2003 -- H 5901
RELATING TO INSURANCE -- NONRENEWAL AND PREMIUM COVERAGE
Introduced By: Representative Peter L. Lewiss
Date Introduced: February 12, 2003
It is enacted by the General Assembly as follows:
SECTION 1. Chapter 27-29 of the General Laws entitled "Unfair Competition and
Practices" is hereby amended by adding thereto the following sections:
27-29-17. Application. – Sections 27-29-17 through 27-29-17.4 shall apply to
commercial property insurance policies, commercial liability insurance policies, other than
aviation and employers' liability insurance policies; and commercial multi-peril policies. These
sections shall not apply to reinsurance, residual market risks, workers' compensation insurance,
multi-state location risks, policies subject to retrospective rating plans, or excess or umbrella
27-29-17.1. Definitions. – For the purpose of sections 27-29-17 through 27-29-17.4:
(a) "Renewal" or "to renew" shall mean the issuance of or the offer by an insurer to issue
a policy succeeding a policy previously issued and delivered by the same insurer or an insurer
within the same group of insurers, or the issuance of a certificate or notice extending the term of
an existing policy for a specified period beyond its expiration date.
(b) "Expiration date" shall mean the date upon which coverage under a policy ends. It
shall also mean, for a policy written for a term longer than one year or with no fixed expiration
date, each annual anniversary date of such policy.
(c) "Nonrenewal" shall mean termination of a policy at its expiration date.
(d) "Commissioner" shall mean the commissioner of insurance.
27-29-17.2. Notice of nonrenewal. – (a) An insurer may nonrenew a policy; provided,
however, no nonrenewal of any policy of insurance to which this section applies shall be effective
unless an insurer shall first give, mail, or deliver to the first named insured at the address shown
on the policy, and to the insurance producer of record, written notice that the insurer will not
renew the policy. Such notice shall be given, mailed or delivered at least sixty (60) days before
the expiration date. If the notice is given, mailed or delivered less than sixty (60) days before the
expiration, coverage shall remain in effect until sixty (60) days after notice is given, mailed or
delivered. Earned premium for any period of coverage that extends beyond the expiration date
shall be considered pro-rata based upon the previous year's rate. For purposes of this section, the
transfer of a policyholder between companies within the same insurance group is not a refusal to
renew. In addition, changes in deductibles, changes in premium, changes in the amount of
insurance, or reductions in policy limits or coverage shall not be deemed to be refusals to renew.
(b) Notice of nonrenewal shall not be required where:
(1) the insurer or a company within the same insurance group has offered to issue a
renewal policy; or
(2) the named insured has obtained replacement coverage or has agreed in writing to
obtain replacement coverage.
27-29-17.3. Notice of premium or coverage changes. – (a) An insurer shall provide to
the first-named insured at the mailing address shown on the policy, and to the insurance producer
of record, written notice of any premium increase and shall also provide the exact renewal
premium, change in deductible, reduction in limits or coverage changes at least sixty (60) days
prior to the expiration date of the policy. If the insurer fails to provide such notice, the coverage
provided to the named insured shall remain in effect until notice is provided or until the effective
date of replacement coverage obtained by the named insured, whichever occurs first. For the
purposes of this section, notice is considered given sixty (60) days following date of giving of the
notice. If the named insured elects not to renew, any earned premium for the period of extension
of the terminated policy shall be calculated pro-rata at the lower of the current or previous year's
rate. If the insured accepts the renewal, the premium increase, if any, and other changes shall be
effective the day following the prior policy's expiration or anniversary date.
(b) Section 27-29-17.3 shall not apply to:
(1) Changes in a rate or plan filed and approved by the commissioner and applicable to an
entire class of business.
(2) Changes based upon the altered nature or extent of the risk insured.
(3) Changes in policy forms filed and approved with the commissioner and applicable to
an entire class of business.
27-29-17.4. Proof of notice. – (a) A company issuing any policy of insurance which is
subject to nonrenewal, a premium increase, a change in deductible, reduction in limits or changes
in coverage shall effect the same by serving the notice of it as provided by the policy. The notice
shall be delivered in hand to the named insured, or be left at his or her last address as shown by
the company's records, or, if its records contain no last address, at his or her last business,
residence, or other address known to the company. A company may alternatively forward notice
to that address by first class mail and maintain proof of mailing of the notice to the insured by the
United States Postal Service certificate of mailing in the ordinary course of the insurer's business,
and this proof of mailing shall be sufficient proof of notice.
(b) If a policy is made payable to a mortgagee or any person other than the named
insured, notice shall be given as provided in subsection (a) to the payee and to the named insured.
(c) The insurance producer of record who insured the policy shall also be given notice of
any nonrenewal or any premium increase, a change in deductible, or a change in coverage, in the
same manner as provided in subsection (a) of this section.
SECTION 2. This act shall take effect upon passage.