Chapter 371
2008 -- S 2444
Enacted 07/08/08
A N A C T
RELATING
TO INSURANCE
Introduced
By: Senator Kevin A. Breene
Date
Introduced: February 13, 2008
It is enacted by the General Assembly as
follows:
SECTION 1. Section
27-2.4-5 of the General Laws in Chapter 27-2.4 entitled "Producer
Licensing Act" is hereby amended to read as
follows:
27-2.4-5.
Exceptions to licensing. -- (a) Nothing in this chapter shall be
construed to
require an insurer to obtain an insurance producer
license. In this section, the term "insurer" does
not include an insurer's officers, directors,
employees, subsidiaries or affiliates.
(b) A license as
an insurance producer shall not be required of the following:
(1) An officer,
director or employee of an insurer or of an insurance producer, provided
that the officer, director or employee does not
receive any commission or fees on policies written
or sold to insure risks residing, located or to
be performed in this state; and:
(i) The officer,
director or employee's activities are executive, administrative,
managerial, clerical or a combination of these,
and are only indirectly related to the sale,
solicitation or negotiation of insurance; or
(ii) The officer,
director or employee's function relates to underwriting, loss control,
inspection or the processing, adjusting,
investigating or settling of a claim on a contract of
insurance; or
(2) The officer, director
or employee is acting in the capacity of a special agent or
agency supervisor assisting insurance producers
where the person's activities are limited to
providing technical advice and assistance to
licensed insurance producers and do not include the
sale, solicitation or negotiation of insurance;
(3) A person who
secures and furnishes information: (i) for the purpose of group life
insurance, group property and casualty
insurance, group annuities, group or blanket accident and
health insurance; or (ii) for the purpose of
enrolling individuals under plans, issuing certificates
under plans or assisting in administering plans;
or (iii) performs administrative services related to
mass marketed property and casualty insurance;
where no commission or fee is paid to the person
for the service;
(4) An employer
or association or its officers, directors, employees, or the trustees of an
employee trust plan, to the extent that the
employers, officers, employees, director or trustees are
engaged in the administration or operation of a
program of employee benefits for the employer's
or association's own employees or the employees
of its subsidiaries or affiliates, which program
involves the use of insurance issued by an
insurer, as long as the employers, associations,
officers, directors, employees or trustees are
not in any manner compensated, directly or
indirectly, by the company issuing the
contracts;
(5) Employees of
insurers or organizations employed by insurers who are engaging in
the inspection, rating or classification of
risks, or in the supervision of the training of insurance
producers and who are not individually engaged
in the sale, solicitation or negotiation of
insurance;
(6) A person
whose activities in this state are limited to advertising without the intent to
solicit insurance in this state through
communications in printed publications or other forms of
electronic mass media whose distribution is not
limited to residents of the state, provided that the
person does not sell, solicit or negotiate
insurance that would insure risks residing, located or to
be performed in this state;
(7) A person who
is not a resident of this state who sells, solicits or negotiates a contract
of insurance for commercial property and
casualty risks to an insured with risks located in more
than one state insured under that contract,
provided that that person is licensed as an insurance
producer to sell, solicit or negotiate that insurance
in the state where the insured maintains its
principal place of business and the contract of
insurance insurers risks located in that state;
(8) A salaried
full-time employee who counsels or advises his or her employer relative to
the insurance interests of the employer or of
the subsidiaries or business affiliates of the employer
provided that the employee does not sell or
solicit insurance or receive a commission;
(9) A person
engaged or employed as an attorney licensed to practice law in Rhode
Island and provided those persons do not sell,
solicit or negotiate insurance;
(10) An actuary
or a certified public accountant engaged or employed in a consulting
capacity performing duties incidental to that
position and provided those persons do not sell,
solicit or negotiate insurance;
(11) A licensed
public adjuster acting within the scope of an applicable license and
provided those persons do not sell, solicit or
negotiate insurance; or
(12) Rental car
companies and their employees principally engaged in the rental of motor
vehicles and which offer in connection with and
incidental to the rental of those motor vehicles
various optional insurance coverage during the
term of the rental agreement which shall be no
more than forty-five (45) sixty (60)
days.
