A N A C T
RELATING TO INSURANCE
It is enacted by the General Assembly as follows:
SECTION 1. Title 27 of the General Laws entitled "Insurance" is hereby amended by adding thereto the following chapter:
CHAPTER 4.7
RISK-BASED CAPITAL (RBC) FOR HEALTH ORGANIZATIONS ACT
27-4.7-1. Short title. -- This chapter shall be known and may be cited as the "Rhode Island Risk-Based Capital (RBC) for Health Organizations Act".
27-4.7-2. Definitions. - As used in this chapter, the following terms shall have the following meanings:
(1) "Adjusted RBC report" means an RBC report which has been adjusted by the commissioner in accordance with section 27-4.7-3;
(2) "Corrective order" means an order issued by the commissioner specifying corrective actions which the commissioner has determined are required;
(3) "Commissioner" means the Director of the Department of Business Regulation;
(4) "Domestic health organization" means a health organization domiciled in this state;
(5) "Foreign health organization" means a health organization that is licensed or otherwise authorized to do business in this state pursuant to title 27 but is not domiciled in this state;
(6) "NAIC" means the National Association of Insurance Commissioners;
(7) "Health organization" means a health maintenance organization, limited health service organization, dental or vision plan, hospital, medical and dental indemnity or service corporation or other managed care organization or any other entity providing a plan of health insurance, health benefits, or health services subject to title 27. This definition does not include an organization that is licensed as either a life and health insurer or a property and casualty insurer pursuant to chapter 27-1 or chapter 27-2 and that is otherwise subject to either the life or property and casualty RBC requirements;
(8) "RBC" means risk-based capital;
(9) "RBC instructions" means the RBC report, including risk-based capital instructions adopted by the NAIC, as these RBC instructions may be amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC;
(10) "RBC level" means a health organization's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where:
(i) "Company action level RBC" means, with respect to any health organization, the product of two (2.0) and its authorized control level RBC;
(ii) "Regulatory action level RBC" means the product of one and one-half (1.5) and its authorized control level (RBC);
(iii) "Authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions;
(iv) "Mandatory control level RBC" means the product of seven tenths (.70) and the authorized control level RBC.
(11) "RBC plan" means a comprehensive financial plan containing the elements specified in section 27-4.7-4(b). If the commissioner rejects the RBC plan, and it is revised by the health organization, with or without the commissioner's recommendation, the plan shall be called the "revised RBC plan";
(12) "RBC report" means the report required in section 27-4.7-3;
(13) "Total adjusted capital" means the sum of:
(i) A health organization's statutory capital and surplus (i.e. net worth) as determined in accordance with the statutory accounting applicable to the annual and quarterly financial statements required to be filed by health organizations pursuant to applicable sections of title 27; and
(ii) Such other items, if any, as the RBC instructions may provide.
27-4.7-3. RBC reports. - (a) A domestic health organization shall, on or prior to each March 1 (the "filing date"), prepare and submit to the commissioner a report of its RBC levels as of the end of the calendar year just ended, in a form and containing such information as is required by the RBC instructions. In addition, a domestic health organization shall file its RBC report:
(1) With the NAIC in accordance with the RBC instructions; and
(2) With the insurance commissioner in any state in which the health organization is authorized to do business, if the insurance commissioner has notified the health organization of its request in writing, in which case the health organization shall file its RBC report not later than the later of:
(i) Fifteen (15) days from the receipt of notice to file its RBC report with that state; or
(ii) The filing date.
(b) A health organization's RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take the following into account (and may adjust for the covariance between) determined in each case by applying the factors in the manner set forth in the RBC instructions:
(1) Asset risk;
(2) Credit risk;
(3) Underwriting risk; and
(4) All other business risks and such other relevant risks as are set forth in the RBC instructions.
(c) An excess of capital (i.e. net worth) over the amount produced by the risk-based capital requirements contained in this chapter and the formulas, schedules and instructions referenced in this chapter is desirable in the business of health insurance. Accordingly, health organizations should seek to maintain capital above the RBC levels required by this chapter. Additional capital is used and useful in the insurance business and helps to secure a health organization against various risks inherent in, or affecting, the business of insurance and not accounted for, or only partially measured by, the risk-based capital requirements contained in this chapter.
