2012 -- H 7484

=======

LC01425

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

____________

A N A C T

RELATING TO INSURANCE - FIRE INSURANCE POLICIES AND RESERVES

     Introduced By: Representatives Kennedy, Messier, Ferri, and McNamara

     Date Introduced: February 09, 2012

     Referred To: House Corporations

It is enacted by the General Assembly as follows:

1-1

     SECTION 1. Section 27-5-3.7 of the General Laws in Chapter 27-5 entitled "Fire

1-2

Insurance Policies and Reserves" is hereby repealed.

1-3

     27-5-3.7. Hurricane deductibles, triggers and policyholder notice. -- (a) The

1-4

provisions of this section shall be applicable to policies issuing or renewing on or after July 1,

1-5

2008.

1-6

      (b) In all instances where an insurance company licensed to do business in this state

1-7

offers or includes any deductible and/or mitigation measure related to such deductible for any

1-8

type of personal lines residential property insurance on dwelling houses, the insurance company

1-9

shall provide prominent and clear notice to insureds, that shall be included in the policy issuance

1-10

or renewal package and shall fully disclose all details pertaining to any such deductible and/or

1-11

mitigation measure.

1-12

      (c) The insurer may apply a deductible specific to windstorm coverage where:

1-13

      (1) The deductible is specifically approved by the director and shall not exceed five

1-14

percent (5%) of the insured value.

1-15

      (2) The deductible shall be applicable to losses due to a hurricane during the period

1-16

commencing with the issuance of a hurricane warning bulletin for any part of the state by the

1-17

National Hurricane Center and concluding twenty-four (24) hours after the termination of the last

1-18

hurricane warning bulletin for any part of the state.

1-19

      (3) The deductible, whether it is a flat dollar deductible or a percentage deductible shall

1-20

be presented by at least two (2) examples that illustrate the application of the deductible to the

2-1

insured. Nothing herein shall prohibit the insurer from providing any additional information to the

2-2

insured to assist in the insured's understanding of the deductible to be applied to the insured's

2-3

policy.

2-4

      (4) The deductible set forth above shall not be applied to any insured, if the insured has

2-5

installed approved mitigation measures to protect against windstorm damage and the insurer has

2-6

either inspected the property or the insured has submitted satisfactory proof of installation of the

2-7

approved mitigation measures. The insurance commissioner, in consultation with the state

2-8

building code commissioner, shall adopt and may amend or revise a list of mitigation measures,

2-9

based so far as reasonably feasible on national standards for such measures and practices in other

2-10

comparable states. The list of mitigation measures adopted by the insurance commissioner shall

2-11

be considered approved mitigation measures for purposes of this subdivision.

2-12

      (5) For the application of the hurricane deductible in Block Island, losses are due to a

2-13

hurricane when a hurricane results in hurricane force sustained winds as reported by the national

2-14

weather service for Block Island. For the application of the hurricane deductible in the remainder

2-15

of the state, losses are due to a hurricane when a hurricane results in hurricane force sustained

2-16

winds as reported by the national weather service for any other location in the state. All terms are

2-17

as defined by the national weather service.

2-18

      (d) Premium credits shall be applied to policies with deductibles as set forth in

2-19

subsection 27-5-3.7(c).

2-20

      (e) (1) An insurer may require mitigation measures to protect against windstorm damage

2-21

only after specific approval of the substance of such mitigation measures by the director;

2-22

      (2) Mitigation measures to be taken by an insured are clearly explained, including a

2-23

complete illustration of the dollar impact upon the premiums to be charged to insureds if the

2-24

requested mitigation activities are undertaken;

2-25

      (3) No mandatory deductible for windstorm damage shall be included in the policy;

2-26

      (4) An insurer shall write the requested coverage at the premium rate that includes the

2-27

premium credit to be realized with the completion of the mitigation efforts;

2-28

      (5) The insurer shall affirmatively state the length of time during which discount given

2-29

for the mitigation efforts will apply; and

2-30

      (6) No insurer shall subsequently non-renew an insured who has taken the mitigation

2-31

steps requested by the insurer for reasons of the insurers exposure to catastrophe loss, unless for

2-32

non-payment of premium, fraud, breach by the insured of a provision of the policy, reversal or a

2-33

lack of maintenance of the mitigation steps, or insurer solvency concerns or adverse loss history.

