TITLE 27
Insurance

CHAPTER 27-14.2
Standards and Director's Authority for Companies Deemed to be in Hazardous Financial Condition

SECTION 27-14.2-3


§ 27-14.2-3 Director's authority.

(a) For the purposes of making a determination of an insurer's financial condition under this chapter, the director may:

(1) Disregard any credit or amount receivable resulting from transactions with a reinsurer which is insolvent, impaired, or otherwise subject to a delinquency proceeding;

(2) Make appropriate adjustments, including disallowances to asset values attributable to investments in or transactions with parents, subsidiaries, or affiliates consistent with the NAIC Accounting Practices and Procedures Manual, state laws and regulations;

(3) Refuse to recognize the stated value of accounts receivable if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor;

(4) Increase the insurer's liability in an amount equal to any contingent liability, pledge, or guarantee not otherwise included if there is a substantial risk that the insurer will be called upon to meet the obligation undertaken within the next twelve (12) month period.

(b) If the director determines that the continued operation of the insurer licensed to transact business in this state may be hazardous to its policyholders, creditors or the general public, then the director may, upon his or her determination, issue an order requiring the insurer to:

(1) Reduce the total amount of present and potential liability for policy benefits by reinsurance;

(2) Reduce, suspend, or limit the volume of business being accepted or renewed;

(3) Reduce general insurance and commission expenses by specified methods;

(4) Increase the insurer's capital and surplus;

(5) Suspend or limit the declaration and payment of a dividend by an insurer to its stockholders or to its policyholders;

(6) File reports in a form acceptable to the director concerning the market value of an insurer's assets;

(7) Limit or withdraw from certain investments or discontinue certain investment practices to the extent the director deems necessary;

(8) Document the adequacy of premium rates in relation to the risks insured; or

(9) File, in addition to regular annual statements, interim financial reports on the form adopted by the national association of insurance commissioners or on a format as promulgated by the director;

(10) Correct corporate governance practice deficiencies, and adopt and utilize governance practices acceptable to the director;

(11) Provide a business plan to the director in order to continue to transact business in the state; or

(12) Notwithstanding any other provision of law limiting the frequency or amount of premium rate adjustments, adjust rates for any non-life insurance product written by the insurer that the director considers necessary to improve the financial condition of the insurer.

(c) If the insurer is a foreign insurer, the director's order under subsection (b) of this section may be limited to the extent provided by statute.

(d) Any insurer subject to an order under subsection (b) of this section may request a hearing to review that order. The notice of hearing shall be served upon the insurer pursuant to the Administrative Procedures Act, chapter 35 of title 42. The notice of hearing shall state the time and place of the hearing, and the conduct, condition, or ground upon which the director based the order. Unless mutually agreed between the director and the insurer, the hearing shall occur not less than ten (10) days nor more than thirty (30) days after notice is served and shall be either in Providence County or in some other place of convenience to the parties to be designated by the director. The director shall hold all hearings under this subsection privately, unless the insurer requests a public hearing, in which case the hearing shall be public.

History of Section.
(P.L. 1992, ch. 445, § 1; P.L. 2010, ch. 57, § 1; P.L. 2010, ch. 68, § 1.)