(d) If a domestic health organization files an RBC report that in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the health organization of the adjustment. The notice shall contain a statement of the reason for the adjustment. An RBC report as so adjusted is referred to as an "adjusted RBC report."
27-4.7-4. Company action level event. - (a) "Company Action Level Event" means any of the following events:
(1) The filing of an RBC report by a health organization that indicates that the health organization's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC;
(2) Notification by the commissioner to the health organization of an adjusted RBC report that indicates an event in paragraph (1) of this subsection, provided the health organization does not challenge the adjusted RBC report under section 27-4.7-8; or
(3) If, pursuant to section 27-4.7-8, a health organization challenges an adjusted RBC report that indicates the event in paragraph (1) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.
(b) In the event of a company action level event, the health organization shall prepare and submit to the commissioner an RBC plan that shall:
(1) Identify the conditions that contribute to the company action level event;
(2) Contain proposals of corrective actions that the health organization intends to take and that would be expected to result in the elimination of the company action level event;
(3) Provide projections of the health organization's financial results in the current year and at least the two (2) succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory balance sheets, operating income, net income, capital and surplus, and RBC levels. The projections for both new and renewal business might include separate projections for each major line of business and separately identify each significant income, expense and benefit component;
(4) Identify the key assumptions impacting the health organization's projections and the sensitivity of the projections to the assumptions; and
(5) Identify the quality of, and problems associated with, the health organization's business, including but not limited to its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business and use of reinsurance, if any, in each case.
(c) The RBC plan shall be submitted:
(1) Within forty-five (45) days of the company action level event; or
(2) If the health organization challenges an adjusted RBC report pursuant to section 27-4.7-8 within forty-five (45) days after notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.
(d) Within sixty (60) days after the submission by a health organization of an RBC plan to the commissioner, the commissioner shall notify the health organization whether the RBC plan shall be implemented or is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines the RBC plan is unsatisfactory, the notification to the health organization shall set forth the reasons for the determination, and may set forth proposed revisions which will render the RBC plan satisfactory in the judgment of the commissioner. Upon notification from the commissioner, the health organization shall prepare a revised RBC plan, which may incorporate by reference any revisions proposed by the commissioner, and shall submit the revised RBC plan to the commissioner:
(1) Within forty-five (45) days after the notification from the commissioner; or
(2) If the health organization challenges the notification from the commissioner under section 27-4.7-8, within forty-five (45) days after a notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.
(e) In the event of a notification by the commissioner to a health organization that the health organization's RBC plan or revised RBC plan is unsatisfactory, the commissioner may at the commissioner's discretion, subject to the health organization's right to a hearing under section 27-4.7-8, specify in the notification that the notification constitutes a regulatory action level event.
(f) Every domestic health organization that files an RBC plan or revised RBC plan with the commissioner shall file a copy of the RBC plan or revised RBC plan with the insurance commissioner in any state in which the health organization is authorized to do business if:
(1) The state has an RBC provision substantially similar to section 27-4.7-9(a); and
(2) The insurance commissioner of that state has notified the health organization of its request for the filing in writing, in which case the health organization shall file a copy of the RBC plan or revised RBC plan in that state no later than the later of:
(i) Fifteen (15) days after the receipt of notice to file a copy of its RBC plan or revised RBC plan with the state; or
(ii) The date on which the RBC plan or revised RBC plan is filed under subsections (c) and (d) of this section.
27-4.7-5. Regulatory action level event. - (a) "Regulatory action level event" means, with respect to a health organization, any of the following events:
(1) The filing of an RBC report by the health organization that indicates that the health organization's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;
(2) Notification by the commissioner to a health organization of an adjusted RBC report that indicates the event in paragraph (1) of this subsection, provided the health organization does not challenge the adjusted RBC report under section 27-4.7-8;
(3) If, pursuant to section 27-4.7-8, the health organization challenges an adjusted RBC report that indicates the event in paragraph (1) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge;
(4) The failure of the health organization to file an RBC report by the filing date, unless the health organization has provided an explanation for the failure that is satisfactory to the commissioner and has cured the failure within ten (10) days after the filing date;
(5) The failure of the health organization to submit an RBC plan to the commissioner within the time period set forth in section 27-4.7-4(c);
(6) Notification by the commissioner to the health organization that:
(i) The RBC plan or revised RBC plan submitted by the health organization is, in the judgment of the commissioner, unsatisfactory; and
(ii) Notification constitutes a regulatory action level event with respect to the health organization, provided the health organization has not challenged the determination under section 27-4.7-8.
