A N A C T
RELATING TO INSURANCE -- WORKERS' COMPENSATION INSURANCE FUND
It is enacted by the General Assembly as follows:
SECTION 1. Sections 27-7.2-1, 27-7.2-2, 27-7.2-3, 27-7.2-5, 27-7.2-6, 27-7.2-9, 27-7.2-9.1, 27-7.2-10, 27-7.2-11 and 27-7.2-12 of the General Laws in Chapter 27-7.2 entitled "Workers' Compensation Insurance Fund" are hereby amended to read as follows:
27-7.2-1. Definitions -- When used in this chapter, the following words shall have the following meanings:
(1) "Board" means the board of directors of the state compensation insurance fund;
(2) "Fund" means the state compensation insurance fund known as The Beacon Mutual Insurance Company;
Manager Chief executive officer" means the manager chief executive officer of the state compensation insurance fund;
(4) "Personal injury" or "injury" has the meaning given to it in chapter 29 of title 28.
27-7.2-2. Creation of fund -- (a) The purpose of the fund is to ensure that all employers in the state of Rhode Island have the opportunity to obtain workers' compensation insurance at the lowest possible price. It is also the policy and purpose of this chapter to establish and maintain that the fund shall be the workers' compensation insurance carrier of last resort. The fund is created as a non-profit independent public corporation for the purpose of insuring employers against liability for personal injuries for which their employees may be entitled to benefits under chapter 33 of title 28 or under 33 U.S.C. section 901 et seq.,
or and other employer's liabilities incidental thereto.
(b) The fund
must shall be organized and, except as provided in subsection (c) of this section, section 27-7.2-9.1(c), or elsewhere in this chapter, operated as a domestic mutual insurance company.
(c) The fund shall be deemed to have met the requirements of sections 27-1-37 and 27-8-5 when the director of the department of labor and training has appropriated to the fund any portion of the amount provided for in section 27-7.2-19 and all policies issued by the fund shall be without the contingent mutual liability of the policyholders for assessment.
(d) The fund shall be deemed for all purposes to be an insurance company organized
pursuant to in accordance with section 7-1-5 and chapter 1.1 of title 7. Without limiting the foregoing, section 7-1.1-4.1 relating to, among other things, indemnification of officers, directors, and employees, and sections 7-1.1-33(b) through (e) relating to directors shall apply to the fund.
(e) The fund may amend its charter pursuant to section 7-1.1-53.1, subject to the prior approval of all amendments by the director of the department of business regulation.
(f) The general assembly declares that a stable market for workers' compensation insurance for all employers seeking coverage is necessary to the economic welfare of Rhode Island; that a stable and competitive insurance market will benefit all employers, all employees and their families, and all insurance companies doing business in Rhode Island; that without this insurance at a competitive rate, the orderly growth and economic development of the state would be severely impeded; and that the provision of competitive insurance coverage by the fund for employers in Rhode Island and the capitalization of the fund through capital assessments as provided in this chapter is for the benefit of the public and in furtherance of a public purpose.
27-7.2-3. Board of directors --
(a) The board of directors consists shall be comprised of seven (7) members elected or appointed as hereinafter provided and the director of the department of labor and training and the manager chief executive officer of the fund who shall be ex officio members. Each director shall hold office until a successor is appointed and qualifies qualified. Each Except for ex officio members, each director shall represent be a policyholder and may be an or an officer or employee of a policyholder. The initial board of directors shall be appointed by the governor and shall consist of seven (7) members, and the director of the department of labor and training who shall serve ex officio. Except as provided in the following paragraph, upon the expiration of the four (4) year terms of the directors in office upon the effective date of this section and thereafter, the governor shall appoint four (4) directors and the remaining three (3) directors shall be chosen elected by the fund's policyholders. In addition to the director of the department of labor and training, no more than one member of the board shall be a representative of a governmental entity. may be an elected or appointed official of state or municipal government. At least three (3) members of the board shall represent private, for profit, enterprises. be policyholders of an officer or employee of a policyholder which is a for profit entity. No member other than the manager of the board chief executive officer may represent or be an employee of an insurance company. (b) The membership terms The terms of board members, except for ex officio members, shall be four (4) years , except as provided below. Notwithstanding any of the foregoing provisions, from and after the repayment by the fund of the loan from the director of the department of labor and training described in section 27-7.2-19, the board of directors of the fund may by resolution provide that all directors, other than those servicing ex officio, shall thereafter be elected by the policyholders of the fund for terms of not more than four (4) years in accordance with the provisions for the election and classification of directors as may be established in the fund's by-laws. In no event shall these provisions alter the duration of the four (4) year terms of the directors elected by the fund's policyholders or appointed by the Governor prior to July 1, 1995. Any vacancy occurring during the term of any director shall be filled as provided in the fund's by-laws from time to time in the same manner as such member's predecessor. Members shall be entitled to reasonable reimbursement for vouchered expenses incurred in their official capacity. The board shall annually elect a chairperson from among its members, and other such officers it deems necessary for the performance of its duties. Directors shall be entitled to receive compensation of one hundred and fifty dollars ($150) per diem for each day or part thereof actually spent on the business of the fund.
