2000-S 2742
Enacted 7/13/2000

A  N     A   C   T


Introduced By:  Senators Irons, Bates, Walton, DaPonte and Patterson Date Introduced:  February 10, 2000

It is enacted by the General Assembly as follows:

SECTION 1. Sections 27-43-3 and 27-43-6 of the General Laws in Chapter 27-43 entitled "Captive Insurance Companies" are hereby amended to read as follows:

27-43-3. Licensing - Authority. -- (a) Any captive insurance company, when permitted by its articles of association or charter, may apply to the commissioner for a license to do any and all insurance; provided, however, that:

(1) No subsidiary captive insurance company may insure any risks other than those of its parent and affiliated companies;

(2) No association captive insurance company may insure any risks other than those of the member organizations of its association, and their affiliated companies;

(3) No industrial insured captive insurance company may insure any risks other than those of the industrial insureds that comprise the industrial insured group, and their affiliated companies;

(4) No captive insurance company may provide personal lines of insurance, or any component thereof; and

(5) No captive insurance company may accept or cede reinsurance, except as provided in section 27-43-7.

(b) No captive insurance company shall do any insurance business in this state unless:

(1) It first obtains from the commissioner a license authorizing it to do insurance business in this state;

(2) Its board of directors holds at least one meeting each year in this state;

(3) It maintains its principal place of business in this state; and

(4) It appoints a resident registered agent to accept service of process and to otherwise act on its behalf in this state. Whenever the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the commissioner shall be an agent of the captive insurance company upon whom any process, notice, or demand may be served.

(c) (1) Before receiving a license, a captive insurance company shall file with the commissioner a certified copy of its charter and by-laws, a statement under oath of its president and secretary showing its financial condition, and any other statements or documents required by the commissioner;

(2) In addition to the information required by subsection (c)(1) each applicant captive insurance company shall file with the commissioner evidence of the following:

(i) The amount and liquidity of its assets relative to the risks to be assumed;

(ii) The adequacy of the expertise, experience, and character of the person or persons who will manage it;

(iii) The overall soundness of its plan of operation;

(iv) The adequacy of the loss prevention programs of its parent, member organizations, or industrial insureds as applicable; and

(v) Any other factors deemed relevant by the commissioner in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.

(3) Information submitted pursuant to this section shall be and remain confidential, and may not be made public by the commissioner or an employee or agent of the commissioner without the written consent of the company, except that:

(i) such information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted such information is a party, upon a showing by the party seeking to discover such information that: (A) the information sought is relevant to and necessary for the furtherance of such action or case; (B) the information sought is unavailable from other nonconfidential sources; and (C) a subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the commissioner; provided, however, that the provisions of this subdivision (3) shall not apply to any industrial insured captive insurance company insuring the risks of an industrial insured group as defined in 27-43-1(8)(ii); and

(ii) the commissioner may, in his or her discretion, disclose such information to a public officer having jurisdiction over the regulation of insurance in another state, provided that: (A) such public official shall agree in writing to maintain the confidentiality of such information ; and (B) the laws of the state in which such public official serves requires such information to be and to remain confidential.

(d) The commissioner is authorized to retain legal, financial and examination services from outside the department, the reasonable cost of which may be charged to the applicant. Each captive insurance company shall pay to the commissioner a nonrefundable fee of one thousand dollars ($1,000) for examining, investigating, and processing its application for license. In addition, it shall pay a license fee for the first year of registration and an annual fee for each year thereafter of five hundred dollars ($500).

(e) If the commissioner is satisfied that the documents and statements that the captive insurance company has filed comply with the provisions of this chapter, the commissioner may grant a license authorizing it to do insurance business in this state in accordance with the provisions of this title.

27-43-6. Reports, statements, examinations, and investigations. -- (a) Captive insurance companies shall annually file a statement of condition as provided in section 27-12-1; provided, however, that the commissioner may by regulation modify the required filing and content of the statements of captive insurance companies. Captive insurance companies are also subject to the further provisions of chapter 12 of this title. ; provided, however, that statements filed pursuant to this section, except for those reports filed by industrial insured captive insurance companies insuring the risks of industrial insured groups as defined in section 27-43-1(8)(ii), shall not be subject to the public inspection provisions of section 27-12-1(b).

(b) The commissioner, either personally or by a committee appointed by him or her, consisting of one or more persons not directors or officers of any captive insurance company doing business in this state, may, at any time, examine the affairs of any captive insurance company incorporated by or doing business in this state. The officers of the company shall exhibit its books to the commissioner or committee, and otherwise facilitate the examination, and the commissioner or the committee may examine, under oath, the officers of the company in relation to its affairs, and the commissioner shall, if he or she deems it advisable, publish the result of the investigation in one or more newspapers published in the state. The total cost of the examinations shall be borne by the companies so examined and shall be one hundred fifty percent (150%) of the total salaries paid to the examining personnel of the insurance division engaged in the examinations, less any salary reimbursements, and shall be paid to the commissioner to and for the use of the insurance division. The assessment shall be in addition to any taxes and fees otherwise payable to the state.

(c) Whenever it shall appear to the commissioner, from the statements, or from an examination of the affairs of any captive insurance company, 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 captive insurance companies, it shall be the duty of the commissioner, after notice and hearing, to revoke the license issued to the company and the licenses issued to all of its insurance producers, or he or she may revoke the licenses or suspend them for a period not exceeding the unexpired terms hereof.

SECTION 2. This act shall take effect upon passage.

As always, your comments concerning this page are welcomed and appreciated.

Thank you for stopping by!