Chapter
144
2008 -- H 8067 SUBSTITUTE A
Enacted 07/01/08
A N A C T
RELATING TO INSURANCE
-- PRODUCER LICENSING ACT
Introduced By: Representatives Kennedy, Lewiss, Naughton, Church, and E Coderre
Date
Introduced: March 25, 2008
It is
enacted by the General Assembly as follows:
SECTION
1. Sections 27-2.4-2, 27-2.4-4 and 27-2.4-8 of the General Laws in Chapter
27-2.4
entitled "Producer Licensing Act" are hereby amended to read as
follows:
27-2.4-2.
Definitions. -- The following definitions apply to this chapter:
(1) "Insurance commissioner" means the director of the department of
business
regulation
or his or her designee;
(2) "Department" means the department of business regulation;
(3) "Home state" means any state or territory of the United States,
or the District of
Columbia,
in which an insurance producer maintains his or her principal place of
residence or
principal
place of business and is licensed to act as an insurance producer;
(4) "Insurance" means any of the lines of authority set forth in this
title;
(5) "Insurance producer" means a person required to be licensed under
the laws of this
state to
sell, solicit or negotiate insurance;
(6) "Insurer" means: (i) any person, reciprocal exchange,
interinsurer, Lloyds insurer,
fraternal
benefit society, and any other legal entity engaged in the business of
insurance,
including
insurance producers; (ii) notwithstanding sections 27-19-2, 27-20-2, 27-20.1-2,
27-
20.2-2,
27-20.3-2, and 27-41-22, all of whom shall be engaged in the business of
insurance for
the
purpose of this chapter, nonprofit hospital and/or medical service corporation,
a nonprofit
dental
service corporation, a nonprofit optometric service corporation, a nonprofit
legal service
corporation,
a health maintenance organization as defined in chapter 41 of this title or as
defined
in
chapter 62 of title 42, or any other entity providing a plan of health benefits
subject to state
insurance
regulation; and (iii) an organization that for consideration assumes certain
risks for an
insured.
Insurer organizations may include corporations, stock companies, mutual
companies, risk
retention
groups, reciprocals, captives, Lloyds associations, and government residual
plans.
(7) "License" means a document issued by this state's insurance
commissioner
authorizing
a person to act as an insurance producer for the lines of authority specified
in the
document.
The license itself does not create any authority, actual, apparent or inherent,
in the
holder
to represent or commit an insurance carrier;
(8) "Limited line credit insurance" includes credit life, credit
disability, credit property,
credit
unemployment, involuntary unemployment, mortgage life, mortgage guaranty,
mortgage
disability,
guaranteed automobile protection (gap) insurance, and any other form of
insurance
offered
in connection with an extension of credit that is limited to partially or
wholly
extinguishing
that credit obligation that the insurance commissioner determines should be
designated
a form of limited line credit insurance;
(9) "Limited line credit insurance producer" means a person who
sells, solicits or
negotiates
one or more forms of limited line credit insurance coverage to individuals
through a
master,
corporate, group or individual policy;
(10) "Limited lines insurance" means those lines of insurance that
the insurance
commissioner
deems necessary to recognize for purposes of complying with section subsection
27-2.4-10(e);
(11) "Limited lines producer" means a person authorized by the
insurance commissioner
to sell,
solicit or negotiate limited lines insurance;
(12) "NAIC" means National Association of Insurance Commissioners;
(13) "Negotiate" means the act of conferring directly with or
offering advice directly to a
purchaser
or prospective purchaser of a particular contract of insurance concerning any
of the
substantive
benefits, terms or conditions of the contract, provided that the person engaged
in that
act
either sells insurance or obtains insurance from insurers for purchasers;
(14) "Person" means an individual;
(15) "Resident" means a person who either resides in Rhode Island or
maintains an
office
in Rhode Island where the business of producing insurance is transacted and
designates
Rhode
Island as the residence for purposes of licensure;
(16) "Sell" means to exchange a contract of insurance by any means,
for money or its
equivalent,
on behalf of an insurance company;
(17) "Solicit" means attempting to sell insurance or asking or urging
a person to apply
for a
particular kind of insurance from a particular company;
(18) "Terminate" means the cancellation of the relationship between
an insurance
producer
and the insurer or the termination of an insurance producer's authority to
transact
insurance;
(19) "Uniform application" means the current version of the NAIC
uniform application
for
resident and nonresident insurance producer licensing.
(20)
“Business entity” means a corporation, association, partnership, limited
liability
company,
limited liability partnership, or other legal entity;
(21)
“Contracted producer report” means the annual report that all insurers
contracting
with
insurance producers must provide to the department on or by March 1 listing
each insurance
producer
to whom the insurer paid one hundred dollars ($100) or more in commissions for
the
preceding
calendar year of January 1 to December 31. The department shall prescribe the
form
and
manner of reporting.