27-7.2-5. Powers and duties of the board -- The board is vested with full power, authority, and jurisdiction over the fund. The board may perform all acts necessary or convenient in the exercise of any power, authority, or jurisdiction over the fund, either in the administration of the fund or in connection with the insurance business to be carried on by it under the provisions of this chapter, as fully and completely as the governing body of
a private all other domestic insurance carriers to fulfill the objectives and intent of this chapter. The board's authority to invest funds is subject to the limitations imposed on domestic insurance companies in chapter 11.1 of title 27.
Manager - Chief executive officer. -- Subject to the authority of the board, the manager chief executive officer appointed by the board pursuant to section 27-7.2-10 shall administer the fund.
27-7.2-9. General powers and limitations -- For the purposes of exercising the specific powers granted in this chapter and effectuating the other purposes of this chapter, the fund may:
(1) Sue and be sued;
(2) Have a seal and alter it at will;
(3) Make, amend, and repeal by-laws and rules relating to the conduct of the business of the fund;
(4) Enter into contracts relating to the administration of the fund;
(5) Rent, lease, buy, or sell property, real and personal, in its own name and may construct or repair buildings necessary to provide space for its operations;
a dividend dividends to its policyholders when there is an excess of assets over liabilities, and minimum surplus requirements;
(7) Pay medical expenses, rehabilitation expenses, compensation due claimants of insured employers, pay salaries, and pay administrative and other expenses of the fund;
(8) Hire personnel and set salaries and compensation; and
(9) Perform all other functions and exercise all other powers of a domestic mutual insurance company that are necessary, appropriate, or convenient to administer the fund and to its members; provided, however, that the fund shall not be a member of the
national council on compensation insurance National Council on Compensation Insurance (NCCI).
27-7.2-9.1. Insurance coverage program -- (a) Provision of workers' compensation coverage.. - Subject to the limitations set forth in this chapter, the fund shall provide workers' compensation insurance against liabilities arising under title 28 of the general laws for any employer that tenders the necessary premium.
(b) Applications; provision of coverage.
(1) Policy applications.. - Applicants may apply for coverage by the fund in good faith, either directly or through an insurance producer licensed by the state of Rhode Island to procure
worker's workers' compensation insurance according to rules adopted by the board under section 27-7.2-17.
(2) Denial, cancellation, and nonrenewal.. - The nonpayment of premium for current or prior policies issued by the fund to the applicant, or to another entity for which the fund deems the applicant to be a successor in interest, may be a basis for the fund to deny, nonrenew or terminate coverage. The failure or refusal by an applicant or insured to fully and accurately disclose to the fund information concerning the applicant's or insured's ownership, change of ownership, operations, or payroll, including allocation of payroll among state and federal compensation programs, classification of payroll, and any other information determined by the fund to be important in determining proper rates shall be sufficient grounds for the fund to deny an application or to nonrenew or cancel an existing policy or to assess a premium surcharge against the insured pursuant to subsection (d). The failure or refusal by any insured or applicant to comply with the fund's safety requirements or to permit premises inspections to the sole satisfaction of the fund shall be sufficient grounds for having its workers' compensation insurance coverage surcharged, nonrenewed, or cancelled, or an application for the coverage denied.
(3) Appeal to director.. - Any determination of the fund with respect to the denial, cancellation, or nonrenewal of any workers' compensation insurance policy against liabilities arising under title 28, with the exception of cancellation for nonpayment of premium, may be appealed to the director of the department of business regulation in writing, within thirty (30) days of notice of this action. If the director thereupon determines that the fund has unreasonably denied, cancelled, or failed to renew any workers' compensation insurance policy, the fund shall in good faith reconsider issuing, reinstating, or renewing
the residual risk workers' compensation insurance policy. If the fund has not issued, reinstated, or renewed the workers' compensation insurance policy within thirty (30) days of a determination of the director, the applicant or insured may appeal the denial, cancellation, or failure to renew by the fund to the superior court for Providence County.
(1) Except as otherwise provided in subsection (d), the fund shall be subject to rate regulation under chapter 7.1 of this title.
