CHAPTER 2.3
Single License Procedure Act

27-2.3-1. Purpose and scope -- (a) This chapter governs the qualifications and procedures for the licensing of insurance producers and shall be called the "Single License Procedure Act." This chapter simplifies and organizes statutory language to improve efficiency and reduce costs associated with issuing and renewing insurance producer licenses. This chapter modifies the present agent, broker, and solicitor licensing system and implements a single "producer" licensing system. This chapter does not apply to excesses and surplus lines agents or brokers licensed pursuant to section 27-3-38.

(b) Whenever the words "agent", "solicitor", or "broker" and their plural construct are used in the context of a licensee pursuant to chapter 3 of title 27 of the general laws and occur in this chapter, any general law, public law, act, or resolution of the general assembly, or department regulation, those words shall mean insurance producer, except for those provisions of law and regulation which govern excess and surplus lines agents or brokers licensed pursuant to section 27-3-38.

27-2.3-2. Definitions -- The following definitions apply to this chapter:

(1) "Commissioner of insurance" means the director of the department of business regulation.

(2) "Department" means the department of business regulation.

(3) "Firm" means any corporation, association, partnership or other legal entity.

(4) "Individual" means any private or natural person but shall not include a partnership, corporation, or association.

(5) "Insurance producer" means a person who solicits, negotiates, effects, procures, delivers, renews, continues or binds policies of insurance or who offers advice, counsel, opinion, or service for risks residing, located, or to be performed in this state. The term "insurance producer" does not include an excess or surplus lines agent or broker licensed pursuant to section 27-3-38.

(6) "License" means a document issued by the department of business regulation authorizing a person to act as an insurance producer for a class or classes of insurance specified in the document. The license itself does not create any authority, actual, apparent, or inherent, in the holder to represent or commit an insurance carrier.

(7) "Nonresident" means any person who is not a resident of Rhode Island as defined in subdivision (9).

(8) "Person" means any natural person, corporation, association, partnership, or other legal entity.

(9) "Resident" means a person who either resides in Rhode Island or maintains an office in Rhode Island where the business of producing insurance is transacted and opts to designate Rhode Island as the residence for the purpose of licensure.

27-2.3-3. License required -- (a) No person shall act as or hold oneself out to be an insurance producer for any class or classes of insurance unless duly licensed for that class or classes in accordance with this chapter.

(b) No person shall, for a fee, engage in the business of offering any advice, counsel, opinion, or service with respect to the benefits, advantages, or disadvantages under any policy of insurance that could be issued in Rhode Island, unless that person is:

(1) Engaged or employed as an attorney licensed to practice law in Rhode Island;

(2) A licensed insurance producer offering advice concerning a class or classes of insurance for which the insurance producer is licensed;

(3) A trust officer of a bank performing duties incidental to the officer's position;

(4) An actuary or a certified public accountant engaged or employed in a consulting capacity, performing duties incidental to that position; or

(5) A licensed public adjuster acting within the scope of any applicable license.

(c) Any person who violates this section by operating without a license shall be guilty of a misdemeanor and fined not exceeding one thousand dollars ($1,000) or imprisoned for a term not exceeding one year, or both. The matter shall be referred to the department of the attorney general.

27-2.3-4. Application for examination -- (a) An individual applying for an insurance producer license shall pass a written examination unless exempt pursuant to section 27-2.3-8. The examination shall test the knowledge of the individual concerning the class or classes of insurance for which the application is made, the duties and responsibilities of an insurance producer, and the insurance laws, rules, and regulations of this state. Examinations required by this section shall be developed and conducted under rules and regulations prescribed by the department of business regulation.

(b) The department of business regulation may make arrangements, including contracting with an outside testing service, for administering examinations and collecting a reasonable nonrefundable fee.

(c) Each individual applying for an examination shall remit a reasonable nonrefundable fee as prescribed by the department of business regulation pursuant to rule and regulation.

(d) An individual who fails to appear for the examination as scheduled or fails to pass the examination must reapply for an examination and remit all required fees and forms before being rescheduled for another examination.

27-2.3-5. Application for license -- (a) An individual applying for an insurance producer license shall apply on a form specified by the department of business regulation and declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. Before approving the application, the department of business regulation shall find that the individual:

(1) Is at least eighteen (18) years of age;

(2) Has not committed any act which is a ground for denial, suspension, or revocation as set forth in section 27-2.3-12;

(3) Has completed a pre-licensing course of study for each class of insurance for which an insurance producer license has been requested, which course of study shall be established in accordance with the insurance laws and rules and regulations prescribed by the department of business regulation;

(4) Has paid the fees set forth in this chapter; and

(5) Has successfully passed the examinations for the class or classes of insurance for which the individual has requested an insurance producer license.