(7) If, pursuant to section 27-4.7-8, the health organization challenges a determination by the commissioner under paragraph (6) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the challenge;
(8) Notification by the commissioner to the health organization that the health organization has failed to adhere to its RBC plan or revised RBC plan, but only if the failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the commissioner has so stated in the notification, provided the health organization has not challenged the determination under section 27-4.7-8; or
(9) If, pursuant to section 27-4.7-8, the health organization challenges a determination by the commissioner under paragraph (8) of this subsection, the notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the challenge.
(b) In the event of a regulatory action level event the commissioner shall:
(1) Require the health organization to prepare and submit an RBC plan or, if applicable, a revised RBC plan;
(2) Perform such examination or analysis as the commissioner deems necessary of the assets, liabilities and operations of the health organization including a review of its RBC plan or revised RBC plan; and
(3) Subsequent to the examination or analysis, issue an order specifying such corrective actions as the commissioner shall determine are required (a "corrective order").
(c) In determining corrective actions, the commissioner may take into account factors the commissioner deems relevant with respect to the health organization based upon the commissioner's examination or analysis of the assets, liabilities and operations of the health organization, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the RBC instructions. The RBC plan or revised RBC plan shall be submitted:
(1) Within forty-five (45) days after the occurrence of the regulatory action level event;
(2) If the health organization challenges an adjusted RBC report pursuant to section 27-4.7-8 and the challenge is not frivolous in the judgment of the commissioner within forty-five (45) days after the notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge; or
(3) If the health organization challenges a revised RBC plan pursuant to section 27-4.7-8 and the challenge is not frivolous in the judgment of the commissioner, within forty-five (45) days after the notification to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.
(d) The commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the commissioner to review the health organization's RBC plan or revised RBC plan, examine or analyze the assets, liabilities and operations (including contractual relationships) of the health organization and formulate the corrective order with respect to the health organization. The fees, costs and expenses relating to consultants shall be borne by the affected health organization or such other party as directed by the commissioner.
27-4.7-6. Authorized control level event. - (a) "Authorized control level event" means any of the following events:
(1) The filing of an RBC report by the health organization that indicates that the health organization's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;
(2) The notification by the commissioner to the health organization of an adjusted RBC report that indicates the event in paragraph (1), provided the health organization does not challenge the adjusted RBC report under section 27-4.7-8;
(3) If, pursuant to section 27-4.7-8, the health organization challenges an adjusted RBC report that indicates the event in paragraph (1), notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge;
(4) The failure of the health organization to respond, in a manner satisfactory to the commissioner, to a corrective order (provided the health organization has not challenged the corrective order under section 27-4.7-8); or
(5) If the health organization has challenged a corrective order under section 27-4.7-8 and the commissioner has, after a hearing, rejected the challenge or modified the corrective order, the failure of the health organization to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner.
(b) In the event of an authorized control level event with respect to a health organization, the commissioner shall:
(1) Take such actions as are required under section 27-4.7-5 regarding a health organization with respect to which a regulatory action level event has occurred; or
(2) If the commissioner deems it to be in the best interests of the policyholders and creditors of the health organization and of the public, take such actions as are necessary to cause the health organization to be placed under regulatory control pursuant to chapters 27-14.1, 27-14.2 and 27-14.3. In the event the commissioner takes such actions, the authorized control level event shall be deemed sufficient grounds for the commissioner to take action under chapters 27-14.1, 27-14.2 and 27-14.3, and the commissioner shall have the rights, powers and duties with respect to the health organization as are set forth in chapters 27-14.1, 27-14.2 and 27-14.3. In the event the commissioner takes actions under this paragraph pursuant to an adjusted RBC report, the health organization shall be entitled to such protections as are afforded to health organizations under the provisions of chapter 35 of title 42 pertaining to summary proceedings.
27-4.7-7. Mandatory control level event. - (a) "Mandatory control level event" means any of the following events:
(1) The filing of an RBC report which indicates that the health organization's total adjusted capital is less than its mandatory control level RBC;
(2) Notification by the commissioner to the health organization of an adjusted RBC report that indicates the event in paragraph (1) of this subsection, provided the health organization does not challenge the adjusted RBC report under section 27-4.7-8; or
(3) If, pursuant to section 27-4.7-8, the health organization challenges an adjusted RBC report that indicates the event in paragraph (1) of this subsection, notification by the commissioner to the health organization that the commissioner has, after a hearing, rejected the health organization's challenge.
