Chapter 066

2012 -- S 2594 SUBSTITUTE A

Enacted 05/14/12

 

A N A C T

RELATING TO FINANCIAL INSTITUTIONS - DEPARTMENT OF BUSINESS

REGULATION

          

     Introduced By: Senators Lanzi, Miller, Ruggerio, Gallo, and Walaska

     Date Introduced: March 01, 2012

  

It is enacted by the General Assembly as follows:

 

     SECTION 1. Section 19-14.10-13 of the General Laws in Chapter 19-14.10 entitled "An

Act Adopting the Federal Secure and Fair Enforcement for Mortgage Licensing Act of 2009" is

hereby amended to read as follows:

 

     19-14.10-13. Enforcement authorities, violations and penalties. -- (a) In order to

ensure the effective supervision and enforcement of this chapter the director or the director's

designee may, pursuant to chapter 42-35:

      (1) Deny, suspend, revoke, condition or decline to renew a license for a violation of this

chapter, rules or regulations issued under this chapter or order or directive entered under this

chapter.

      (2) Deny, suspend, revoke, condition or decline to renew a license if an applicant or

licensee fails at any time to meet the requirements of section 19-14.10-6 or 19-14.10-9, or

withholds information or makes a material misstatement in an application for a license or renewal

of a license.

      (3) Order restitution against persons subject to this chapter for violations of this chapter.

      (4) Impose fines on persons subject to this chapter pursuant to subsections (b), (c) and

(d) of this section.

      (5) Issue orders or directives under this chapter as follows:

      (i) Order or direct persons subject to this chapter to cease and desist from conducting

business, including immediate temporary orders to cease and desist.

      (ii) Order or direct persons subject to this chapter to cease any harmful activities or

violations of this chapter, including immediate temporary orders to cease and desist.

      (iii) Enter immediate temporary orders to cease business under a license or interim

license issued pursuant to the authority granted under this chapter if the director or the director's

designee determines that such license was erroneously granted or the licensee is currently in

violation of this chapter;

      (iv) Order or direct such other affirmative action as the director or the director's designee

deems necessary.

      (2)(b) The director or the director's designee may impose a civil penalty on a mortgage

loan originator and any lender or loan broker licensed under chapter 19-14 or 19-14.1 which

employs such mortgage loan originator, if the director or the director's designee finds, on the

record after notice and opportunity for hearing, that such mortgage loan originator has violated or

failed to comply with any requirement of this chapter or any regulation prescribed by the director

or the director's designee under this chapter or order issued under authority of this chapter. In

addition, the director or the director's designee may impose a civil penalty on a lender or loan

broker licensed under chapter 19-14 or 19-14.1 which employs any mortgage loan originator

licensed under this chapter, if the director or the director's designee finds, on the record after

notice and opportunity for hearing, that such lender or loan broker has violated or failed to

comply with any requirement of this chapter or any such regulation or order.

      (c)(3) The maximum amount of penalty for each act or omission described in subsection (b)

of this section shall be twenty-five thousand five hundred dollars ($25,000).

      (d)(4) Each violation or failure to comply with any directive or order of the director or the

director's designee is a separate and distinct violation or failure.

 

     SECTION 2. Section 27-1-40.1 of the General Laws in Chapter 27-1 entitled "Domestic

Insurance Companies" is hereby amended to read as follows:

 

     27-1-40.1. Mutual insurance holding companies. -- (a) Any mutual insurance company

created under the laws of this state (whether pursuant to section 7-1-5 or by special act of the

general assembly) and any foreign mutual insurance company which has been domesticated or

redomesticated pursuant to Chapter 2.2 of this title which meets or exceeds all capital and surplus

funds required by law for the transaction of business in Rhode Island may, in any manner

permitted by subsection (b) of this section, reorganize into a mutual insurance holding company

structure upon adoption of a plan of reorganization by two-thirds (2/3) vote of the board of

directors or other governing body, approval of a plan of reorganization by the director of the

department of business regulation, and the affirmative vote of one half (1/2) of those members or

policyholders, constituting a quorum, present in person or by proxy at a meeting called by the

board of directors or other governing body. Unless otherwise provided in its charter, bylaws or in

the plan of reorganization, each member or policyholder shall have one vote, and in the case of

any policy or contract of group life or other group insurance, the employer or other person to

whom or in whose name the master policy or contract has been issued shall be deemed to be the

member or policyholder and shall be entitled to one vote for each policy or contract of group

insurance irrespective of the number of individuals insured.