(b) A firm applying for an insurance producer license shall make an application on a form specified by the department of business regulation. An officer who has obtained an insurance producer license shall be responsible to declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the officer's knowledge. Before approving the application, the department of business regulation shall find that:

(1) Each officer, director, and/or member of the firm who is acting as an insurance producer for the firm has obtained an insurance producer license from the state of Rhode Island for the same class or classes of insurance;

(2) The firm has paid the fees set forth in this chapter;

(3) The firm has disclosed to the department of business regulation the names of all officers and directors and whether or not they are licensed as insurance producers or by the state of Rhode Island;

(4) The firm has designated an officer who has obtained an insurance producer license to be responsible for the firm's compliance with the insurance laws, rules, and regulations of this state; and

(5) The department of business regulation may require the applicant to provide any documents reasonably necessary to verify the information contained in the application.

27-2.3-6. License -- (a) Persons who have met the requirements of sections 27-2.3-4 and 27-2.3-5 shall be issued an insurance producer license.

(b) Each insurance producer license shall remain in effect unless revoked or suspended as long as the fees set forth in section 27-2.3-17 are paid when due and all applicable education requirements prescribed in the insurance laws and the rules and regulations prescribed by the department of business regulation have been met by the holder of the insurance producer license.

(c) An individual insurance producer whose license lapses because of failure to pay annual fees may, within twelve (12) months from the due date of the unpaid annual fee, make application for the same license without the necessity of passing a written examination; provided, however, that the annual fee, in that event, shall be in an amount which is double the then current annual fee. The individual must also meet the continuing education requirements set forth in chapter 3.2 of this title for the period during which the license lapsed.

(d) The license shall contain the licensee's name, address, personal identification number, the date of issuance, the class or classes of insurance covered, conditions of expiration and termination, and any other information the department of business regulation deems necessary or desirable.

(e) All insurance producer licensees shall provide the department of business regulation with written notification of any change of business mailing and/or residence address within thirty (30) days of any change.

(f) All companies contracting with insurance producers must provide the department of business regulation with a written report of their contracted insurance producers for the calendar year of January 1 to December 31. This report, along with any fees due, shall be provided on or before March 1 of the following year.

(g) The department of business regulation is hereby authorized to provide to the national association of insurance commissioners, upon the development of a centralized reporting and license verification bureau, agency, or department within the national association of insurance commissioners, any information contained in the application for an insurance producer license or in any license issued by the department of business regulation.

27-2.3-7. Nonresident licensing -- (a) A nonresident may apply for an insurance producer license if:

(1) The nonresident is in compliance with the requirements of section 27-2.3-5, except that completion of a prelicensing course of study shall not apply to nonresidents; and

(2) The nonresident's state of residence issues similar licenses to a person residing in this state, without completion of a prelicensing course of study, for the same class or classes of insurance for which that person is licensed in this state.

(b) A nonresident may be licensed without written examination if the insurance department in any state in which the nonresident holds a license to produce insurance certifies that the nonresident applicant has passed a written examination for the class or classes of insurance applied for or was licensed to produce insurance prior to the time a written examination was required by that state, and that the license is currently in good standing.

(c) A nonresident shall file with the department of business regulation the required forms appointing the commissioner of insurance and successors in office as the nonresident's agent upon whom all lawful process in any legal proceeding against the nonresident may be served in the state, and by acceptance of the license agrees that any lawful process has the same legal force and validity as personal service of process upon the nonresident. The commissioner of insurance shall, within three (3) working days after receiving process, forward a copy of the process by registered or certified mail to the nonresident at the nonresident's address of record.

(d) Whenever, by the laws or regulations of any other state, there is imposed any limitation of rights and privileges, conditions precedent, or any other requirements upon residents of this state who are nonresident insurance producer licensees of that other state which are in addition to, or in excess of, those imposed on nonresidents under this chapter, the department shall have the authority to impose the same or similar requirements on licensed insurance producers who are residents of that other state.

(e) A nonresident individual insurance producer who must meet continuing education requirements in the individual's state of residence is exempt from the continuing education requirements by the department of business regulation for resident insurance producers, if the requirements in the individual's state of residence, as determined by the department of business regulation, are substantially similar to this state's requirements.

27-2.3-8. Exemption from examination -- An individual who files with the department of business regulation a current letter of clearance within one hundred eighty (180) days of the cancellation of the individual's insurance producer license in a former state of residence certifying that the individual has passed an examination and held an insurance license in good standing in the individual's prior state of licensure shall only be required to take and pass the state law portion of this state's examination. For any class or classes of insurance for which the applicant has applied for licensure and which are not covered under the license or licenses held in the other state, the applicant shall be required to pass an examination pertaining to this state's laws, rules, and regulations.

