2018 -- S 2328

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LC004538

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

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A N   A C T

RELATING TO INSURANCE -- INSURANCE CONSUMER PROTECTION SALES ACT

     Introduced By: Senators Cote, Sheehan, and Raptakis

     Date Introduced: February 15, 2018

     Referred To: Senate Commerce

     (by request)

It is enacted by the General Assembly as follows:

     SECTION 1. Title 27 of the General Laws entitled "INSURANCE" is hereby amended

by adding thereto the following chapter:

CHAPTER 82

INSURANCE CONSUMER PROTECTION SALES ACT

     27-82-1. Short title.

     This chapter shall be known and may be cited as the "Insurance Consumer Protection

Sales Act."

     27-82-2. Purpose.

     The purpose of this chapter is to regulate noninsurance business entities in the disclosure

of personal identifiable information for insurance sales.

     27-82-3. Definitions.

     For the purposes of this chapter:

     (1) "Business entity" means an individual, firm, corporation, business trust, association,

partnership, limited liability company, limited liability partnership or any legal entity, its affiliates

or subsidiaries and any of its officers, agents, representatives or employees; provided, however,

"business entity" shall not include financial institutions as defined and subject to the provisions of

chapter 58 of title 27.

     (2) "Commissioner" means the director of the department of business regulation or their

designee.

     (3) "Insurance" includes all products defined or regulated as insurance by the department

of business regulation except those products offered as follows:

     (i) Portable electronics insurance as defined in § 27-2.7-1;

     (ii) Credit life, credit accident and health, credit involuntary unemployment insurance;

group credit insurance, forced, placed or voluntary credit personal property insurance; group

mortgage cancellation life insurance, or group mortgage accident and health insurance and

annuities;

     (iii) Insurance placed by a financial institution in connection with collateral pledged as

security for a loan when the debtor breaches the contractual obligation to provide that insurance;

and

     (iv) Private mortgage insurance.

     27-82-4. Authorization for implementing regulations.

     The commissioner may promulgate administrative regulations to effectuate the purposes

of this chapter.

     27-82-5. Anti-tying provisions.

     (a) No person or business entity may offer any tangible personal property for sale or

lease, or fix or vary the conditions of an offer, on a condition or requirement that the customer

obtains insurance from the business entity, or any particular insurance producer or insurer.

     (b) No business entity shall require or imply that the purchase of an insurance product

from a business entity or any particular insurance producer or insurer, by a customer or

prospective customer is required as a condition of, or is in any way related to the purchase or

lease of any tangible personal property, the lending of money or extension of credit or the

provision of services related to an of these activities.

     (c) No business entity shall impose any requirement on any insurance producer or insurer

who is not associated with the business entity that is not imposed on any insurance producer or

insurer who is associated with that business entity.

     27-82-6. Sales force.

     Solicitation for the purchase or sale of insurance by a business entity shall be conducted

only by persons licensed in accordance with chapter 2.4 of title 27 whose responsibilities do not

include the sale of a noninsurance related tangible personal property, including, but not limited to,

salespersons, persons whose responsibilities include a determination of credit qualification,

financing, or persons assisting those individuals in the sale or lease of any tangible personal

property.

     27-82-7. Confidential customer information.

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     (a) As used in this section, unless the context requires otherwise:

     (1) "Customer" means a person seeking to purchase or lease a product.

     (2) "Nonpublic customer information" means personally identifiable financial

information regarding a person that has been derived from a record of a business entity,

including, information on the product to be purchased or leased, information concerning the terms

and conditions of insurance coverage, insurance expirations, insurance claims, or insurance

history of an individual. Nonpublic customer information does not include customer names,

addresses or telephone numbers.

     (b) No business entity shall use any nonpublic customer information for the purpose of

selling or soliciting the purchase of insurance or provide the nonpublic customer information to a

third party for the purpose of another's sale or solicitation of the purchase of insurance.

     27-82-8. Insurance in connection with the sale or lease of a tangible personal

property.

     The transaction of a sale or lease of any tangible personal property and insurance

transactions shall be completed independently and through separate documents.

     27-82-9. Physical location of insurance activities.

     The place of solicitation or sale of insurance by any insurance company or any insurance

producer affiliated with a business entity shall be from an office physically separated from the

activities associated with the sale or lease of any tangible personal property. Physical separation

shall not be defined as a separate building. The commissioner shall have the authority to

promulgate rules and regulations to implement this section pursuant to § 27-82-4.

     27-82-10. Penalties.

     Any business entity or person who violates the provisions of this chapter, who fails to

perform any duties imposed by this chapter, or who violates any administrative regulation

promulgated pursuant to this chapter shall be liable for a civil penalty not to exceed the sum of

one hundred dollars ($100) for each day which the violation continues, and may be concurrently

enjoined from any further violations by the superior court upon petition of the insurance

commissioner.

     SECTION 2. This act shall take effect January 1, 2019.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- INSURANCE CONSUMER PROTECTION SALES ACT

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     This act would create a system of consumer protection for regulation by DBR of

noninsurance business entities using or disclosing personal identifiable financial information for

insurance sales.

     This act would take effect on January 1, 2019.

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