(2) Notwithstanding the foregoing, if, at any time, the
insurance commissioner director finds that a rate or filing of the fund is unjust, unreasonable, inadequate, excessive, or unfairly discriminatory, he or she shall, after a hearing held upon not less than ten (10) days written notice, specifying the matters to be considered at that hearing, issue an order specifying in what respects he or she finds that the rate or filing is unjust, unreasonable, inadequate, excessive, or unfairly discriminatory and stating when within a reasonable period thereafter the rate shall no longer be used or the filing shall be deemed no longer effective. That order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in the order. If, however, the commissioner director finds that an unfair discrimination exists in the application of a rate or filing to an individual applicant or insured, the commissioner director may, after a hearing held on like notice to the fund, issue an order that the discrimination be removed.
(d) Rate regulation.
(1) When a filing is not accompanied by the information upon which the fund supports that filing, and the director does not have sufficient information to determine whether the filing meets the requirements of applicable law, the director may require the fund to furnish the information upon which it supports the filing. The information furnished in support of a filing may include (i) the experience or judgment of the fund, (ii) its interpretation of any statistical data it relies upon, (iii) the experience of other insurers or rating organizations, or (iv) any other relevant factors.
(2) Notwithstanding any law to the contrary, the fund and any workers' compensation insurance policyholder may mutually consent to modify the rates for that policyholder's workers' compensation insurance policy, provided the fund files notice of the modification with the director of the department of business regulation.
(3) Notwithstanding any law to the contrary, the fund may establish and apply a premium surcharge
protocal protocol. The protocal protocol shall provide for higher premium and surcharge payments by insureds who present higher than normal risks within a class, including the ability of the fund to assess from time to time a premium surcharge of up to three (3) times its otherwise applicable premium rate, as it deems appropriate to further the public purposes set forth herein. The surcharge may be payable, at the option of the fund, upon assessment, over the policy year, or upon renewal. Any premium surcharge assessed by the fund may be appealed to the director of the department of business regulation within twenty (20) days of notice thereof, and the director may modify or rescind the surcharge if the director determines that the surcharge is unjust, unreasonable, inadequate, excessive or unfairly discriminatory.
(4) Notwithstanding any other provisions of law, immediately upon May 18, 1992, the fund may issue workers' compensation insurance policies at an initial rate not in excess of the rates then in effect for residual market workers' compensation insurance coverage offered by any other insurers within the state of Rhode Island, subject to the discretion of the fund to apply discounts and surcharge multipliers of up to three (3) times the premiums that would otherwise be applicable under the rates, with the premium surcharge to be payable as provided in subdivision (d)(4). The fund may continue to issue workers' compensation insurance coverage at the initial rates until the effectiveness of any revised rates filed pursuant to subdivision (d)(1).
Manager -- Appointment and qualifications - Chief executive officer - Appointment and qualifications. -- The board shall appoint a manager chief executive officer of the fund who shall be in charge of the day to day operations of the fund. The manager chief executive officer shall have proven successful experience as an executive at the general management level. The manager chief executive officer shall receive compensation as set by the board and shall serve at the pleasure of the board.
27-7.2-11. Bond -- Before entering on the duties of the office, the
manager chief executive officer shall qualify by giving an official bond in an amount and with sureties approved by the board. The manager chief executive officer shall file the bond with the secretary of state. The premium for the bond shall be paid by the fund.
Manager's powers -Chief executive officer's powers. -- (a) Subject to the authority of the board and the provisions of this chapter, the manager has the powers and duties prescribed in this section. the chief executive officer shall perform the duties of chief executive officer as provided in the fund's by-laws or that have been determined by resolution of the board of directors. Without limitation thereon, the chief executive officer or qualified officers or employees of the fund designated by the chief executive officer shall:
(b) The manager shall
(i) make safety inspections of risks and furnish advisory services to employers on safety and health measures;
. The manager may
(ii) act for the fund in collecting and disbursing money necessary to administer the fund and conduct the business of the fund;
. The manager shall have and
(iii) cause an abstract summary of any audit or survey conducted. The
manager chief executive officer may perform all other acts necessary in the to exercise of any power, authority, or jurisdiction over the powers, authorities and jurisdictions of the fund, either in the administration of the fund or in connection with the insurance business to be carried on by the fund under this chapter, including the establishment of premium rates. Subject to the approval of the board, the manager chief executive officer may delegate the manager's such duties, under this section on behalf of the fund, to qualified officers and employees of the fund, and may contract with the qualified independent contractors to perform those duties for the fund.
SECTION 2. This act shall take effect upon passage.