2015 -- H 5704

========

LC001109

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

____________

A N   A C T

RELATING TO INSURANCE -- UNAUTHORIZED INSURANCE BUSINESS--HEALTH

INSURANCE

     Introduced By: Representatives Filippi, Reilly, Roberts, Price, and Costa

     Date Introduced: February 26, 2015

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 27-16-1.2 of the General Laws in Chapter 27-16 entitled

"Unauthorized Insurance Business" is hereby amended to read as follows:

     27-16-1.2. Certificate of compliance -- Exceptions. -- (a) It shall be unlawful for any

insurer to transact insurance business in this state as set forth in subsection (b) of this section

without a certificate of compliance from the commissioner; provided, that this section shall not

apply to:

      (1) The lawful transaction of surplus lines insurance;

      (2) The lawful transaction of reinsurance by insurers;

      (3) Transactions in this state involving a policy lawfully solicited, written, and delivered

outside of this state covering only subjects of insurance not resident, located, or expressly to be

performed in this state at the time of issuance, and which transactions are subsequent to the

issuance of the policy;

      (4) Attorneys acting in the ordinary relation of attorney and client in the adjustment of

claims or losses;

      (5) Transactions in this state involving group life and group sickness and accident or

blanket sickness and accident insurance or group annuities where the master policy of the groups

was lawfully issued and delivered in and pursuant to the laws of a state in which the insurer was

authorized to do an insurance business, to a group organized for purposes other than the

procurement of insurance, and where the policyholder is domiciled or has a bona fide situs;

      (6) Transactions in this state involving any policy of insurance or annuity contract issued

prior to May 15, 1973;

      (7) Transactions in this state relative to a policy issued outside of this state involving

insurance on vessels, craft, or hulls, cargoes, marine protection, and indemnity or other risk,

including strikes and war risks commonly insured under ocean or wet marine forms of policy;

      (8) Transactions in this state involving contracts of insurance issued to one or more

industrial insured. An industrial insured is defined as an insured:

      (i) Which procures the insurance of any risk by the use of the services of a full-time

employee acting as insurance manager or buyer or the services of a regularly and continuously

retained qualified insurance consultant;

      (ii) Whose aggregate annual premiums on all risks excluding workers' compensation and

group total at least twenty-five thousand dollars ($25,000); and

      (iii) Which has at least twenty-five (25) full-time employees; and

      (9) (i) Transactions in this state involving life insurance, health insurance, or annuities

provided to educational or religious or charitable institutions organized and operated without

profit to any private shareholder or individual for the benefit of the institutions and individuals

engaged in the service of the institutions;

      (ii) This exemption shall be conditional upon the company complying with the following

requirements:

      (A) Payment of an annual registration fee of five hundred dollars ($500);

      (B) Filing a copy of any policy or contract form, including annuities issued to any Rhode

Island residents with the commissioner of insurance. Each policy and contract form, including

annuities, shall contain (on its front and declaration page) in at least twelve (12) point type the

following notice:

      (B) NOTICE TO RHODE ISLAND RESIDENTS

      THIS CONTRACT HAS BEEN PLACED WITH AN INSURER NOT LICENSED TO

DO BUSINESS IN THE STATE OF RHODE ISLAND BUT ELIGIBLE AS AN UNLICENSED

REGISTERED INSURER PURSUANT TO THE UNAUTHORIZED BUSINESS STATUTE.

THE INSURER IS NOT A MEMBER OF THE RHODE ISLAND LIFE AND HEALTH

GUARANTY ASSOCIATION. SHOULD THE INSURER BECOME INSOLVENT, THE

PROTECTION AND BENEFITS OF THE ASSOCIATION ARE NOT AVAILABLE.

      (C) Filing a copy of its annual statement, prepared pursuant to the laws of its state of

domicile, and any other financial material that may be requested by the commissioner; and

LC001109 - Page 2 of 5

      (D) The company agrees to appoint the commissioner of insurance, and his or her

successors in office, as its attorney to receive service of legal process issued against it in Rhode

Island. The appointment is to be irrevocable and to bind the commissioner, and any successors in

interest, and to remain in effect as long as there is in force in this state any contract issued by the

company or any obligations arising from a contract.