      (b) A plan of reorganization of a mutual insurance company into a mutual insurance

holding company structure may provide for the reorganization to be effected in one of the

following manners:

      (1) A domestic mutual insurance company may form a mutual insurance holding

company in accordance with the provisions of section 7-1-5 except that the approval of the plan

of reorganization by the director of the department of business regulation shall be deemed to

constitute the approval of the director of the department of business regulation required under

section 7-1-5. Upon this formation, the domestic mutual insurance company shall be converted to

a stock insurance company and shall issue to the mutual insurance holding company all of the

authorized shares of the voting stock of the stock insurance company. The articles of

incorporation and bylaws of the mutual insurance holding company formed in this manner shall

provide for all then current policyholders of the converted mutual insurance company to become

members of the mutual insurance holding company and to retain this membership interest so long

as the policyholder has a policy in force with the converted mutual insurance company. The

articles of incorporation and bylaws of the mutual insurance holding company also shall set forth

the terms and conditions under which future policyholders of the stock insurance company shall

become members of the mutual insurance holding company. The mutual insurance holding

company at all times shall retain a majority of the issued and outstanding shares of each class of

voting stock of the stock insurance company.

      (2) A domestic mutual insurance company may merge its policyholders' membership

interests into a mutual insurance holding company previously formed under the provisions of this

section. Upon the merger, the domestic mutual insurance company shall be converted to a stock

insurance company and shall issue to the mutual insurance holding company all of the authorized

shares of voting stock of the stock insurance company. In connection with the merger and in

accordance with the articles of incorporation and bylaws of the mutual insurance holding

company, the then current policyholders of the converted mutual insurance company shall

become members of the mutual insurance holding company and shall retain membership interest

so long as the policyholder has a policy in force with the converted mutual insurance company.

The mutual insurance holding company at all times shall retain a majority of the issued and

outstanding shares of each class of voting stock of the stock insurance company.

      (3) A domestic mutual insurance company may establish a subsidiary stock insurance

company in accordance with the provisions of section 7-1-5 (approval of the plan of

reorganization by the director of the department of business regulation constituting any approval

required under section 7-1-5) and then transfer to the subsidiary stock insurance company

substantially all of its assets and liabilities. Upon this transfer, all persons who prior to the

transfer held policy rights with respect to or other rights as creditors of the mutual insurance

company shall have those rights solely with respect to the subsidiary stock insurance company

created and the corresponding liability or obligation of the mutual insurance company to those

persons shall be assumed by the subsidiary stock insurance company. All policyholders of the

mutual insurance company at the time of the transfer of assets and liabilities shall continue to

have a membership interest in the mutual insurance company and the articles of incorporation and

bylaws of the mutual insurance company shall be amended to provide this. The articles of

incorporation and bylaws of the mutual insurance company shall also be amended to set forth the

terms and conditions under which future policyholders of the subsidiary stock insurance company

shall become members of the mutual insurance company. The mutual insurance company after

this shall be considered a mutual insurance holding company for the purposes of this section and

at all times shall retain a majority of the issued and outstanding shares of each class of voting

stock of the subsidiary stock insurance company.

      (c) The plan of reorganization shall specify in any detail as may be required by the

director of the department of business regulation the manner under subsection (b) in which the

mutual holding company structure shall be created, the capital structure of the stock insurance

company and the mutual insurance holding company, the management of the stock insurance

company and the mutual insurance holding company, the purposes for the reorganization, the

articles of incorporation and bylaws of both the mutual insurance holding company and the stock

insurance company, and the terms of and use of proceeds from any proposed sale of capital stock

by the stock insurance company.