SECTION 2. Section
27-6-39 of the General Laws in Chapter 27-6 entitled "Fire and
Marine Insurance Rating" is hereby amended
to read as follows:
27-6-39.
Examination of rating and advisory organizations and underwriting and
reinsurance groups. -- The commissioner shall,
at least once in five (5) years, make or cause to
be made an examination of each rating
organization licensed in this state as provided in section
27-6-23 and the commissioner may, as often as he
or she may deem it expedient, make or cause
to be made an examination of each advisory
organization referred to in section 27-6-33 and of
each group, association, or other organization
referred to in section 27-6-37. The total cost of
those examinations shall be borne by the
examined organization and shall be one hundred thirty-
five percent (135%) one hundred fifty
percent (150%) of the total salaries paid to the examining
personnel of the banking and insurance division
engaged in those examinations less any salary
reimbursements and shall be paid to the
insurance commissioner to and for the use of the state.
This assessment shall be in addition to any
taxes and fees payable to the state. The officers,
manager, agents, and employees of the rating
organization, advisory organization, or group,
association, or other organization may be
examined at any time under oath and shall exhibit all
books, records, accounts, documents, or
agreements governing its method of operation. In lieu of
any examination the commissioner may accept the
report of an examination made by the
insurance supervisory official of another state,
pursuant to the laws of that state.
SECTION 3. Section
27-9-36 of the General Laws in Chapter 27-9 entitled "Casualty
Insurance Rating" is hereby amended to read
as follows:
27-9-36.
Examination of rating and advisory organizations and underwriting and
reinsurance groups. -- The commissioner may,
as often as he or she may deem it necessary,
make or cause to be made an examination of each
rating organization licensed in this state as
provided in section 27-9-22 and the commissioner
may, as often as he or she may deem it
expedient, make or cause to be made an
examination of each advisory organization referred to in
section 27-9-30 and of each group, association,
or other organization referred to in section 27-9-
34, including any workers' compensation assigned
risk servicing carrier or carriers. The total cost
of those examinations shall be borne by the
organizations so examined and shall be one hundred
thirty-five percent (135%) of the total salaries
paid to the examining personnel of the banking and
insurance division engaged in those examinations
less any salary reimbursements and shall be
paid to the insurance commissioner to and for
the use of the state. This assessment shall be in
addition to any taxes and fees payable to the
state. All
such examinations shall be performed in
accordance with the requirements of section 27-13.1-1
et seq.
The officers, managers, agents, and
employees of any rating organization, advisory
organization, or group, association, or other
organization of insurers, including workers'
compensation assigned risk servicing carrier or
carriers, may be examined at any time under oath
and shall exhibit all books, records, accounts,
documents, or agreements governing its method of
operation. In lieu of any examination the
commissioner may accept the report of an
examination made by the insurance supervisory official
of another state, pursuant to the laws of that
state.
SECTION 4. Section
27-16-1.2 of the General Laws in Chapter 27-16 entitled
"Unauthorized Insurance Business" is
hereby amended to read as follows:
27-16-1.2. Certificate
of compliance -- Exceptions. -- (a) It shall be unlawful for any
insurer to transact insurance business in this
state as set forth in subsection (b) of this section
without a certificate of compliance from the
commissioner; provided, that this section shall not
apply to:
(1) The lawful
transaction of surplus lines insurance;
(2) The lawful
transaction of reinsurance by insurers;
(3) Transactions
in this state involving a policy lawfully solicited, written, and delivered
outside of this state covering only subjects of
insurance not resident, located, or expressly to be
performed in this state at the time of issuance,
and which transactions are subsequent to the
issuance of the policy;
(4) Attorneys
acting in the ordinary relation of attorney and client in the adjustment of
claims or losses;
(5) Transactions
in this state involving group life and group sickness and accident or
blanket sickness and accident insurance or group
annuities where the master policy of the groups
was lawfully issued and delivered in and
pursuant to the laws of a state in which the insurer was
authorized to do an insurance business, to a
group organized for purposes other than the
procurement of insurance, and where the
policyholder is domiciled or has a bona fide situs;
(6) Transactions
in this state involving any policy of insurance or annuity contract issued
prior to May 15, 1973;
(7) Transactions
in this state relative to a policy issued outside of this state involving
insurance on vessels, craft, or hulls, cargoes,
marine protection, and indemnity or other risk,
including strikes and war risks commonly insured
under ocean or wet marine forms of policy;
(8) Transactions
in this state involving contracts of insurance issued to one or more