      (10) Rental car companies and their employees principally engaged in the rental of motor

vehicles and which offer in connection with and incidental to the rental of motor vehicles various

optional insurance coverage during the term of the rental, which shall be no more than sixty (60)

days.

      (11) Transactions that are insurance securitization or reinsurance transactions entered

into by a protected cell of a protected cell company organized under the Protected Cell

Companies Act, chapter 64 of this title, as those terms are defined or utilized in that chapter.

     (12) Health insurance provided by an out-of-state insurer, provided that the insurer

conforms to requirements imposed upon insurers licensed to do business in this state.

HealthSourceRI shall take all steps necessary to insure that residents of this state are allowed to

purchase such insurance.

      (b) Any of the following acts in this state effected by mail or otherwise, by or on behalf

of an insurer, is deemed to constitute the transaction of an insurance business in this state. The

venue of an act committed by mail is at the point where the matter transmitted by mail is

delivered and takes effect. Unless indicated, "insurer," as used in this section, includes all

corporations, associations, partnerships, and individuals engaged as principals in the business of

insurance and also includes interinsurance exchanges and mutual benefit societies:

      (1) The making or proposing to make, as an insurer an insurance contract;

      (2) The making of or proposing to make, as guarantor or surety, any contract of guaranty

or suretyship as a vocation and not merely incidental to any other legitimate business or activity

of the guarantor or surety;

      (3) The taking or receiving of any application for insurance;

      (4) The receiving or collection of any premium, commission, membership fees,

assessments, dues, or other consideration for an insurance or any part of an insurance;

      (5) The issuance or delivery of contracts of insurance to residents of this state or to

persons authorized to do business in this state;

      (6) Directly or indirectly acting as an agent or insurance producer for or representing or

aiding on behalf of another any person or insurer in the solicitation, negotiation, procurement, or

effectuation of insurance or renewals of insurance or in the dissemination of information as to

LC001109 - Page 3 of 5

coverage or rates, forwarding of applications, delivery of policies or contracts, inspection of risks,

fixing of rates or investigation or adjustment of claims or losses, or in the transaction of matters

subsequent to effectuation of the contract and arising out of it, or in any other manner

representing or assisting a person or insurer in the transaction of insurance with respect to

subjects of insurance, resident, located, or to be performed in this state. The provisions of this

subsection shall not operate to prohibit full-time salaried employees of a corporate insured from

acting in the capacity of an insurance manager or buyer in placing insurance in behalf of the

employer;

      (7) The transaction of any kind of insurance business specifically recognized as

transacting an insurance business within the meaning of the statutes relating to insurance; or

      (8) The transacting or proposing to transact any insurance business in substance

equivalent to any of these in a manner designed to evade the provisions of the statutes.

      (c) The failure of an insurer transacting insurance business in this state to obtain a

certificate of compliance shall not impair the validity of any act or contract of the insurer and

shall not prevent the insurer from defending any action at law or suit in equity in any court of this

state, but no insurer transacting insurance business in this state without a certificate of authority

shall be permitted to maintain an action in any court of this state to enforce any right, claim, or

demand arising out of the transaction of insurance business until the insurer shall have obtained a

certificate of authority.

      (d) In the event of the failure of any unauthorized insurer to pay any claim or loss within

the provisions of the insurance contract, any person who assisted or in any manner aided directly

or indirectly in the procurement of the insurance contract shall be liable to the insured for the full

amount of the claim or loss in the manner provided by the provisions of the insurance contract.

     SECTION 2. This act shall take effect upon passage.

========

LC001109

========

LC001109 - Page 4 of 5

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- UNAUTHORIZED INSURANCE BUSINESS--HEALTH

INSURANCE

***

     This act would permit Rhode Island residents to purchase health insurance from out-of-

state companies, and would require HealthSourceRI to make this option known to consumers.

     This act would take effect upon passage.

========

LC001109

========

LC001109 - Page 5 of 5