Chapter 303
2009 -- S 0667 SUBSTITUTE A
Enacted 11/13/09
A N A C T
RELATING TO
INSURANCE
Introduced By: Senator Leo R. Blais
Date Introduced: February 26, 2009
It is enacted by the
General Assembly as follows:
SECTION 1. Section 27-2-14 of the General Laws in Chapter
27-2 entitled "Foreign
Insurance Companies"
is hereby amended to read as follows:
27-2-14. Forwarding of process by commissioner. (a) Whenever lawful process
against an a foreign insurance company shall be
served upon the insurance commissioner, the
commissioner shall forward a copy of the process served on him or
her, by mail, postpaid, and
directed to the person appointed by the insurance company
to accept service of process on behalf
of the company.
secretary of the company, or in the case of
companies of foreign countries, to the
resident manager, if any, in this country.
(b) Service upon the
insurance commissioner shall be accomplished by regular mail or by
whatever alternative method is designated by the commissioner.
(c) For each copy
of process the insurance commissioner shall collect, for the use of the
state, the sum of twenty-five dollars ($25.00), which shall
be paid by the plaintiff at the time of
the service; the fee is to be recovered by the plaintiff
as part of the taxable costs, if he or she
prevails in the suit.
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 -
- Reports and records -- Premium tax -- Notice to
purchasers. -- (a) The insurance
commissioner may issue a surplus line broker's license to any
person 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 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
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) 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
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. Prior to
renewing, continuing, or
extending any policy, the 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) 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) 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 sufficient
information as determined by the insurance commissioner whether a
licensee or a person acting on the licensees behalf,
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) 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
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
INSOLVENCY FUND ARE NOT
AVAILABLE.
SECTION 3. Section 27-7-2.5 of the General Laws in Chapter
27-7 entitled "Liability
Insurance" is hereby
amended to read as follows:
27-7-2.5.
Minimum coverage -- Medical payments. -- (a) No
policy insuring against
loss resulting from liability imposed by law, or for
injuries caused by a motor vehicle collision or
for injuries arising out of the ownership, maintenance,
or use of a motor vehicle, shall be
delivered or issued in this state unless coverage is provided
in the policy for medical payments in
an amount of not less than twenty-five hundred dollars
($2,500) for each individual and five
thousand dollars ($5,000) aggregate for the protection of
persons injured regardless of the fault of
the injured person; provided, that the named insured
shall have the right to reject that coverage. in
writing.
(b) The insurer or any
affiliated insurer shall be required to notify the policy holder in
any renewal policy as to the availability of medical
payments coverage. Unless the insured named
in the policy requests medical payments coverage in
writing, that coverage need not be provided
in any subsequent policy issued by the same insurer or
any affiliate for motor vehicles owned by
the named insured, including, but not limited to,
renewal, reinstatement, substitute, amended,
modified, transfer, or replacement policies where the named
insured has rejected the coverage in
connection with the policy previously issued to the insured by
the same insurer or an affiliate.
SECTION 4. Section 27-10-8 of the General Laws in Chapter
27-10 entitled "Claim
Adjusters" is hereby
amended to read as follows:
27-10-8.
Emergency licenses. -- (a) Notwithstanding
any of the provisions of this
chapter, the commissioner may permit an experienced adjuster
to act as an adjuster in this state on
homeowners' losses
without a
(1) The adjuster is
either a licensed adjuster in another state which requires a license or
regularly adjusts in another state where such licensing is not
required and works for an insurance
company authorized to do business in
(2) He or she is
engaged in emergency insurance adjustment work during the period of
emergency only, as determined by the commissioner.
(b) The experienced
adjuster may work in this state either for an employer who is an
adjuster licensed by this state, or for a regular employer of
one or more adjusters licensed by this
state, or for an insurance company authorized to do
business in this state; provided, that the
employer or insurer shall furnish to the commissioner a notice
in writing or electronically
promptly after the beginning of any emergency insurance
adjustment work. The adjuster may
adjust claims from within or outside the state.
Emergency licenses
permitted under this section shall not exceed one hundred twenty
(120) days, unless extended by the commissioner.
(c) As used in this
section, "emergency insurance adjustment work" includes, but is not
limited to:
(1) Adjustment of a
single loss or losses arising out of an event or catastrophe common
to all of those losses; or
(2) Adjustment of
losses in any area declared to be a state of disaster by the governor of
the state of
SECTION 5. Section 27-20.1-5 of the General Laws in Chapter
27-20.1 entitled
"Nonprofit Dental
Service Corporations" is hereby amended to read as follows:
27-20.1-5.
Examination of affairs of corporation. -- It is
the duty of the director of
business regulation at least every three (3) five
(5) years to make an examination of the financial
condition and methods of doing business of every nonprofit
dental service corporation. The
examination shall be performed, and the associated costs shall be
borne by the company, in
accordance with all provisions of chapter 13.1 of this title.
SECTION 6. Section 27-29-13.2 of the General Laws in Chapter
27-29 entitled "Unfair
Competition and
Practices" is hereby amended to read as follows:
27-29-13.2.
Cancellation provisions for return of unearned premium. --
Every
insurance policy issued and approved for use in
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. For all cancellations, the
actual percentage retained by the
insurer shall be discernible in the policy cancellation
provisions. If a policy is canceled using a
short-rate table, the insurer shall provide the short-rate table
within the cancellation provisions of
the insurance policy so that an insured can make an
informed decision when cancelling a policy
midterm. Insurers
shall not impose cancellation fees when insurance policies are cancelled using
short rate tables.
