 .

27-6-45. False or misleading information.

No person or organization shall willfully withhold information from, or knowingly give false or misleading information to, the commissioner, any statistical agency designated by the commissioner, any rating organization, or any insurer, which will affect the rates or premiums chargeable under this chapter. A violation of this section shall subject the one guilty of that violation to the penalties provided in §§ 27-6-47 and 27-6-48 .

History of Section. P.L. 1948, ch. 2088, § 13; G.L. 1956, § 27-6-45 .

27-6-46. Terms to be stated in policy — Rebates prohibited.

No insurer, or any officer, insurance producer, or representative of an insurer, shall make any contract for insurance, on property on risks located within this state, or against any liability, casualty, accident, or hazard that may arise or occur in this state, or any agreement as to that contract, other than as plainly expressed in the policy issued or to be issued on the agreement or contract; or shall any insurer, or officer, insurance producer, or representative of an insurer, directly or indirectly, in any manner, pay or allow or offer to pay or allow to the insured named in the policy or to any employee of the insured as an inducement to that insurance, or after the insurance shall have been effected, any rebate from the premium which is specified in the policy or any special favor or advantage in the dividends or other benefit to accrue on the policy; or any valuable consideration or inducement not specified in the policy or contract of insurance, or give, sell, or purchase, as an inducement to that insurance, or in connection with that insurance, any stock, bonds, or other securities of any insurance or other corporation or association, or any dividends or profits accrued on the securities, or anything of value not specified in the policy, or shall any insurance producer or his or her representatives, or any other person, directly or indirectly, either by sharing commissions or in any manner pay or allow or offer to pay or allow to the insured named in the policy, or to any employee of the insured, as an inducement to that insurance, or after the insurance shall have been effected, any rebate from the premium which is specified in the policy, or shall any insured, or party, or applicant for insurance, his or her or its employee, agent, or representative knowingly receive or accept, or agree to accept, or agree to receive or accept, directly or indirectly, any rebate of premium or any part of the premium or all or any part of any commission on the premium, or any favor or advantage, or share in any benefit to accrue under any contract of insurance, or any valuable consideration or inducement, other than what is specified in the policy; provided, that nothing in this section shall prevent any insurer from the distribution of surplus, dividends, savings, or the unused or unabsorbed portion of premiums and premium deposits to participating policyholders, or shall this section prevent any insurer, or its insurance producer, from paying commissions to a licensed insurance producer who shall have negotiated for the insurance, or shall it prevent any licensed insurance producer from sharing or dividing a commission earned or received by the insurance producer with any other licensed insurance producers who shall have aided the insurance producer in respect to the insurance for the negotiation of which that commission shall have been earned or paid; but no insurer or agent, or broker shall pay or allow commissions or brokerage to any person acting as an insurance producer in this state who is required by law to be licensed but is not licensed. Sections 27-8-7 — 27-8-10 shall not apply to the kinds of insurance subject to the provisions of this chapter.

History of Section. P.L. 1948, ch. 2088, § 14; G.L. 1956, § 27-6-46 .

27-6-47. Penalty for violations.

Any person or organization willfully violating any provision of this chapter shall, upon conviction, be fined not less than one hundred dollars ($100) and not more than five hundred dollars ($500) for each violation. That penalty may be in addition to any other penalty provided by law.

History of Section. P.L. 1948, ch. 2088, § 15; G.L. 1956, § 27-6-47 .

27-6-48. Suspension or revocation of licenses.

1. The commissioner may suspend the license of any rating organization or insurer which fails to comply with an order of the commissioner within the time limited by the order, or any extension which the commissioner may grant. The commissioner shall not suspend the license of any rating organization or insurer for failure to comply with an order until the time prescribed for an appeal has expired or, if an appeal has been taken, until the order has been affirmed.
2. The commissioner may determine when a suspension of a license shall become effective, and it shall remain in effect for the period fixed by the commissioner, unless he or she modifies or rescinds that suspension, or until the order upon which that suspension is based is modified, rescinded, or reversed.
3. No license shall be suspended or revoked except upon a written order of the commissioner, stating the commissioner’s findings made after a hearing held upon not less than ten (10) days’ written notice to the person or organization specifying the alleged violation.

History of Section. P.L. 1948, ch. 2088, § 15; G.L. 1956, § 27-6-48 .

27-6-49. Hearings on decisions of commissioner.

