Chapter 174

2005 -- S 0546

Enacted 07/06/05

A N A C T

RELATING TO INSURANCE -- FIRE AND MARINE INSURANCE RATING

Introduced By: Senator David E. Bates

Date Introduced: February 10, 2005

It is enacted by the General Assembly as follows:

SECTION 1. Chapter 27-6 of the General Laws entitled "Fire and Marine Insurance

Rating" is hereby amended by adding thereto the following section:

27-6-11.1. Costs. – For the purpose of determining whether the filing meets the

requirements of this chapter, the director may employ staff personnel and outside consultants,

including, but not limited to, those authorized pursuant to section 27-9-52. The reasonable costs

related to the review of rate filings, including the conduct of the hearing, shall be borne by the

rating organizations or insurers making the filing.

SECTION 2. Section 27-6-23 of the General Laws in Chapter 27-6 entitled "Fire and

Marine Insurance Rating" is hereby amended to read as follows:

27-6-23. Licensing of rating organizations. -- (a) A corporation, an unincorporated

association, a partnership, or an individual, whether located within or outside this state, may make

an application to the commissioner for a license as a rating organization for those kinds of

insurance, or a subdivision or a class of risk or a part or combination of it as are specified in its

application and shall file with the application:

(1) A copy of its constitution, its articles of agreement or association or its certificate of

incorporation, and its bylaws, rules, and regulations governing the conduct of its business;

(2) A list of its members and subscribers;

(3) The name and address of a resident of this state upon whom notices or orders of the

commissioner or process affecting the rating organization may be served; and

(4) A statement of its qualification as a rating organization.

(b) If the commissioner finds that the applicant is competent, trustworthy, and otherwise

qualified to act as a rating organization and that its constitution, its articles of agreement or

association or certificate of incorporation, and its bylaws, rules, and regulations governing the

conduct of its business conform to the requirements of law, the commissioner shall issue a license

specifying the kinds of insurance, or a subdivision or a class or a risk or part or combination of it,

for which the applicant is authorized to act as a rating organization. Every application shall be

granted or denied in whole or in part by the commissioner within sixty (60) days of the date of its

filing with him or her. Licenses issued pursuant to this section shall remain in effect for three (3)

years unless suspended or revoked by the commissioner. The fee for the license shall be ~~forty~~

~~dollars ($40.00)~~ three hundred dollars ($300). All in force licenses shall be transitioned into a

three (3) year licensing cycle beginning June 1, 2006, to expire every three (3) years thereafter.

License fees may be prorated for the initial renewal period as deemed appropriate by the director.

commissioner, after hearing upon notice, in the event the rating organization ceases to meet the

requirements of this section. Every rating organization shall notify the commissioner promptly of

every change in:

(1) Its constitution, its articles of agreement or association or its certificate of

incorporation, and its bylaws, rules, and regulations governing the conduct of its business;

(2) Its list of members and subscribers; and

(3) The name and address of the resident of this state designated by it upon whom

notices or orders of the commissioner or process affecting the rating organization may be served.

SECTION 3. Chapter 27-9 of the General Laws entitled "Casualty Insurance Rating" is

hereby amended by adding thereto the following section:

27-9-10.1. Costs. -- For the purpose of determining whether the filing meets the

requirements of this chapter, the director may employ staff personnel and outside consultants,

including, but not limited to, those authorized pursuant to section 27-9-52. The reasonable costs

related to the review of rate filings, including the conduct of the hearing, shall be borne by the

rating organizations or insurers making the filing.

SECTION 4. Sections 27-9-22 and 27-9-52 of the General Laws in Chapter 27-9 entitled

"Casualty Insurance Rating" are hereby amended to read as follows:

27-9-22. Licensing of rating organization. -- (a) A corporation, an unincorporated

association, a partnership, or an individual whether located within or outside this state may make

an application to the commissioner for a license as a rating organization for those kinds of

insurance or subdivisions of insurance specified in its application and shall file with the

application:

(1) A copy of its constitution, articles of agreement or association, or certificate of

incorporation, and bylaws, rules, and regulations governing the conduct of its business;

(2) A list of its members and subscribers;

(3) The name and address of a resident of this state upon whom notices or orders of the

commissioner or process affecting the rating organization may be served; and

(4) A statement of its qualifications as a rating organization.

