Chapter 079

2005 -- H 5876 SUBSTITUTE A

Enacted 06/24/05

A N A C T

RELATING TO INSURANCE

Introduced By: Representatives Savage, Ehrhardt, Moffitt, Long, and Singleton

Date Introduced: March 01, 2005

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:

27-29-13.1. Late payment of premium. -- An insurer may levy and collect a maximum

fee or charge of ten dollars ($10.00) for any late payment of premium by a policyholder for any

property, casualty, fire and marine or liability policy of insurance. A late fee may not be imposed

unless payment is received more than five (5) business days following the date payment is due.

27-29-13.2. Cancellation provisions for return of unearned premium. -- Every

insurance policy issued and approved for use in Rhode Island shall provide clear language on the

method of calculation of the unearned premium portion to be returned to the insured if the policy

is cancelled. Insurance policies shall not state "refer to manuals" to determine the amount of

unearned premium to be returned. Insurers shall not impose cancellation fees when insurance

policies are cancelled using short rate tables.

     SECTION 2. Section 27-29-16 of the General Laws in Chapter 27-29 entitled "Unfair

Competition and Practices" is hereby repealed.

27-29-16. Written notice to claimants of payment of claim in settlements. -- Upon

payment of five thousand dollars ($5,000) or more in settlement of any liability claim, the insurer

shall cause written notice of the payment to be mailed to the claimant, at the same time payment

is made, by the insurer or its representative, including the insurer's attorney, to the claimant's

attorney or other representative of the claimant by draft, check, or otherwise.

     SECTION 3. Chapter 27-7 of the General Laws entitled "Liability Insurance" is hereby

amended by adding thereto the following section:

27-7-7. Written notice to claimants of payment of claim in settlements. -- Upon

payment of five thousand dollars ($5,000) or more in settlement of any liability claim, the insurer

shall cause written notice of the payment to be mailed to the claimant, at the same time payment

is made by the insurer or its representative, including the insurer's attorney, to the claimant's

attorney or other representative of the claimant by draft, check, or otherwise.

     SECTION 4. Chapter 27-9.1 of the General Laws entitled "Unfair Claims Settlement

Practices Act" is hereby amended by adding thereto the following section:

27-9.1-4.1. Amounts received in settlement of claims retained for unpaid premiums.

-- (a) Any insurance company or insurance producer may retain an amount equal to any unpaid

premiums due on the policy under which a claim is being presented when settling any presented

claim for an insured; provided, that:

(1) The unpaid premium remains unpaid sixty (60) days after the effective date of the

policy or the date of the original billing of the premium, whichever occurs later;

(2) The insurance company shall pay to the insurance producer, upon written

documentation submitted by the insurance agent or broker of the unpaid premium due, the

amount equal to the unpaid premium due the insurance producer from the amount of the claim

being presented and the balance of the claim be paid to the insured and/or loss payee or

mortgagee named in the policy.

(b) This section shall not apply to any health insurance policy within the state.

     SECTION 5. Section 27-10-15 of the General Laws in Chapter 27-10 entitled "Claim

Adjusters" is hereby repealed.

27-10-15. Amounts received in settlement of claims retained for unpaid premiums. --

(a) Any insurance company or insurance producer may retain an amount equal to any unpaid

premiums due on the policy under which a claim is being presented when settling any presented

claim for an insured; provided, that:

(1) The unpaid premium remains unpaid sixty (60) days after the effective day of the

policy or the date of the original billing of the premium, whichever occurs later;

(2) The insurance company shall pay to the insurance producer, upon written

documentation submitted by the insurance agent or broker of the unpaid premium due, the

amount equal to the unpaid premium due the insurance producer from the amount of the claim

being presented and the balance of the claim be paid to the insured and/or loss payee or

mortgagee named in the policy.

(b) This section shall not apply to any health insurance policy within the state.

     SECTION 6. This act shall take effect on January 1, 2006

=======

LC01696/SUB A

========