Chapter 198
2008 -- S 2599
SUBSTITUTE A
Enacted 07/02/08
A N A C T
RELATING
TO INSURANCE -- PRODUCER LICENSING ACT
Introduced
By: Senator David E. Bates
Date
Introduced: February 26, 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.
=======
LC01764/SUB A/2
=======