3-34

      (f) Penalties for failure to comply with the provisions of this section shall be

3-35

administered by the director in accordance with the provisions of section 42-14-16.

3-36

      (g) The department of business regulation shall have authority to adopt such rules,

3-37

including emergency rules, as may be necessary or desirable to effectuate the purposes of this

3-38

section.

3-39

     SECTION 2. Title 27 of the General Laws entitled "INSURANCE" is hereby amended

3-40

by adding thereto the following chapter:

3-41

     CHAPTER 76

3-42

WEATHER RELATED LOSSES

3-43

     27-76-1. Hurricane deductibles, triggers and policyholder notice. -- (a) The

3-44

provisions of this section shall be applicable to policies issuing or renewing on or after July 1,

3-45

2008.

3-46

     (b) In all instances where an insurance company licensed to do business in this state

3-47

offers or includes any deductible and/or mitigation measure related to such deductible for any

3-48

type of personal lines residential property insurance on dwelling houses, the insurance company

3-49

shall provide prominent and clear notice to insureds that shall be included in the policy issuance

3-50

or renewal package and shall fully disclose all details pertaining to any such deductible and/or

3-51

mitigation measure.

3-52

     (c) The insurer may apply a deductible specific to windstorm coverage where:

3-53

     (1) The deductible is specifically approved by the director and shall not exceed five

3-54

percent (5%) of the insured value.

3-55

     (2) The deductible shall be applicable to losses due to a hurricane during the period

3-56

commencing with the issuance of a hurricane warning bulletin for any part of the state by the

3-57

National Hurricane Center and concluding twenty-four (24) hours after the termination of the last

3-58

hurricane warning bulletin for any part of the state.

3-59

     (3) The deductible, whether it is a flat dollar deductible or a percentage deductible shall

3-60

be presented by at least two (2) examples that illustrate the application of the deductible to the

3-61

insured. Nothing herein shall prohibit the insurer from providing any additional information to the

3-62

insured to assist in the insured's understanding of the deductible to be applied to the insured's

3-63

policy.

3-64

     (4) The deductible set forth above shall not be applied to any insured, if the insured has

3-65

installed approved mitigation measures to protect against windstorm damage and the insurer has

3-66

either inspected the property or the insured has submitted satisfactory proof of installation of the

3-67

approved mitigation measures. The insurance commissioner, in consultation with the state

3-68

building code commissioner, shall adopt and may amend or revise a list of mitigation measures,

4-1

based so far as reasonably feasible on national standards for such measures and practices in other

4-2

comparable states. The list of mitigation measures adopted by the insurance commissioner shall

4-3

be considered approved mitigation measures for purposes of this subdivision.

4-4

     (5) For the application of the hurricane deductible in New Shoreham, losses are due to a

4-5

hurricane when a hurricane results in hurricane force sustained winds as reported by the national

4-6

weather service for New Shoreham. For the application of the hurricane deductible in the

4-7

remainder of the state, losses are due to a hurricane when a hurricane results in hurricane force

4-8

sustained winds as reported by the national weather service for any other location in the state. All

4-9

terms are as defined by the national weather service.

4-10

     (d) Premium credits shall be applied to policies with deductibles as set forth in subsection

4-11

27-76-1(c).

4-12

     (e)(1) An insurer may require mitigation measures to protect against windstorm damage

4-13

only after specific approval of the substance of such mitigation measures by the director;

4-14

     (2) Mitigation measures to be taken by an insured are clearly explained, including a

4-15

complete illustration of the dollar impact upon the premiums to be charged to insureds if the

4-16

requested mitigation activities are undertaken;

4-17

     (3) No mandatory deductible for windstorm damage shall be included in the policy;

4-18

     (4) An insurer shall write the requested coverage at the premium rate that includes the

4-19

premium credit to be realized with the completion of the mitigation efforts;

4-20

     (5) The insurer shall affirmatively state the length of time during which discount given

4-21

for the mitigation efforts will apply; and

4-22

     (6) No insurer shall subsequently non-renew an insured who has taken the mitigation

4-23

steps requested by the insurer for reasons of the insurers exposure to catastrophe loss, unless for

4-24

non-payment of premium, fraud, breach by the insured of a provision of the policy, reversal or a

4-25

lack of maintenance of the mitigation steps, or insurer solvency concerns or adverse loss history.

