A N A C T
RELATING TO INSURANCE
It is enacted by the General Assembly as follows:
SECTION 1. Sections 27-3-38 and 27-3-39 of the General Laws in Chapter 27-3 entitled "Agents, Brokers, and Solicitors" are hereby amended to read as follows:
27-3-38. Surplus line brokers -- License -- Affidavit of inability to obtain insurance -- Records -- Premium tax -- Notice to purchasers -- (a) The insurance commissioner may issue a surplus line broker's license to any person, firm, or corporation who or which is licensed as an insurance agent in this state, authorizing the licensee to procure, subject to the restrictions herein provided, policies of insurance, except life and health and accident, from insurers which are on the commissioner's list of approved surplus insurers in this state. This license may be suspended or revoked by the insurance commissioner whenever, in the commissioner's judgment, a suspension or revocation will best promote the interest of the people of this state. Before any license shall be issued by the insurance commissioner and before each renewal thereof, there shall be filed in his or her office a written application by the person, firm, or corporation desiring the license in the form or forms and supplements to the form, and containing the information, as the insurance commissioner may prescribe.
(b) 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 and the licensee were unable, after diligent effort, to procure from any authorized insurer or insurers the full amount of insurance required to protect the property owned or controlled by the insured or the risks insured, and further showing that the amount of insurance procured from an approved surplus lines insurer or insurers is only the excess over the amount, if any, so procurable from authorized insurers and that the purpose of obtaining that insurance from approved surplus lines insurers is not to procure insurance on forms different from those which would be used by authorized insurers writing insurance against the same risks or hazards. These affidavits shall be filed by the licensee with the insurance commissioner within thirty (30) days after the policies have been procured and the insurance commissioner, if not satisfied therewith, may order the licensee to take any further action to obtain the insurance from authorized insurers that he or she may deem necessary.
(c) 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.
(d) Every person, firm, or corporation licensed pursuant to the provisions of this section shall file with the insurance commissioner, not later than April 1 of each year, a certificate of the tax administrator, on a blank furnished by the insurance commissioner, certifying that the licensee 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 three percent (3%) on the gross premiums charged the insured by the insurers, less the amount of premiums returned to the insureds.
(e) 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 (10) point type the following notice:
THIS INSURANCE CONTRACT HAS BEEN PLACED WITH AN INSURER NOT LICENSED TO DO BUSINESS IN THE STATE OF RHODE ISLAND BUT
ELIGIBLE 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.
27-3-39. Surplus line broker's bond -- (a) No license to act as a 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 section 27-3-38.
(b) 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, further, that in the event of cancellation, any license covered thereby shall be suspended by the insurance commissioner pending the substitution of a like bond for the bond so cancelled. 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 which 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.
(c) 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).
SECTION 2. This act shall take effect upon passage.