Any insurer or rating organization aggrieved by any order or decision of the commissioner or by any rule or regulation adopted and promulgated by the commissioner may within thirty (30) days after notice to the insurer or organization make a written request to the commissioner for a hearing, except that a hearing provided for by §§ 27-6-17 — 27-6-22 shall be held as provided in those sections. Within twenty (20) days after receipt of that written request, the commissioner shall hear the party or parties and shall give not less than ten (10) days written notice of the time and place of the hearing. Within fifteen (15) days after the hearing, the commissioner shall affirm, reverse, or modify his or her previous action, specifying his or her reasons. Pending the hearing and decision, the commissioner may suspend or postpone the effective date of his or her previous action.

History of Section. P.L. 1948, ch. 2088, § 16; G.L. 1956, § 27-6-49 .

27-6-50. Pleadings and evidence at hearings.

At any hearing before the commissioner, observance of formal rules of pleading or evidence shall not be required.

History of Section. P.L. 1948, ch. 2088, § 16; G.L. 1956, § 27-6-50 .

27-6-51. Judicial review of orders and decisions.

1. Any final order or decision of the commissioner, including any order made after a hearing under the provisions of §§ 27-6-17 — 27-6-22 or § 27-6-49 , shall be subject to review by a petition filed within twenty (20) days after notice of it at the instance of any party in interest in the superior court for the counties of Providence and Bristol, and the matter shall be heard de novo in the superior court and decisions on issues of fact shall be in accordance with the preponderance of the evidence presented there.
2. The court shall determine whether the order or decision of the commissioner shall be stayed pending review. The court may, in disposing of the issue before it, modify, affirm, or reverse the order or decision of the commissioner in whole or in part.
3. An appeal may be taken from the decision of the superior court to the supreme court, and that appeal shall follow the course of equity.

History of Section. P.L. 1948, ch. 2088, § 16; G.L. 1956, § 27-6-51 .

27-6-52. Severability.

If any section, subsection, subdivision, paragraph, sentence, or clause of this chapter is held invalid or unconstitutional, that decision shall not affect the remaining portions of this chapter.

History of Section. P.L. 1948, ch. 2088, § 18; G.L. 1956, § 27-6-52 .

27-6-53. Use of credit rating.

1. An insurer may use insurance scoring for rating and underwriting of homeowners’ insurance only under the following conditions:
   1. The insurer demonstrates the predictive nature of their insurance score to the insurance division.
   2. An insurer shall, once every two (2) years if requested by an existing customer, obtain an updated insurance score for the customer. If, after obtaining the insurance score, the customer has improved his, her or its credit rating, the user of the information shall afford the customer any decrease in rates that are available due to the improved rating. The user may not increase the rate of an existing customer based solely on a worsening in the customer’s insurance score unless: (i) the worsening is due to a bankruptcy, tax lien, garnishment, foreclosure or judgment; or (ii) if a subsequent insurance score no sooner than six (6) months later confirms the worsening in score. Should an existing customer’s score change as the result of an updated credit report, the decrease or increase in rates must be done at renewal subject to conditions established herein.
   3. An insurer shall not decline insurance for a new customer based solely on an insurance score, or absence of an insurance score; and an insurer shall not cancel, nonrenew or increase the rate of an existing customer based solely on a worsening in a customer’s insurance score unless: (i) the worsening is due to a bankruptcy, tax lien, garnishment, foreclosure or judgment; or (ii) if a subsequent insurance score no sooner than six (6) months later confirms the worsening in score. Should an existing customer’s score change as the result of an updated credit report, the decrease or increase in rates must be done at renewal subject to conditions established herein.
   4. No insurer is obligated to obtain a current credit report or insurance score for an insured if: the insured is in the most favorably-priced tier of the insurer, within a group of affiliated insures; or credit was not used for the insured when the policy was initially written. However, the insurer shall have the discretion to use credit for the insured upon renewal, if consistent with its underwriting guidelines. The user may not increase the rate of an existing customer based solely on a worsening in the customer’s insurance score unless: (i) the worsening is due to a bankruptcy, tax lien, garnishment, foreclosure or judgment; or (ii) if a subsequent insurance score no sooner than six (6) months later confirms the worsening in score. Should an existing customer’s score change as the result of an updated credit report, the decrease or increase in rates must be done at renewal subject to conditions established herein.
   5. If a credit bureau determines that disputed information is inaccurate or incorrect and that information was used in determining an insurance score which resulted in a denial, cancellation or nonrenewal of or higher premiums or less favorable policy terms for a consumer, the insurer shall, within thirty (30) days of receiving notice of correction, reissue or re-rate the policy by refunding the amount of the overpayment of premium based on the corrected insurance score retroactive to the shorter of the last twelve (12) months of coverage or the actual period of coverage. An “insurance score” as used in this section shall be defined as a number or rating that is derived from an algorithm, computer application, model or other process that is based in whole or in part on credit history.
2. Agents shall be held harmless by insurers for all acts, efforts and disclosures in obtaining an insurance score on the insurer’s behalf. The commissioner is authorized and empowered to establish rules and regulations to carry out the provisions of this section and to fulfill the goals of this section.
3. Notwithstanding the above, an insurer authorized to do business in Rhode Island that uses credit information to underwrite or rate risks, shall not use the following as a negative factor in any insurance scoring methodology or in reviewing credit information for the purpose of underwriting or rating a policy of personal insurance:
   1. Credit inquiries not initiated by the consumer or inquiries requested by the consumer for his or her own credit information;
   2. Inquiries relating to insurance coverage, if so identified on a consumer’s credit report;
   3. Collection accounts with a medical industry code, if so identified on the consumer’s credit report;
   4. Multiple lender inquiries, if coded by the consumer reporting agency on the consumer’s credit report as being from the home mortgage industry and made within thirty (30) days of one another, unless only one inquiry is considered;
   5. Multiple lender inquiries, if coded by the consumer reporting agency on the consumer’s credit report as being from the automobile lending industry and made within thirty (30) days of one another, unless only one inquiry is considered.
4. No consumer reporting agency shall provide or sell data or lists that include any information that in whole or in part was submitted in conjunction with an insurance inquiry about a consumer’s credit information or a request for a credit report or insurance score. Such information includes, but is not limited to, the expiration dates of an insurance policy or any other information that may identify time periods during which a consumer’s insurance may expire and the terms and conditions of the consumer’s insurance coverage.
5. The restrictions provided in subsection (d) of this section do not apply to data or lists the consumer reporting agency supplies to the insurance [agent/producer] from whom information was received, the insurer on whose behalf such [agent/producer] acted, or such insurer’s affiliates or holding companies.
6. Nothing in this section shall be construed to restrict any insurer from being able to obtain a claims history report or a motor vehicle report.

