§ 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 authorizing the licensee to procure, subject to the restrictions provided in this section, policies of insurance, except life and health and accident, except as allowed under § 27-3-38.3, from eligible surplus lines insurers. Residents of this state must hold an insurance producer license to qualify for a surplus lines broker license. This license may be denied, suspended, or revoked by the insurance commissioner whenever, in the commissioner’s judgment, any of the bases under § 27-2.4-14 exist. 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, and containing any information, that the insurance commissioner may prescribe. For the purposes of carrying out the provisions of the Nonadmitted and Reinsurance Reform Act of 2010, the commissioner is authorized to utilize the national insurance producer database of the National Association of Insurance Commissioners (NAIC), or any other equivalent uniform national database, for the licensure of a person as a surplus lines producer and for renewal of such license. For insureds whose home state is this state, a person shall not procure a contract of surplus lines insurance with a nonadmitted insurer unless the person possesses a current surplus lines insurance license issued by the commissioner.
(b) A Rhode Island resident business entity acting as a surplus line broker may elect to 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 Rhode Island producer, were unable, after diligent effort, to procure from no less than three (3) admitted 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, private flood, and contingent liability. In addition, no such affidavit is required for exempt commercial purchasers as defined by the Nonadmitted and Reinsurance Reform Act of 2010. 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, sufficient information, as determined by the insurance commissioner, whether a licensee or a person acting on the licensee’s 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 four percent (4%) on the gross premiums charged the insured by the insurers, less the amount of premiums returned to the insured. The tax administrator shall provide to the insurance commissioner, upon request, information needed to determine compliance with this subsection. The content and nature of the information to be disclosed shall be determined and approved by the tax administrator, shall be the minimum necessary to determine compliance, and shall be kept confidential by the insurance commissioner.
(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-point (10) type the following notice:
THIS INSURANCE CONTRACT HAS BEEN PLACED WITH AN INSURER NOT LICENSED TO DO BUSINESS IN THE STATE OF RHODE ISLAND BUT APPROVED AS 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 ISLAND INSURERS INSOLVENCY FUND ARE NOT AVAILABLE.
History of Section.
P.L. 1959, ch. 155, § 1; P.L. 1982, ch. 147, § 1; P.L. 1987, ch. 166, § 11; P.L. 1996, ch. 188, § 3; P.L. 2000, ch. 161, § 1; P.L. 2000, ch. 183, § 1; P.L. 2002, ch. 354, § 1; P.L. 2006, ch. 632, § 1; P.L. 2007, ch. 443, § 1; P.L. 2008, ch. 144, § 2; P.L. 2008, ch. 198, § 2; P.L. 2009, ch. 303, § 2; P.L. 2009, ch. 304, § 2; P.L. 2010, ch. 23, art. 9, § 15; P.L. 2011, ch. 14, § 2; P.L. 2011, ch. 22, § 2; P.L. 2012, ch. 415, § 4; P.L. 2016, ch. 98, § 2; P.L. 2016, ch. 107, § 2; P.L. 2022, ch. 404, § 1, effective June 30, 2022; P.L. 2022, ch. 405, § 1, effective June 30, 2022.