(b) In the event of a mandatory control level event, the commissioner shall take such actions as are necessary to place the health organization under regulatory control pursuant to chapters 27-14.1, 27-14.2 and 27-14.3. In that event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under chapters 27-14.1, 27-14.2 and 27-14.3, and the commissioner shall have the rights, powers and duties with respect to the health organization as are set forth in chapters 27-14.1, 27-14.2 and 27-14.3. If the commissioner takes actions pursuant to an adjusted RBC report, the health organization shall be entitled to the protections of chapter 35 of title 42 pertaining to summary proceedings. Notwithstanding any of the foregoing, the commissioner may forego action for up to ninety (90) days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the ninety (90) day period.
27-4.7-8. Hearings. - Upon the occurrence of any of the following events the health organization shall have the right to a confidential department hearing, on the record, at which the health organization may challenge any determination or action by the commissioner. The health organization shall notify the commissioner of its request for a hearing within five (5) days after the notification by the commissioner under subsections (a), (b), (c) or (d) of this section. Upon receipt of the health organization's request for a hearing, the commissioner shall set a date for the hearing, which shall be no less than ten (10) days nor more than thirty (30) days after the date of the health organization's request. The events include:
(1) Notification to a health organization by the commission of an adjusted RBC report;
(2) Notification to a health organization by the commissioner that:
(i) The health organization's RBC plan or revised RBC plan is unsatisfactory; and
(ii) Notification constitutes a regulatory action level event with respect to the health organization;
(3) Notification to a health organization by the commissioner that the health organization has failed to adhere to its RBC plan or revised RBC plan and that the failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event with respect to the health organization in accordance with its RBC plan or revised RBC plan; or
(4) Notification to a health organization by the commissioner of a corrective order with respect to the health organization.
27-4.7-9. Confidentiality - Prohibition on announcements - Prohibition on use in ratemaking. - (a) All RBC reports (to the extent the information is not required to be set forth in a publicly available annual statement schedule) and RBC plans (including the results or report of any examination or analysis of a health organization performed pursuant to this chapter and any corrective order issued by the commissioner pursuant to examination or analysis) with respect to a domestic health organization or foreign health organization that are filed with the commissioner constitute information that might be damaging to the health organization if made available to its competitors, and therefore shall be kept confidential by the commissioner. This information shall not be made public or be subject to subpoena, other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner pursuant to this chapter or any other provision of the insurance laws of this state.
(b) It is the judgment of the legislature that the comparison of a health organization's total adjusted capital to any of its RBC levels is a regulatory tool which may indicate the need for corrective action with respect to the health organization, and is not intended as a means to rank health organizations generally. Therefore, except as otherwise required under the provisions of this chapter, the making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over a radio or television station, or in any other way, an advertisement, announcement or statement containing an assertion, representation or statement with regard to the RBC levels of any health organization, or of any component derived in the calculation, by any health organization, agent, broker or other person engaged in any manner in the insurance business, would be misleading and is therefore prohibited; provided, however, that if any materially false statement with respect to the comparison regarding a health organization's total adjusted capital to its RBC levels (or any of them) or an inappropriate comparison of any other amount to the health organization's RBC levels is published in any written publication and the health organization is able to demonstrate to the commissioner with substantial proof the falsity of the statement, or the inappropriateness, as the case may be, then the health organization may publish an announcement in a written publication if the sole purpose of the announcement is to rebut the materially false statement.
27-4.7-10. Supplemental provisions - Rules - Exemption. - (a) The provisions of this chapter are supplemental to any other provisions of the laws of this state, and shall not preclude or limit any other powers or duties of the commissioner under such laws, including, but not limited to, chapters 41, 19, 20, 20.1, 20.2, 20.3, 14.1, 14.2 and 14.3 of this title. The provisions of this chapter shall supercede any provisions of Title 27 in conflict with this chapter.
(b) The commissioner may adopt reasonable rules necessary for the implementation of this chapter.