(b) If the commissioner finds that the applicant is competent, trustworthy, and qualified

to act as a rating organization and that its constitution, articles of agreement or association, or

certificate of incorporation, and bylaws, rules, and regulations governing the conduct of its

business conform to the requirements of law, the commissioner shall issue a license specifying

the kinds of insurance or subdivisions of insurance for which the applicant is authorized to act as

a rating organization. Every application shall be granted or denied in whole or in part by the

commissioner within sixty (60) days of the date of its filing with him or her. Licenses issued

pursuant to this section shall remain in effect for three (3) years unless sooner suspended or

revoked by the commissioner. The fee for the license shall be three hundred dollars ($300). All in

force licenses shall be transitioned into a three (3) year licensing cycle beginning June 1, 2006, to

expire every three (3) years thereafter. License fees may be prorated for the initial renewal period

as deemed appropriate by the director.

commissioner, after a hearing upon notice, in the event the rating organization ceases to meet the

requirements of this section. Every rating organization shall notify the commissioner promptly of

every change in:

(1) Its constitution, articles of agreement or association or certificate of incorporation,

and bylaws, rules, and regulations governing the conduct of its business;

(2) Its list of members and subscribers; and

(3) The name or address of the resident of this state designated by it upon whom notices

or orders of the commissioner or process affecting the rating organization may be served.

27-9-52. Assessment for costs of rate filings, review, and pricing. -- The director of the

department of business regulation may appoint actuaries and any other required administrative

personnel to assist the director in the performance of his or her duties relating to the evaluation of

rate filings, reviews, and pricing procedures of insurers ~~when insuring against workers'~~

~~compensation and employers' liability~~; the actuaries and other administrative personnel shall

serve under the direction of the director and shall be removable at the director's pleasure. The

director is authorized to enter into contracts with consultants for the purpose of studying rate

filings, reviews, and pricing procedures of insurers~~, and the administration and other aspects of~~

~~the workers' compensation system~~. Insurance companies doing ~~workers' compensation and~~

~~employers' liability~~ insurance in this state shall be assessed according to a schedule of their direct

writings of ~~workers' compensation and employers' liability~~ insurance in this state to pay for the

compensation of the actuaries, consultants, and other administrative personnel retained hereunder.

This assessment shall comply with the provisions pursuant to chapter 37 of title 28.

SECTION 5. Chapter 27-44 of the General Laws entitled "Casualty, Liability and Fire

and Marine Insurance Rating" is hereby amended by adding thereto the following section:

27-44-6.1. Costs. -- For the purpose of determining whether the filing meets the

requirements of this chapter, the director may employ staff personnel and outside consultants,

including, but not limited to, those authorized pursuant to section 27-9-52. The reasonable costs

related to the review of rate filings, including the conduct of the hearing, shall be borne by the

rating organizations or insurers making the filing.

SECTION 6. Section 27-44-8 of the General Laws in Chapter 27-44 entitled "Casualty,

Liability and Fire and Marine Insurance Rating" is hereby amended to read as follows:

27-44-8. Licensing of rating organizations. -- (a) License required. - No rating

organization shall provide any service relating to the rates of any insurance subject to this chapter,

and no insurer shall utilize the services of the organization for these purposes unless the

organization has obtained a license under subsection (c) of this section.

(b) Availability of services. - No rating organization shall refuse to supply any services

for which it is licensed in this state to any insurer authorized to do business in this state and

offering to pay the fair and usual compensation for the services.

(1) Application. - A rating organization applying for a license shall include with its

application:

(i) A copy of its constitution, charter, articles of organization, agreement, association, or

incorporation, and a copy of its bylaws, plan of operation, and any other rules or regulations

governing the conduct of its business;

(ii) A list of its members and subscribers;

(iii) The name and address of one or more residents of this state upon whom notices,

process affecting it, or orders of the director may be served;

(iv) A statement showing its technical qualifications for acting in the capacity for which

it seeks a license; and

(v) Any other relevant information and documents that the director may require;

(2) Change of circumstances. - Every organization that has applied for a license shall

notify the director of every material change in the facts or in the documents on which its

application was based. Any amendment to a document filed under this section shall be filed with

the director not less than thirty (30) days after it becomes effective;

(3) Granting of license; fee. - If the director finds that the applicant and the natural

persons through whom it acts are competent, trustworthy, and technically qualified to provide the

services proposed, and that all requirements of the law are met, he or she shall issue a license

specifying the authorized activity of the applicant. The ~~annual~~ fee for the license shall be ~~forty~~

~~dollars ($40.00)~~ three hundred dollars ($300). The director shall not issue a license if the

proposed activity would tend to create a monopoly or to substantially lessen the competition in

any market;

(4) Duration. - Licenses issued pursuant to this section shall remain in effect for three (3)

years unless sooner suspended or revoked. All in force licenses shall be transitioned into a three

(3) year licensing cycle beginning June 1, 2006, to expire every three (3) years thereafter. License

fees may be prorated for the initial renewal period as deemed appropriate by the director. The

director may, at any time, after a hearing, revoke or suspend the license of a rating organization

that does not comply with the requirements and standards of this chapter.

SECTION 7. This act shall take effect upon passage.

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LC01703

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