History of Section. P.L. 2002, ch. 303, § 2; P.L. 2003, ch. 316, § 1; P.L. 2003, ch. 370, § 1.

27-7-1. Direct liability of insurer to person injured.

Every policy written insuring against liability for property damage or personal injuries or both, and every policy written indemnifying any person by reason of that liability, other than the payment of compensation under chapters 29 — 38 of title 28, shall contain provisions to the effect that the insurer shall be directly liable to the injured party and, in the event of that party’s death, to the party entitled to sue for that death, to pay that party the amount of damages for which the insured is liable.

History of Section. P.L. 1921, ch. 2094, § 1; G.L. 1923, ch. 258, § 7; P.L. 1936, ch. 2422, § 1; G.L. 1938, ch. 155, § 1; G.L. 1956, § 27-7-1 .

27-7-2. Remedies of injured party against insurer.

An injured party, or, in the event of that party’s death, the party entitled to sue for that death, in his or her suit against the insured, shall not join the insurer as a defendant. If the officer serving any process against the insured shall return that process “non est inventus,” or where before suit has been brought and probate proceedings have not been initiated the insured has died, or where a suit is pending against an insured in his or her own name and the insured died prior to judgment, or where a nonresident had been involved in an automobile accident in Rhode Island as an operator or owner and died before suit has been brought, the injured party, and, in the event of that party’s death, the party entitled to sue for that death, may proceed directly against the insurer. The injured party, or, in the event of that party’s death, the party entitled to sue for that death, after having obtained judgment against the insured alone, may proceed on that judgment in a separate action against the insurer; provided, the payment in whole or in part of the liability by either the insured or the insurer shall, to the extent of the payment, be a bar to recovery against the other of the amount paid. The time limitations for filing such actions shall be governed by the provisions of § 9-1-14 as appropriate, including, but not limited to, any extension of the statute of limitations for injuries to the person provided by § 9-1-14 (c).

History of Section. P.L. 1921, ch. 2094, § 1; G.L. 1923, ch. 258, § 7; P.L. 1936, ch. 2422, § 1; G.L. 1938, ch. 155, § 1; G.L. 1956, § 27-7-2 ; P.L. 1972, ch. 188, § 1; P.L. 1973, ch. 205, § 1; P.L. 2009, ch. 123, § 2; P.L. 2009, ch. 142, § 2.