(c) The commissioner may exempt from the application of this chapter or modify the requirements of this chapter for:
(1) A domestic health organization that:
(i)Writes direct business only in this state;
(ii) Assumes no reinsurance in excess of five percent (5%) of direct premium written; and
(iii) Writes direct annual premiums for comprehensive medical business of two million dollars ($2,000,000) or less; or
(iv) Is a limited health service organization that covers less than two thousand (2,000) lives.
(2) A domestic health organization that provides a plan of health insurance, health benefits, or health services to members, eighty-five percent (85%) or greater of which are participants in the RIte Care program administered by the State of Rhode Island, if the health organization has contracts with insurers, hospital or medical service corporations, governments, or other organizations that are sufficient to reasonably assure the performance of its obligations; provided, however, that in no event shall the net worth or total adjusted capital requirement be less than one hundred thousand dollars ($100,000).
27-4.7-11. Foreign health organizations. - (a)(1) A foreign health organization shall, upon the written request of the commissioner, submit to the commissioner an RBC report as of the end of the calendar year just ended the later of:
(i) The date an RBC report would be required to be filed by a domestic health organization under this chapter;
(ii) Fifteen (15) days after the request is received by the foreign health organization.
(2) A foreign health organization shall, at the written request of the commissioner, promptly submit to the commissioner a copy of any RBC plan that is filed with the insurance commissioner of any other state.
(b) In the event of a company action level event, regulatory action level event or authorized control level event with respect to a foreign health organization as determined under the RBC statute applicable in the state of domicile of the health organization (or, if no RBC statute is in force in that state, under the provisions of this chapter), if the insurance commissioner of the state of domicile of the foreign health organization fails to require the foreign health organization to file an RBC plan in the manner specified under that state's RBC statute (or, if no RBC statute is in force in that state, under section 27-4.7-4 of this chapter), the commissioner may require the foreign health organization to file an RBC plan with the commissioner. In such event, the failure of the foreign health organization to file an RBC plan with the commissioner shall be grounds to order the health organization to cease and desist from writing new insurance business in this state.
(c) In the event of a mandatory control level event with respect to a foreign health organization, if no domiciliary receiver has been appointed with respect to the foreign health organization under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign health organization, the commissioner may make application to the superior court of the county of Providence permitted under chapter 27-14.3 with respect to the liquidation of property of foreign health organizations found in this state, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application.
27-4.7-12. Immunity. - There shall be no liability on the part of, and no cause of action shall arise against, the commissioner or the insurance department or its employees or agents for any action taken by them in the performance of their powers and duties under this chapter.
27-47.1-13. Severability clause. - If any provision of this chapter, or its application to any person or circumstance, is held invalid, that determination shall not affect the provisions or applications of this chapter that can be given effect without the invalid provision or application, and to that end the provisions of this chapter are severable.
27-4.7-14. Notices. - All notices by the commissioner to a health organization that may result in regulatory action under this chapter shall be effective upon dispatch if transmitted by registered or certified mail, or in the case of any other transmission shall be effective upon the health organization's receipt of notice.
27-4.7-15. Phase-In provision. - For RBC reports required to be filed by health organizations with respect to the years 2000 and 2001, the following requirements shall apply in lieu of the provisions of sections 27-4.7-4, 27-4.7-5, 27-4.7-6 and 27-4.7-7 of this chapter. However, in no event shall any of the following requirements preclude any action or limit any powers or duties otherwise available to the insurance commissioner under any other state laws or regulation.
(1) In the event of a company action level event with respect to a domestic health organization, the commissioner shall take no regulatory action under this chapter.
(2) In the event of a regulatory action level event under section 27-4.7-5(a)(1), (2) or (3) with respect to a domestic health organization, the commissioner shall take the actions required under section 27-4.7-4 with respect to the health organization.
(3) In the event of a regulatory action level event under section 27-4.7-5(a)(4), (5), (6), (7), (8) or (9) or an authorized control level event, the commissioner shall take the actions required under section 27-4.7-5 with respect to the health organization.
(4) In the event of a mandatory control level event with respect to a health organization, the commissioner shall take the actions required under section 27-4.7-6 with respect to the health organization.
(5) In the event the health organization's total adjusted capital at December 31, 2000 is less than the product of twenty-five one hundredths (.25) and its authorized control level RBC, the commissioner shall take the actions required under section 27-4.7-7 with respect to the health organization.
(6) In the event the health organization's total adjusted capital at December 31, 2001 is less than the product of one-half (.5) and its authorized control level RBC, the commission shall take the actions required under section 27-4.7-7 with respect to the health organization.