27-2.4-4.
Fees. -- (a) Fees required by this chapter shall be as follows:
(1) Initial insurance producer license: $55.00;
(2) Annual insurance producer renewal: $55.00; and
(3) Annual contract fee contracted producer report: $30.00 (per
producer).
(b) The insurance commissioner may by rule or regulation specify fees for
letters of
certification,
clearance letters, duplicate licenses, and any other documents as well as
fees for
service services and documents provided by or on
behalf of the department that are reasonably
determined
by the insurance commissioner.
27-2.4-8.
Application for license. -- (a) A person applying for a resident
insurance
producer
license shall make application to the insurance commissioner on the uniform
application
and
declare under penalty of refusal, suspension or revocation of the license that
the statements
made in
the application are true, correct and complete to the best of the individual's
knowledge
and
belief. Before approving the application, the insurance commissioner shall find
that the
individual:
(1) Is at least eighteen (18) years of age;
(2) Has not committed any act that is a ground for denial, suspension or
revocation set
forth in
section 27-2.4-14;
(3) Has completed a prelicensing course of study for the lines of authority for
which the
person
has applied unless exempted in writing, for good cause, from the requirement
by the
department;
(4) Has paid the fees set forth in section 27-2.4-4; and
(5) Has successfully passed the examinations for the lines of authority for
which the
person
has applied.
(b)
A Rhode Island resident business entity acting as an insurance producer may
elect to
obtain
an insurance producer license. Application shall be made using the uniform
business
entity
application. Prior to approving the application, the commissioner shall find
both of the
following:
(1)
The business entity has paid the appropriate fees.
(2)
The business entity has designated a licensed producer responsible for the
business
entity’s
compliance with the insurance laws and rules of this state.
(c)(b) The insurance commissioner may require any documents
reasonably necessary to
verify
the information contained in an application.
(d)(c) Each insurer that sells, solicits or negotiates any form
of limited line credit
insurance
shall provide to each individual whose duties will include selling, soliciting
or
negotiating
limited line credit insurance a program of instruction that may be approved by
the
insurance
commissioner.
SECTION
2. Section 27-3-38 of the General Laws in Chapter 27-3 entitled "Agents,
Brokers,
and Solicitors" is hereby amended to read as follows:
27-3-38.
Surplus line brokers -- License -- Affidavit of inability to obtain
insurance -
-
Records -- Premium tax -- Notice to purchasers. – Surplus line brokers – License –
Affidavit
of inability to obtain insurance – Reports and records – Premium tax – Notice
to
purchasers- (a) The insurance commissioner may issue a surplus
line broker's license to any
person,
firm, or corporation who or which is licensed as a property and casualty
insurance
producer
in this state, authorizing the licensee to procure, subject to the restrictions
provided in
this
section, policies of insurance, except life and health and accident, from
insurers which are on
the
commissioner's list of approved surplus insurers in this state. This license
may be suspended
or
revoked by the insurance commissioner whenever, in the commissioner's judgment,
a
suspension
or revocation will best promote the interest of the people of this state.
Before any
license
is issued by the insurance commissioner and before each renewal of a license,
there shall
be filed
in his or her office a written application by the person, firm, or
corporation desiring the
license
in the form or forms and supplements to the form, and containing any
information, that
the
insurance commissioner may prescribe.
(b)
A Rhode Island resident business entity acting as a surplus line broker may
elect to
obtain
a surplus line broker license. Application shall be made using the uniform
business entity
application.
Prior to approving the application, the commissioner shall find both of the
following:
(1)
The business entity has paid the appropriate fees.
(2)
The business entity has designated a licensed surplus line broker responsible
for the
business
entity’s compliance with the insurance laws and rules of this state.
(c)(b)
When any policy of insurance is procured under the authority of that license,
there
shall be
executed, both by the licensee and by the insured, affidavits setting forth
facts showing
that the
insured or a licensed Rhode Island producer were unable, after diligent effort,
to procure
from no
less than three (3) authorized insurers the full amount of insurance required
to protect the
property
owned or controlled by the insured or the risks insured. Provided, however the
aforementioned
affidavit shall not be required when insuring the following interest: amusement
parks
and devices, environmental improvement and/or remediation sites, vacant
property or
property
under renovation, demolition operations, event cancellation due to weather,
railroad
liability,
discontinued products, fireworks and pyrotechnics, warehouseman's legal
liability,
excess
property coverage, and contingent liability. For purposes of this section,
residual market
mechanisms
shall not be considered authorized insurers. These affidavits shall be filed
by the
licensee
with the insurance commissioner within sixty (60) days after the policies have
been
procured
and the insurance commissioner, if not satisfied with the affidavits, may order
the
licensee
to take any further action to obtain the insurance from authorized insurers
that he or she
may
deem necessary. Notwithstanding the provisions of this subsection, for any
policy renewed,
continued,
or extended by the same insurer, no affidavit shall be required to be filed by
a licensee
with
the commissioner, for any policy of insurance or coverage under a policy
procured by the
licensee,
for which the licensee has previously filed an affidavit. Prior to renewing, continuing, or
extending
any policy, the licensee licensed surplus line broker must
confirm that the insurer is on
the
insurance commissioner's list of approval surplus line insurers in this state.