      (d) The corporate existence of any mutual insurance company reorganizing into a mutual

insurance holding company structure under this section shall not terminate, but the reorganized

institution shall be deemed to be a continuation of entity of this reorganized mutual insurance

company.

      (e) The director of the department of business regulation may employ staff personnel as

well as professional consultants and other persons to assist in the review of the plan of

reorganization and may hold public hearings as, in the director's discretion, are desirable prior to

granting approval of the plan of reorganization. All reasonable costs related to the review of the

plan of reorganization, including the costs attributable to staff personnel and professional

consultants, shall be borne by the mutual insurance company filing a plan of reorganization for

approval.

      (f) The department of business regulation shall issue rules and regulations implementing

this section, which shall be administered by the director of the department of business regulation.

      (g) Subject to applicable provisions of this title, a mutual insurance holding company

formed pursuant to this section may: (1) invest in the stock of one or more domestic or foreign

insurance companies; (2) acquire a domestic or foreign insurance company through consolidation

or merger of the institution with its subsidiary insurance company; (3) merge with another mutual

insurance holding company; (4) invest in a corporation, the purchase of the capital stock of which

is permitted for a mutual insurance company under the laws of this state; (5) exercise any other

power or engage in any activity permitted to a mutual insurance company organized under the

laws of this state; and (6) exercise the powers and engage directly or indirectly in those activities

as are now or may after this be permitted for business corporations under Chapter 1.1 of this title

7.

      (h) A mutual insurance holding company formed pursuant to this section, subsequent to

its formation, shall be subject to the provisions of Chapter 35 of this title.

 

     SECTION 3. 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 4. Section 42-14-2.1 of the General Laws in Chapter 42-14 entitled

"Department of Business Regulation" is hereby amended to read as follows:

 

     42-14-2.1. Reporting by certain insurers -- Settlements. -- (a) Every insurer or entity

exempt pursuant to section 2.6 of chapter 16 of title 27 or entity permissibly self insured pursuant

to subsection 2(c) of chapter 14.1 of title 42 providing professional liability insurance to licensed

healthcare professionals or licensed healthcare facilities shall send a complete report to the board

of medical licensure and discipline established pursuant to chapter 37 of title 5, or the board of

examiners in dentistry established pursuant to chapter 31.1 of title 5 and the department of

business regulation as to any claim, notice, settlement, judgment, or arbitration award of a claim

or action for damages for death or personal injury caused by such person's negligence, error, or

omission in practice or his or her rendering of unauthorized professional services. The report shall

be sent within thirty (30) days after service of such arbitration award on the parties or notice of

the claim, settlement, judgment, or arbitration award.

      (b) Notwithstanding any other provision of law, an insurer or entity exempt pursuant to

section 2.6 of chapter 16 of title 27 or entity permissibly self insured pursuant to subsection 2(c)

subsection (2) of chapter 14.1 of title 42 providing professional liability coverage to licensed

healthcare professionals or licensed healthcare facilities shall have the contractual right to settle

any claim up to the limits of the policy without the insured's consent, unless the policy by its

express terms prohibits the insurer from settling any claim without the consent of the insured.

      (c) All insurers doing business in the state of Rhode Island or entity exempt pursuant to

section 2.6 of chapter 16 of title 27 or entity permissibly self insured pursuant to subsection 2(c)

subsection (2) of chapter 14.1 of title 42 providing professional liability insurance for health care

professionals or licensed healthcare facilities shall file an annual report with the commissioner of

insurance. This report must be filed for each year by March 1 of the next year. The information

required for each year shall include, for each rating class:

      (1) The number of insured;

      (2) The total premiums paid;

      (3) The total number of claims made, the years in which the incidents giving rise to the

claims occurred, and the total number of those claims outstanding at the end of the year;

      (4) The total amount of claims paid, the years in which the incidents giving rise to the

claims occurred, and the amount of the costs which can be identified with these claims for

investigation, processing, and defense of these claims; and

      (5) The number of lawsuits filed.

 

     SECTION 5. This act shall take effect upon passage.

     

=======

LC01223/SUB A

=======