SECTION 2. Section 27-12-1 of the General Laws in Chapter 27-12 entitled "Annual Reports of Insurance Companies" is hereby amended to read as follows:
27-12-1. Time of filing -- Contents of report -- (a) Every insurance company of whatever name or kind, doing business in this state, shall annually on the first day of January, or within two (2) months thereafter, file with the insurance commissioner an annual national association of insurance commissioners statement convention blank, prepared in accordance with the national association of insurance commissioners annual statement instructions and accounting practices and procedures manuals, examiners' handbook, securities valuation manual and such other manuals published by the national association of insurance commissioners as may be amended from time to time, signed and sworn to by its president and secretary, of its exact condition specifying that the company is a fire, marine, fire and marine, life, health, accident, or other insurance company, as the case may be; stating the amount of its capital and the manner of its investment; designating the amount invested respectively in mortgages, in what companies, particularizing each item of investment; the amount of marine risks not terminated, and the premium paid thereon; the amount of fire risks not terminated, and the premium paid thereon; the amount of liabilities, specifying therein the amount of outstanding claims, adjusted or unadjusted, due or not due; and in case the company is incorporated on the mutual principle, the statement shall set forth, in addition to the foregoing, the amount of risks insured by the company, the amount of premium thereon, what portion of it has been paid in cash, what security has been taken for the remainder, and what is the largest sum insured in any one risk; and, except in the case of a company writing less than one million dollars ($1,000,000) of total direct plus assumed written premiums during a calendar year or which has fewer than one thousand (1,000) policyholders or certificate holders at the end of a calendar year, a statement of actuarial opinion relating to loss and loss adjustment expense reserves; and, except in the case of a company having direct premiums written of less than one million dollars ($1,000,000) in any calendar year and fewer than one thousand (1,000) policyholders or certificate holders at the end of a calendar year, an audited financial report prepared by an independent certified public accountant; and the statement herein required to be made, so far as applicable, shall be made of each class in companies authorized to take risks in classes, and in all cases the returns may be varied by the commissioner to obtain more definite information of the company; and shall pay a filing fee of one hundred dollars ($100).
(b) Companies may be required to file quarterly statements upon request by the insurance commissioner, in accordance with the national association of insurance commissioners' guidelines and procedures, due on or before forty-five (45) days after the quarter ending. Annual and quarterly statements shall be available for inspection by the public.
(c) The commissioner may assess a late fee of one hundred dollars ($100) per day for each day the insurer is late in filing its annual or quarterly statement, except that the insurer may request and receive a reasonable extension of the filing date without penalty.
(d) Provisions of this chapter shall apply to corporations organized under chapters 19, 20, 20.1, 20.2, 20.3 and 41 of Title 27.
(e) With respect to individual and group health benefit contracts, including managed care contracts, written by an insurance company or health organization subject to the requirements of this chapter, when the expected claim payments or incurred costs, claims adjustment expenses and administration costs exceed the premiums to be collected for the remainder of a contract period, the insurer or health organization shall recognize a premium deficiency reserve by recording an additional liability for the deficiency, with a corresponding charge to operations. The reserve shall be calculated in accordance with regulations promulgated pursuant to this chapter.
(f) In addition to the powers which the commissioner has under other sections of this title relating to the financial statements of health organizations, the commissioner shall also have the power to require any health organizations subject to this title to file the annual audited financial statements of its controlling affiliate or person whether or not the controlling affiliate or person is licensed or authorized pursuant to this title. Additionally, if the controlling affiliate or person is an insurer or health organization that prepares statutory financial statements for submission to its state of domicile, such annual and/or quarterly statutory financial statements shall be filed with the commissioner. In the event the health organization fails to comply with a request of the commissioner pursuant to this section, the commissioner shall have the power to suspend or revoke the license of the health organization and/or to examine the controlling affiliate or person.
(g) As used in this section, the term "control" including "controlling," and the terms "affiliate" and "person" shall have the meanings ascribed to them in section 27-35-1. The term "health organization" shall have the meaning ascribed to it in section 27-4.7-2.