(d)(c) The licensee shall keep a complete and separate record of
all policies procured
from
approved surplus lines insurers under the license and these records shall be
open to the
examination
of both the insurance commissioner and tax administrator at all reasonable
times,
and
shall show the exact amount of each kind of insurance permitted under this
section which has
been
procured for each insured, the gross premiums charged by the insurers for each
kind of
insurance
permitted under this section which were returned to each insured, the name of
the
insurer
or insurers which issued each of these policies, the effective dates of these
policies, and
the
terms for which these policies were issued. The licensee shall file a yearly
report with the
insurance
commissioner on a form prescribed by the insurance commissioner showing the
business
procured under the surplus line license for the preceding calendar year, and
the report
shall
be due annually on or before April 1.
(e)(d) Every person, firm, or corporation licensed pursuant to
the provisions of this
section
shall file with the insurance commissioner, at the time of the insurance
producer license
renewal,
a certificate of the tax administrator, on a blank furnished by the insurance
commissioner,
certifying that the licensee has paid to the tax administrator, for all
policies
procured
by the licensee pursuant to the license during the next preceding calendar
year, a tax,
computed
at the rate of three percent (3%) on the gross premiums charged the insured by
the
insurers,
less the amount of premiums returned to the insured.
(f)(e) Every application form for insurance from a surplus lines
insurer, every affidavit
form
executed by the insured, and every policy (on its front and declaration pages)
issued by the
surplus
lines insurer, shall contain in ten (10) point type the following notice:
NOTICE
THIS INSURANCE CONTRACT HAS BEEN PLACED WITH AN INSURER NOT
LICENSED
TO DO BUSINESS IN THE STATE OF RHODE ISLAND BUT APPROVED AS
A
SURPLUS LINES INSURER. THE INSURER IS NOT A MEMBER OF THE RHODE
ISLAND
INSURERS INSOLVENCY FUND. SHOULD THE INSURER BECOME
INSOLVENT,
THE PROTECTION AND BENEFITS OF THE RHODE ISLAND INSURERS
INSOLVENCY
FUND ARE NOT AVAILABLE.
SECTION
3. Section 27-10-3 of the General Laws in Chapter 27-10 entitled "Claim
Adjusters"
is hereby amended to read as follows:
27-10-3.
Issuance of license. – (a) The insurance commissioner may, upon
the payment
of a fee
established by the commissioner, issue to any person a license to act as an
insurance
claims
adjuster once that person satisfies the reasonable requirements for the
issuance of the
license,
as established by the commissioner.
(b)
A Rhode Island resident business entity acting as an insurance adjuster may
elect to
obtain
an insurance adjusters license. Application shall be made using the uniform
business
entity
application. Prior to approving the application, the commissioner shall find
both of the
following:
(1)
The business entity has paid the appropriate fees.
(2)
The business entity has designated a licensed adjuster responsible for the
business
entity’s
compliance with the insurance laws and rules of this state.
SECTION
4. Section 27-10.1-2 of the General Laws in Chapter 27-10.1 entitled
"Motor
Vehicle
Damage Appraisers" is hereby amended to read as follows:
27-10.1-2.
"Motor vehicle physical damage appraiser" defined. – (a)
"Motor vehicle
physical
damage appraiser" means any person, partnership, association, or
corporation that
practices
as a business the appraising of damages to motor vehicles insured under
automobile
physical
damage policies on or on behalf of third party claimants.
(b)
A Rhode Island resident business entity acting as a motor vehicle physical
damage
appraiser
may elect to obtain a motor vehicle physical damage appraiser license surplus
line
broker
license. Application shall be made using the uniform business entity
application. Prior to
approving
the application, the commissioner shall find both of the following:
(1)
The business entity has paid the appropriate fees.
(2)
The business entity has designated a licensed motor vehicle physical damage
appraiser
responsible for the business entity’s compliance with the insurance laws and
rules of
this
state.
SECTION
5. This act shall take effect upon passage.
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LC02530/SUB A
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