industrial insured. An industrial insured is
defined as an insured:
(i) Which
procures the insurance of any risk by the use of the services of a full-time
employee acting as insurance manager or buyer or
the services of a regularly and continuously
retained qualified insurance consultant;
(ii) Whose
aggregate annual premiums on all risks excluding workers' compensation and
group total at least twenty-five thousand
dollars ($25,000); and
(iii) Which has at
least twenty-five (25) full-time employees; and
(9) (i)
Transactions in this state involving life insurance, health insurance, or
annuities
provided to educational or religious or
charitable institutions organized and operated without
profit to any private shareholder or individual
for the benefit of the institutions and individuals
engaged in the service of the institutions;
(ii) This
exemption shall be conditional upon the company complying with the following
requirements:
(A) Payment of an
annual registration fee of five hundred dollars ($500);
(B) Filing a copy
of any policy or contract form, including annuities issued to any Rhode
Island residents with the commissioner of
insurance. Each policy and contract form, including
annuities, shall contain (on its front and
declaration page) in at least twelve (12) point type the
following notice:
NOTICE TO RHODE
ISLAND RESIDENTS
THIS CONTRACT HAS
BEEN PLACED WITH AN INSURER NOT LICENSED TO
DO BUSINESS IN THE STATE OF RHODE ISLAND BUT
ELIGIBLE AS AN UNLICENSED
REGISTERED INSURER PURSUANT TO THE UNAUTHORIZED
BUSINESS STATUTE.
THE INSURER IS NOT A MEMBER OF THE RHODE ISLAND
LIFE AND HEALTH
GUARANTY ASSOCIATION. SHOULD THE INSURER BECOME
INSOLVENT, THE
PROTECTION AND BENEFITS OF THE ASSOCIATION ARE
NOT AVAILABLE.
(C) Filing a copy
of its annual statement, prepared pursuant to the laws of its state of
domicile, and any other financial material that
may be requested by the commissioner; and
(D) The company agrees
to appoint the commissioner of insurance, and his or her
successors in office, as its attorney to receive
service of legal process issued against it in Rhode
Island. The appointment is to be irrevocable and
to bind the commissioner, and any successors in
interest, and to remain in effect as long as
there is in force in this state any contract issued by the
company or any obligations arising from a
contract.
(10) Rental car companies
and their employees principally engaged in the rental of motor
vehicles and which offer in connection with and
incidental to the rental of motor vehicles various
optional insurance coverage during the term of
the rental, which shall be no more than forty-five
(45) sixty (60) days.
(11) Transactions
that are insurance securitization or reinsurance transactions entered
into by a protected cell of a protected cell
company organized under the Protected Cell
Companies Act, chapter 64 of this title, as
those terms are defined or utilized in that chapter.
(b) Any of the
following acts in this state effected by mail or otherwise, by or on behalf
of an insurer, is deemed to constitute the
transaction of an insurance business in this state. The
venue of an act committed by mail is at the
point where the matter transmitted by mail is
delivered and takes effect. Unless indicated,
"insurer," as used in this section, includes all
corporations, associations, partnerships, and
individuals engaged as principals in the business of
insurance and also includes interinsurance
exchanges and mutual benefit societies:
(1) The making or
proposing to make, as an insurer an insurance contract;
(2) The making of
or proposing to make, as guarantor or surety, any contract of guaranty
or suretyship as a vocation and not merely
incidental to any other legitimate business or activity
of the guarantor or surety;
(3) The taking or
receiving of any application for insurance;
(4) The receiving
or collection of any premium, commission, membership fees,
assessments, dues, or other consideration for an
insurance or any part of an insurance;
(5) The issuance
or delivery of contracts of insurance to residents of this state or to
persons authorized to do business in this state;
(6) Directly or
indirectly acting as an agent or insurance producer for or representing or
aiding on behalf of another any person or
insurer in the solicitation, negotiation, procurement, or
effectuation of insurance or renewals of
insurance or in the dissemination of information as to
coverage or rates, forwarding of applications,
delivery of policies or contracts, inspection of risks,
fixing of rates or investigation or adjustment
of claims or losses, or in the transaction of matters
subsequent to effectuation of the contract and
arising out of it, or in any other manner
representing or assisting a person or insurer in
the transaction of insurance with respect to
subjects of insurance, resident, located, or to
be performed in this state. The provisions of this
subsection shall not operate to prohibit
full-time salaried employees of a corporate insured from
acting in the capacity of an insurance manager
or buyer in placing insurance in behalf of the
employer;
(7) The
transaction of any kind of insurance business specifically recognized as
transacting an insurance business within the
meaning of the statutes relating to insurance; or
(8) The
transacting or proposing to transact any insurance business in substance
equivalent to any of these in a manner designed
to evade the provisions of the statutes.