SECTION 3. Section 27-19-29 of the General Laws in Chapter 27-19 entitled "Nonprofit Hospital Service Corporations" is hereby amended to read as follows:
27-19-29. Control, merger, or consolidation -Holding company systems. -- No person may make a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire on the open market or otherwise, any voting security or other indicia of ownership of a nonprofit hospital service corporation or enter into any other agreement if, after the consummation thereof, that person would, directly or indirectly, or by conversion or by the exercise of any right to acquire, be in control of the nonprofit hospital service corporation, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a nonprofit hospital service corporation, unless, at the time any offer, request, or invitation is made or any agreement is entered into, or prior to the acquisition if no offer or agreement is involved, the person has filed with the director of business regulation and the attorney general, and has sent to the nonprofit hospital service corporation, the information required by section 27-35-2, and the offer, request, invitation, agreement or acquisition has been approved by the director. Approval by the director of business regulation shall be made in accordance with the standards set forth in section 27-35-2. That approval shall not supersede any other approval under Rhode Island law relative to mergers or other acquisitions of nonprofit hospital service corporations in their capacity as Rhode Island charitable nonprofit corporations. Except to the extent superceded by chapter 27-64, all of the provisions of chapter 27-35 shall apply to corporations organized or licensed pursuant to this chapter.
SECTION 4. Section 27-20-25 of the General Laws in Chapter 27-20 entitled "Nonprofit Medical Service Corporations" is hereby amended to read as follows:
27-20-25. Control, merger, or consolidation - Holding company systems. - No person may take a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire on the open market or otherwise, any voting security or other indicia of ownership of a nonprofit medical service corporation or enter into any other agreement if, after the consummation thereof, that person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the nonprofit medical service corporation, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a nonprofit medical service corporation, unless, at the time any offer, request, or invitation is made or any agreement is entered into, or prior to the acquisition if no offer or agreement is involved, the person has filed with the director of business regulation and the attorney general, and has sent to the nonprofit medical service corporation, the information required by section 27-35-2 and the offer, request, invitation, agreement or acquisition has been approved by the director. Approval by the director of business regulation shall be made in accordance with the standards set forth in section 27-35-2. That approval shall not supersede any other approval under Rhode Island law relative to mergers or other acquisitions of nonprofit medical service corporations in their capacity as Rhode Island charitable nonprofit corporations. Except to the extent superceded by chapter 27-64, all of the provisions of chapter 27-35 shall apply to corporations organized or licensed pursuant to this chapter.
SECTION 5. Section 27-20.1-12 of the General Laws in Chapter 27-20.1 entitled "Nonprofit Dental Service Corporations" is hereby amended to read as follows:
27-20.1-12. Control, merger, or consolidation Holding company systems. -- No person may make a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire on the open market or otherwise, any voting security or other indicia of ownership of a nonprofit dental service corporation or enter into any other agreement if, after the consummation thereof, that person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the nonprofit dental service corporation, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a nonprofit dental service corporation, unless, at the time any offer, request, or invitation is made or any agreement is entered into, or prior to the acquisition if no offer or agreement is involved, the person has filed with the director of business regulation and the attorney general, and has sent to the nonprofit dental service corporation, the information required by section 27-35-2 and the offer, request, invitation, agreement, or acquisition has been approved by the director. Approval by the director of business regulations shall be made in accordance with the standards set forth in section 27-35-2.All of the provisions of chapter 27-35 shall apply to corporations organized or licensed pursuant to this chapter.That Any approval granted by the director pursuant to chapter 27-35 shall not supersede any other approval under Rhode Island law relative to mergers or other acquisitions of nonprofit dental service corporations in their capacity as Rhode Island charitable nonprofit corporations.
SECTION 6. Section 27-20.2-12 of the General Laws in Chapter 27-20.2 entitled "Nonprofit Optometric Service Corporations" is hereby amended to read as follows:
27-20.2-12. Control, merger, or consolidation - >Holding company systems. -- No person may make a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire on the open market or otherwise, any voting security or other indicia of ownership of a nonprofit optometric service corporation, or enter into any other agreement if, after the consummation thereof, that person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the nonprofit optometric service corporation, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a nonprofit optometric service corporation, unless, at the time any offer, request, or invitation is made or any agreement is entered into, or prior to the acquisition if no offer or agreement is involved, the person has filed with the director of business regulation and the attorney general, and has sent to the nonprofit optometric service corporation, the information required by section 27-35-2 and the offer, request, invitation, agreement, or acquisition has been approved by the director. Approval by the director of business regulation shall be made in accordance with the standards set forth in section 27-35-2. All of the provisions of chapter 27-35 shall apply to corporations organized or licensed pursuant to this chapter. That Any approval granted by the director pursuant to chapter 27-35 shall not supersede any other approval under Rhode Island law relative to mergers or other acquisitions of nonprofit optometric service corporations in their capacity as Rhode Island charitable nonprofit corporations.