4-26

     (f) Penalties for failure to comply with the provisions of this section shall be administered

4-27

by the director in accordance with the provisions of section 42-14-16.

4-28

     (g) The department of business regulation shall have authority to adopt such rules,

4-29

including emergency rules, as may be necessary or desirable to effectuate the purposes of this

4-30

section.

4-31

     27-76-2. Residential property insurance hurricane deductible application.--

4-32

     (a) For all deductibles as provided in section 27-76-1, such deductible may only be

4-33

applied once to all hurricane losses that are subject to the hurricane deductible during the calendar

4-34

year.

5-1

     (b) If an insured incurs a hurricane loss from more than one hurricane during a calendar

5-2

year that are subject to the separate deductible referred to in subsection (a), the insurer may apply

5-3

the deductible to the succeeding hurricane that is equal to the remaining amount of the separate

5-4

deductible or the amount of the deductible that applies to all perils other than a hurricane,

5-5

whichever is greater. Insurers may require policyholders to produce receipts or other records of

5-6

such losses in order to apply such losses to subsequent hurricane claims.

5-7

     27-76-3. Hurricane Mediation.-- The department of business regulation is hereby

5-8

authorized to establish by regulation a non-adversarial alternative dispute resolution procedure for

5-9

the effective, fair, and timely handling of personal lines insurance claims arising out of damages to

5-10

residential property caused by hurricanes.

5-11

     27-76-4. State of emergency; effect upon insurance policies; rules.--

5-12

     (a) The department of business regulation may promulgate regulations to take effect upon

5-13

the declaration of a catastrophe, as declared by a nationally recognized catastrophe loss index

5-14

provider, that address any of the following or other matters related to the catastrophe for

5-15

insurance policies issued in this state:

5-16

     (1) Reporting requirements for claims related to the emergency;

5-17

     (2) Grace periods for payment of insurance premiums and performance of other duties by

5-18

insureds; and/or

5-19

     (3) Temporary postponement of cancellations and nonrenewals of insurance policies.

5-20

     27-76-5. Notice of Property Loss.-- No insurance policy or contract covering damages

5-21

to personal lines residential property may be cancelled or nonrenewed, nor may the premium for

5-22

such a policy be increased solely as a result of inquiries or claims made under the policy which

5-23

resulted in no loss payout or resulted in a loss payout of less than five hundred dollars ($500).

5-24

     27-76-6. Use of Prior Claim Experience of Insured Property.-- No insurer may refuse

5-25

to insure, cancel, nonrenew or surcharge an insurance policy covering damages to personal lines

5-26

residential property based solely upon prior claim experience of the insured property while under

5-27

the ownership of someone other than the current insured unless the risk from which the claim

5-28

originated has not been mitigated.

5-29

     27-76-7. Use of Claim Experience resulting from Catastrophic Events.-- No insurer

5-30

may refuse to insure, cancel, nonrenew or surcharge a policy or contract covering damages to

5-31

personal lines residential property resulting solely from a catastrophic event.

5-32

     27-76-8. Severability.-- If a court holds any section or portion of a section of this chapter

5-33

or the applicability thereof to any person or circumstance invalid, the remainder of the chapter shall

5-34

not be affected thereby.

6-1

     SECTION 3. This act shall take effect upon passage.

=======

LC01425

=======

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE - FIRE INSURANCE POLICIES AND RESERVES

***

7-1

     This act would relocate the existing section of law relative to hurricanes to a new chapter

7-2

which would also include additional provisions for the processing of insurance claims for

7-3

hurricane damage.

7-4

     This act would take effect upon passage.

=======

LC01425

=======