2014 -- H 7205

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LC003866

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO INSURANCE -- CASUALTY, FIRE AND MARINE INSURANCE

     Introduced By: Representatives O`Grady, Ackerman, Costantino, Marcello, and

     Date Introduced: January 29, 2014

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 27-6-46 of the General Laws in Chapter 27-6 entitled "Fire and

Marine Insurance Rating" is hereby amended to read as follows:

     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. Nothing

in this chapter shall prevent any corporation, lawfully doing insurance business in the state, from

offering to policyholders, a benefit or service not otherwise offered in the policy or contract of

insurance, provided such benefit or service is offered to all policyholders purchasing a

comparable product in the state.

     SECTION 2. Section 27-8-7 of the General Laws in Chapter 27-8 entitled "Casualty

Insurance Generally" is hereby amended to read as follows:

     27-8-7. Terms to be stated in policy -- Rebates prohibited. -- No insurance corporation

authorized to do any insurance business within this state, or any officer, insurance producer, or

their representative, shall make any contract for insurance, on property or 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; nor shall any corporation, or officer, insurance producer, or their representative, 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 the insurance, or after the insurance

has 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

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purchase, as an inducement to the insurance, or in connection with it, any stock, bonds, or other

securities of any insurance or other corporation or association, or any dividends or profits accrued

on the stock, bonds, or securities, or anything of value, not specified in the policy; nor shall any

insurance producer or representative, 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 the insurance, or after the

insurance has been effected, any rebate from the premium which is specified in the policy.

Nothing in this chapter shall prevent any corporation lawfully doing insurance business in this

state from the distribution of surplus and dividends to policyholders, nor shall this chapter prevent

any corporation, or its agent, from paying commissions to a licensed insurance producer who has

negotiated for the insurance, nor 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 producer, who has aided the insurance producer in respect to the insurance for the

negotiation of which the commission has been earned or paid. Nothing in this chapter shall

prevent any corporation, lawfully doing insurance business in the state, from offering to

policyholders, a benefit or service not otherwise offered in the policy or contract of insurance,

provided such benefit or service is offered to all policyholders purchasing a comparable product

in the state.

     SECTION 3. Section 27-9-44 of the General Laws in Chapter 27-9 entitled "Casualty

Insurance Rating" is hereby amended to read as follows:

     27-9-44. Terms to be stated in policy -- Rebates prohibited. -- No insurer, or any

officer, insurance producer, or their representative, shall make any contract for insurance, on

property or risks located within this state, or against any liability, casualty, accident, or hazard

that may arise or occur in this state, or any agreements as to any contract, other than as plainly

expressed in the policy issued or to be issued on the agreement or contract; nor shall any insurer,

or officer, insurance producer, or their representative, 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 the 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

the insurance, or in connection with the insurance, any stock, bonds, or other securities of any

insurance or other corporation or association, or any dividends or profits accrued on the stock,

bonds, or securities, or anything of value, not specified in the policy, nor shall any insurance

LC003866 - Page 3 of 5

producer or representative, 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 the insurance, or after the

insurance shall have been effected, any rebate from the premium which is specified in the policy,

nor shall any insured, or party, or applicant for insurance, his, 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 a 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, nor shall this section prevent any insurer, or its

agent, from paying commissions to a licensed insurance producer who shall have negotiated for

the insurance, nor 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

producer who shall have aided the insurance producer in respect to the insurance for the

negotiation of which the commission shall have been earned or paid; but no insurer, or insurance

producer 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. As used in this

section, the word "insurance" includes suretyship and the word "policy" includes bond. Sections

27-8-7 -- 27-8-10 shall not apply to the kinds of insurance subject to the provisions of this

chapter. Nothing in this chapter shall prevent any corporation, lawfully doing insurance business

in the state, from offering to policyholders, a benefit or service not otherwise offered in the policy

or contract of insurance, provided such benefit or service is offered to all policyholders

purchasing a comparable product in the state.

     SECTION 4. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- CASUALTY, FIRE AND MARINE INSURANCE

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     This act would amend selected chapters on insurance to permit insurance companies in

the state, to offer policyholders a benefit or service not offered in the insurance policy, provided

the benefit or service is offered equally to all policyholders purchasing a similar product in the

state.

     This act would take effect upon passage.

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LC003866

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