(c) The failure
of an insurer transacting insurance business in this state to obtain a
certificate of compliance shall not impair the
validity of any act or contract of the insurer and
shall not prevent the insurer from defending any
action at law or suit in equity in any court of this
state, but no insurer transacting insurance
business in this state without a certificate of authority
shall be permitted to maintain an action in any
court of this state to enforce any right, claim, or
demand arising out of the transaction of
insurance business until the insurer shall have obtained a
certificate of authority.
(d) In the event
of the failure of any unauthorized insurer to pay any claim or loss within
the provisions of the insurance contract, any
person who assisted or in any manner aided directly
or indirectly in the procurement of the insurance
contract shall be liable to the insured for the full
amount of the claim or loss in the manner
provided by the provisions of the insurance contract.
SECTION 5. Section
27-44-9 of the General Laws in Chapter 27-44 entitled "Casualty,
Liability and Fire and Marine Insurance
Rating" is hereby amended to read as follows:
27-44-9.
Licensing of advisory organizations. -- (a) License required. - No
advisory
organization shall provide any service relating
to the rates of any insurer subject to this chapter,
and no insurer shall utilize the services of the
organization for those purposes unless the
organization has become licensed under
subsection (d) of this section.
(b) Authorized
activities. - A licensed advisory organization may perform any of the
authorized activities enumerated in section
27-44-11 except no advisory organization may make
any filings on behalf of any insurer.
(c) Availability
of services. - No advisory 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.
(d) License. - An
advisory organization shall submit at the time of application:
(1) A copy of its
constitution, articles of association or incorporation, and the bylaws,
plan of operation, or other rules and
regulations governing its activities;
(2) A list of its
members and subscribers;
(3) 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; and
(4) Any other
relevant information and documents that the director may require.
(e) Change of
circumstances. - Every registered advisory organization shall promptly
notify the director of every material change in
the facts or in the documents upon which its
registration was based.
(f) 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 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)
one hundred dollars ($100). The director shall not
issue a license if the proposed activity would
tend to create a monopoly or to substantially
lessen competition.
(g) 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, after a hearing, may revoke or suspend
the license of an advisory organization that does
not comply with the requirements and standards of
this chapter.
SECTION 6. Section
46-12.9-8 of the General Laws in Chapter 46-12.9 entitled "Rhode
Island Underground Storage Tank Financial
Responsibility Act" is hereby amended to read as
follows:
46-12.9-8.
Review board. -- (a) There is hereby authorized, created and
established the
"underground storage tank review
board," to approve, modify, or deny disbursements to eligible
parties and to have such other powers as are
provided herein.
(b) The review
board shall consist of ten (10) nine (9) members, as follows: the
director
of the department of environmental management or
his or her designee who shall be a
subordinate within the department of
environmental management;. the director of the department
of business regulation or his or her designee
who shall be a subordinate within the division of
insurance and who shall be a nonvoting member. The governor, with the
advice and consent of
the senate, shall appoint eight (8) public
members one of whom shall have expertise and
experience in financial matters. In making these
appointments the governor shall give due
consideration to recommendations from the
American Petroleum Institute, the Independent Oil
Marketers Association, the Oil Heat Institute,
the Environment Council, the Independent Oil
Dealers Association and the Rhode Island Marine
Trade Association. The newly appointed
members will serve for a term of three (3) years
commencing on the day they are qualified. Any
vacancy which may occur on the board shall be
filled by the governor, with the advice and
consent of the senate, for the remainder of the
unexpired term in the same manner as the
member's predecessor as prescribed in this
section. The members of the board shall be eligible to
succeed themselves. Members shall serve until
their successors are appointed and qualified. No
one shall be eligible for appointment unless he
or she is a resident of this state. The members of
the board shall serve without compensation.