SECTION 7. Section 27-20.3-12 of the General Laws in Chapter 27-20.3 entitled "Nonprofit Legal Service Corporations" is hereby amended to read as follows:
27-20.3-12. Control, merger, or consolidation - Holding company systems. -- No person may make a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire on the open market or otherwise, any voting security or other indicia of ownership of a nonprofit legal service corporation, or enter into any other agreement if, after the consummation thereof, that person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the nonprofit legal service corporations, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a nonprofit legal service corporation, unless, at the time any offer, request, or invitation is made or any agreement is entered into, or prior to the acquisition if no offer or agreement is involved, the person has filed with the director of business regulation, and has sent to the nonprofit legal service corporation, the information required by section 27-35-2 and the offer, request, invitation, agreement or acquisition has been approved by the director. Approval by the director of business regulation shall be made in accordance with the standards set forth in section 27-35-2 of the general laws.All provisions of chapter 27-35 shall apply to corporations organized or licensed pursuant to this chapter. That Any approval granted by the director pursuant to chapter 27-35 shall be in lieu of and not supersede any other approval under Rhode Island law relative to mergers or other acquisitions of nonprofit legal service corporations in their capacity as Rhode Island charitable nonprofit corporations.
SECTION 8. Section 27-35-1 of the General Laws in Chapter 27-35 entitled "Insurance Holding Company Systems" is hereby amended to read as follows:
27-35-1. Definitions -- (a) Affiliate.. - An "affiliate" of, or person "affiliated" with, a specific person, is a person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the person specified. An "affiliate" does not include a protected cell of a protected cell company organized under the Protected Cell Companies Act of this title.
(b) Commissioner.. - The term "commissioner" shall mean the insurance commissioner, and any assistant to the insurance commissioner designated and authorized by him or her while acting under that designation.
(c) Control.. - The term "control", including the terms "controlling," "controlled by" and "under common control with", means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, ten percent (10%) or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided by section 27-35-3(i) that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support that determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.
(d) Insurance holding company system.. - An "insurance holding company system" consists of two (2) or more affiliated persons, one or more of which is an insurer.
(e) Insurer.. - The term "insurer" shall mean any person or persons or corporation, partnership or company authorized by the laws of this state to transact the business of insurance in this state, including entities organized or authorized to transact business in this state pursuant to chapters 27-19, 27-20, 27-20.1, 27-20.2, 27-20.3 and 27-41, except that it shall not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.
(f) Person.. - A "person" is an individual, corporation, partnership, association, joint stock company, trust, unincorporated organization, or any similar entity or any combination of the foregoing acting in concert, but shall not include any securities broker performing no more than the usual and customary broker's function.
(g) Securityholder.. - A "securityholder" of a specified person is one who owns any security of the person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing.
(h) Subsidiary.. - A "subsidiary" of a specified person is an affiliate controlled by the person directly, or indirectly through one or more intermediaries.
(i) Voting security.. - The term "voting security" shall include any security convertible into or evidencing a right to acquire a voting security.
SECTION 9. Section 27-41-25 of the General Laws in Chapter 27-41 entitled "Health Maintenance Organizations" is hereby amended to read as follows:
27-41-25. Acquisition of control of or merger of a health maintenance organization - Holding company systems. -- No person may take a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire in the open market or otherwise, any voting security of a health maintenance organization or enter into any other agreement if, after the consummation thereof, that person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the health maintenance organization, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a health maintenance organization, unless, at the time any offer, request, or invitation is made or any agreement is entered into, or prior to the acquisition of the securities if no offer or agreement is involved, the person has filed with the director and the attorney general, and has sent to the health maintenance organization, information required by section 27-35-2 and the offer, request, invitation, agreement, or acquisition has been approved by the director. Approval by the director shall be governed by section 27-35-2. Except to the extent superceded by chapter 27-64, all of the provisions of chapter 27-35 shall apply to corporations organized or licensed pursuant to this chapter.
SECTION 10. This act shall take effect upon passage.