Fire Insurance Policies and Reserves

SECTION 27-5-3.8

§ 27-5-3.8. Rhode Island commission on hurricane loss projection methodology.

(a) Legislative findings and intent.

(1) Reliable projections of hurricane losses are necessary in order to assure that rates for residential property insurance meet the statutory requirement that rates be neither excessive nor inadequate.

(2) The general assembly recognizes the need for expert evaluation of computer models and other recently developed or improved actuarial methodologies for projecting hurricane losses, in order to resolve conflicts among actuarial professionals, and in order to provide both immediate and continuing improvement in the sophistication of actuarial methods used to set rates charged to consumers.

(3) It is the intent of the general assembly to create the Rhode Island commission on hurricane loss projection methodology as a panel of experts to provide the most actuarially sophisticated guidelines and standards for projection of hurricane losses possible, given the current state of actuarial science.

(b) Commission created.

(1) There is created the Rhode Island commission on hurricane loss projection methodology. For the purposes of this section, the term "commission" means the Rhode Island commission on hurricane loss projection methodology. The commission shall be administratively housed within the department of administration, but it shall independently exercise the powers and duties specified in this section.

(2) The commission shall consist of the following eight (8) members:

(i) The director of business regulation, acting as the administrator of insurance, or designee;

(ii) The director of the Rhode Island emergency management agency;

(iii) A member of the board of directors of the Rhode Island Joint Reinsurance Association appointed by the governor;

(iv) Five (5) members directly appointed by the governor, as follows:

(A) An actuary who is employed full-time by a property and casualty insurer that was responsible for at least one percent of the aggregate statewide direct written premium for homeowner's insurance in the calendar year preceding the member's appointment to the commission;

(B) An expert in insurance finance who has a background in actuarial science;

(C) An expert in statistics who has a background in insurance;

(D) An expert in computer system design.

(E) An expert in meteorology who specializes in hurricanes.

(3) Members designated under subparagraphs (b)(2)(i)-(iii) shall serve on the commission as long as they maintain the respective offices designated in subparagraphs (b)(2)(i)-(iii). Members under subparagraph (b)(2)(iv)(A)-(E) shall serve for a term of three (3) years, and may be reappointed to the commission. All members may be removed by the governor prior to the expiration of their term for cause. Vacancies on the commission shall be filled in the same manner as the original appointment.

(4) The governor shall annually appoint one of the members of the commission to serve as chair.

(5) Members of the commission shall serve without compensation but shall be reimbursed for per diem and travel expenses.

(6) There shall be no liability on the part of, and no cause of action of any nature shall arise against, any member of the commission for any action taken in the performance of their duties under this section. In addition, the commission may, in writing, waive any potential cause of action for negligence of a consultant, contractor, or contract employee engaged to assist the commission.

(c) Adoption and effect of standards and guidelines.

(1) The commission shall consider any actuarial methods, principles, standards, models, or output ranges that have the potential for improving the accuracy of or reliability of the hurricane loss projections used in residential property insurance rate filings. The commission shall, from time to time, adopt findings as to the accuracy or reliability of particular methods, principles, standards, models, or output ranges.

(2) The commission shall adopt revisions to previously adopted actuarial methods, principles, standards, models, or output ranges at least annually.

(3)(i) A trade secret that is used in designing and constructing a hurricane loss model and that is provided pursuant to this section, by a private company, to the commission, is confidential and shall not be deemed a public record pursuant to the provisions of chapter 2 of title 38.

(ii) That portion of a meeting of the commission or of a rate proceeding on an insurer's rate filing at which a trade secret made confidential and exempt by this paragraph is discussed shall be deemed confidential and not open to disclosure pursuant to the open meetings act, but may be discussed at a closed meeting as provided for in chapter 46 of title 42.

(d) The Rhode Island commission is hereby authorized to form a multi-state commission with the states of Massachusetts, Connecticut, and any other interested state in furtherance of the goals of this act.

History of Section.
(P.L. 2007, ch. 131, § 1; P.L. 2008, ch. 475, § 76; P.L. 2015, ch. 52, § 3; P.L. 2015, ch. 53, § 3.)