Those members of the board as of the effective date
of this act [July 15, 2005]who were appointed to
the board by members of the general assembly
shall cease to be members of the board on the
effective date of this act, and the governor shall
thereupon nominate three (3) members, each of
whom shall serve the balance of the unexpired
term of his or her predecessor. Those members of
the board as of the effective date of this act
[July 15, 2005]who were appointed to the board
by the governor shall continue to serve the
balance of their current terms. Thereafter, the
appointments shall be made by the governor as
prescribed in this section.
(c) When claims
are pending, the review board shall meet at the call of the chair no less
than four (4) times per year. All meetings shall
be held consistent with chapter 46 of title 42.
(d) The review
board and its corporate existence shall continue until terminated by law.
Upon termination of the existence of the review
board, all its rights and properties shall pass to
and be vested in the state.
(e) The review
board shall have the following powers and duties, together with all
powers incidental thereto or necessary for the
performance of those stated in this chapter:
(1) To elect or
appoint officers and agents of the review board, and to define their duties:
(2) To make and
alter bylaws, not inconsistent with this chapter, for the administration of
the affairs of the review board. Such bylaws may
contain provisions indemnifying any person
who is or was a director or a member of the
review board, in the manner and to the extent
provided in section 7-6-6 of the Rhode Island
nonprofit corporation act;
(3) To approve
and submit an annual report within ninety (90) days after the end of each
fiscal year to the governor, the speaker of the
house of representatives, the president of the senate,
and the secretary of state, of its activities
during that fiscal year. The report shall provide: an
operating statement summarizing meetings or
hearings held, including meeting minutes, subjects
addressed, and decisions rendered; a summary of
the review board's actions, fees levied, collected
or received as prescribed in sections 46-12.9-7
and 46-12.9-11, claims submitted, verified,
approved, modified, and denied as prescribed in
section 46-12.9-7, and reconsideration hearings
held as prescribed in section 46-12.9-9; a
synopsis of any law suits or other legal matters related
to the authority of the review board; and a
summary of performance during the previous fiscal
year including accomplishments, shortcomings and
remedies; a briefing on anticipated activities
in the upcoming fiscal year; and findings and
recommendations for improvements; and a
summary of any training courses held pursuant to
subdivision (f)(15) of this section. The report
shall be posted electronically as prescribed in
section 42-20-8.2.
(4) To conduct a
training course for newly appointed and qualified members and new
designees of ex-officio members within six (6)
months of their qualification or designation. The
course shall be developed by the executive
director, approved by the board, and conducted by the
executive director. The board may approve the
use of any board or staff members or other
individuals to assist with training. The training
course shall include instruction in the following
areas: the provisions of chapters 46-12.9,
42-46, 36-14, and 38-2; and the boards rules and
regulations. The director of the department of
administration shall, within ninety (90) days of the
effective date of this act [July 15, 2005]
prepare and disseminate training materials relating to the
provisions of chapters 36-14, 38-2, and 42-46.
(f) Upon the
passage of this act and the appointment and qualification of the three (3)
new members prescribed in subsection (b) of this
section, the board shall elect from among its
members a chair. Thereafter, the board shall
elect annually in February a chair from among the
members. The board may elect from among its
members such other officers as it deems
necessary.
(g) Six (6)
members of the board shall constitute a quorum and the vote of the majority
of the members present shall be necessary and
shall suffice for any action taken by the board. No
vacancy in the membership of the board shall
impair the right of a quorum to exercise all of the
rights and perform all of the duties of the
board.
(h) Members of
the board shall be removable by the governor pursuant to section 36-17
and removal solely for partisan or personal
reasons unrelated to capacity or fitness for the office
shall be unlawful.
SECTION 7. This
act shall take effect upon passage.
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LC01760
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