SECTION 7. Chapter 27-29 of the General Laws entitled
"Unfair Competition and
Practices" is hereby
amended by adding thereto the following section:
27-29-13.3.
Fraud Warning. Notwithstanding any similar
requirements in title 28,
every claim form and application for insurance, regardless
of the form of transmission, shall
contain the following statement or a substantially similar
statement; provided, that this section
shall not apply to any claim form for health insurance
which is on a form promulgated by the
centers for Medicare and Medicaid Services, or in electronic
format pursuant to 45 C.F.R. Part
162. Any person who knowingly presents a false or
fraudulent claim for payment of a loss or
benefit or knowingly presents false information in an
application for insurance is guilty of a crime
and may be subject to fines and confinement in prison.
SECTION 8. Section 27-34.3-14 of the General Laws in Chapter
27-34.3 entitled "Rhode
follows:
27-34.3-14. Miscellaneous provisions. -- (a) This
chapter shall not be construed to
reduce the liability for unpaid assessments of the insureds of an impaired or insolvent insurer
operating under a plan with assessment liability.;
provided, however, this chapter shall not be
construed to reduce the liability for unpaid assessments of the
insureds of an impaired or
insolvent insurer operating under a plan with assessment
liability prior to January 1, 1996.
(b) Records shall be
kept of all meetings of the board of directors to discuss the activities
of the association in carrying out its powers and duties
under section 27-34.3-8. The records of
the association with respect to an impaired or insolvent
insurer shall not be disclosed prior to the
termination of a liquidation, rehabilitation or conservation
proceeding involving the impaired or
insolvent insurer, upon the termination of the impairment or
insolvency of the insurer, or upon the
order of a court of competent jurisdiction. Nothing in this
subsection shall limit the duty of the
association to render a report of its activities under section
27-34.3-15.
(c) For the purpose of
carrying out its obligations under this chapter, the association shall
be deemed to be a creditor of the impaired or insolvent
insurer to the extent of assets attributable
to covered policies reduced by any amounts to which the
association is entitled as subrogee
pursuant to section 27-34.3-8(k). Assets of the impaired or
insolvent insurer attributable to
covered policies shall be used to continue all covered
policies and pay all contractual obligations
of the impaired or insolvent insurer as required by this
chapter. Assets attributable to covered
policies, as used in this subsection, are that proportion of
the assets which the reserves that should
have been established for covered policies bear to the
reserves that should have been established
for all policies of insurance written by the impaired or
insolvent insurer.
(d) As a creditor of
the impaired or insolvent insurer as established in subsection (c) of
this section and consistent with section 27-14.3-38, the
association and other similar associations
shall be entitled to receive a disbursement of assets out
of the marshalled assets, from time to time
as the assets become available to reimburse it, as a
credit against contractual obligations under
this chapter. If the liquidator has not, within one
hundred twenty (120) days of a final
determination of insolvency of an insurer by the receivership
court, made an application to the
court for the approval of a proposal to disperse assets out
of marshalled assets to guaranty
associations having obligations because of the insolvency, then
the association shall be entitled to
make application to the receivership court for approval of
its own proposal to disburse these
assets.
(e) (1) Prior to the termination of any liquidation, rehabilitation
or conservation
proceeding, the court may take into consideration the contributions
of the respective parties,
including the association, the shareholders, and policy owners
of the insolvent insurer, and any
other party with a bona fide interest, in making an
equitable distribution of the ownership rights
of the insolvent insurer. In that determination,
consideration shall be given to the welfare of the
policy owners of the continuing or successor insurer.
(2) No distribution to
stockholders, if any, of an impaired or insolvent insurer shall be
made until and unless the total amount of valid claims of
the association with interest on the
claims for funds expended in carrying out its powers and
duties under section 27-34.3-8 with
respect to the insurer have been fully recovered by the
association.
(f) (1) If an order for liquidation or rehabilitation of an insurer
domiciled in this state has
been entered, the receiver appointed under the order shall
have a right to recover on behalf of the
insurer, from any affiliate that controlled it, the amount of
distributions, other than stock
dividends paid by the insurer on its capital stock, made at any
time during the five (5) years
preceding the petition for liquidation or rehabilitation
subject to the limitations of subdivisions (2)
-- (4) of this subsection.
(2) No distribution
shall be recoverable if the insurer shows that when paid the
distribution was lawful and reasonable, and that the insurer did
not know and could not
reasonably have known that the distribution might adversely
affect the ability of the insurer to
fulfill its contractual obligations.
(3) Any person who was
an affiliate that controlled the insurer at the time the
distributions were paid shall be liable up to the amount of
distributions received. Any person who
was an affiliate who controlled the insurer at the time
the distributions were declared, shall be
liable up to the amount of distributions which would have
been received if they had been paid
immediately. If two (2) or more persons are liable with respect
to the same distributions, they
shall be jointly and severally liable.
(4) The maximum amount
recoverable under this subsection shall be the amount needed
in excess of all other available assets of the insolvent
insurer to pay the contractual obligations of
the insolvent insurer.
(5) If any person
liable under subdivision (3) of this subsection is insolvent, all its
affiliates that controlled it at the time the distribution was
paid, shall be jointly and severally
liable for any resulting deficiency in the amount recovered
from the insolvent affiliate.
SECTION 9. Sections 3, 6, 7 and 8 shall take effect on
January 1, 2010. Sections 1, 2, 4,
5 shall take effect upon
passage.
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LC01325/SUB A
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