27-2.3-9. Assumed names -- Insurance producers desiring to use an assumed name in the state of Rhode Island are required to register the name or names with the department of business regulation prior to the use of the assumed name or names.

27-2.3-10. Exceptions to licensing requirements -- No license as an insurance producer shall be required of the following:

(1) Any regularly salaried officer or employee of any domestic or foreign insurance company who is engaged solely in the performance of usual and customary executive, administrative, or clerical duties and which duties do not include the direct solicitation of insurance;

(2) Salaried employees in the office of an insurance producer who devote their full time to clerical and administrative services, including but not limited to the incidental taking of insurance applications and receipt of premiums in the office of their employer, as long as those employees do not receive any commissions on the applications and their compensation is not varied by the volume of applications or premiums taken or received;

(3) Persons who secure and furnish information for the purpose of enrolling individuals for group or blanket life insurance, accident and health insurance, or annuities, or who issue contracts or certificates under those plans, or who otherwise assist in administering those plans, provided that any compensation paid for services is not based upon the amount of premium generated by the enrollment or the number of individuals enrolled;

(4) Employers or their officers or employees, or the trustees of any employee trust plan, to the extent that the employers, officers, employees, or trustees are engaged in the administration or operation of any program of employee benefits for their own employees or the employees of their subsidiaries or affiliates, which program involves the use of insurance issued by an insurance company, as long as the employers, officers, employees, or trustees are not in any manner compensated, directly or indirectly, by the company issuing the contracts;

(5) Employees of insurance companies or organizations employed by insurance companies who are engaging in the inspection, rating, or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the solicitation or negotiation of policies or contracts for insurance; or

(6) 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 those motor vehicles various optional insurance coverage during the term of the rental agreement which shall be no more than forty-five (45) days.

27-2.3-11. Temporary licenses -- (a) The department may issue a temporary insurance producer's license without requiring an examination and without compliance with the educational or experience requirements of this title as follows:

(1) To the executor or administrator of the estate of a deceased person who at the time of that person's death was a licensed insurance producer under this chapter;

(2) To a surviving next of kin of a deceased person, if no administrator or executor has been appointed and qualified, but any license issued under this subsection shall be revoked upon issuance of a license to an executor or administrator under subdivision (a)(1);

(3) To the surviving member or members of a firm upon the death of a member who was a licensed insurance producer; and

(4) To the designee of a licensed insurance producer upon entering active service in the armed forces of the United States of America.

(b) To obtain a temporary license, the person desiring the license shall file a written application with the department of business regulation. The application shall be in a form prescribed by the department of business regulation.

(c) A temporary license or temporary licenses shall authorize the person or persons named therein to conduct the business of the deceased individual insurance producer, or, if applicable, the firm insurance producer during the term in which the temporary license or licenses are in force, to collect premiums due and payable to the estate or to the firm, and to perform the other acts as an insurance producer as are incidental to the continuance of the insurance business of the deceased insurance producer or the firm insurance producer as the case may be.

(d) A temporary license or licenses may be issued for a term not exceeding ninety (90) days from the death of the deceased insurance producer or entrance into the armed forces of the United States of America. The department of business regulation may in its discretion renew the license or licenses for an additional term or terms of ninety (90) days each, not exceeding, in the aggregate, fifteen (15) months.

(e) A person eligible for a temporary insurance producer's license may be licensed only as an agent of the insurer or insurers which the deceased insurance producer, or firm, as the case may be, was licensed to represent at the time of death. The department of business regulation is authorized to waive this provision if the original insurer or insurers are no longer issuing policies of insurance in the state of Rhode Island.

27-2.3-12. Licenses -- Denial -- Nonrenewal -- Suspension or revocation -- (a) Any license issued under this chapter may be suspended, revoked, or nonrenewed, and any application for a license may be denied, if the department of business regulation finds that the licensee or applicant has:

(1) Made any materially untrue statement in the license application;

(2) Violated any law relating to the production of insurance, or violated any rule, regulation, subpoena, or order of the department or of an insurance commissioner of any state relating to the production of insurance;

(3) Obtained or attempted to obtain any license through misrepresentation or fraud;

(4) Improperly withheld, misappropriated, or converted to the person's own use any moneys belonging to policyholders, insurers, beneficiaries, or others received in the course of producing insurance;

(5) Intentionally or negligently misrepresented the terms of any actual or proposed insurance contract;

(6) Been convicted of a felony;

(7) Been determined to have violated the laws of this state relating to unfair trade practice or fraud;

(8) In the conduct of providing insurance while holding an insurance producer license, used fraudulent, coercive, or dishonest practices, or has been shown to be incompetent, untrustworthy, financially irresponsible, or a hazard to the public;

(9) Had an insurance producer license nonrenewed, suspended, or revoked in any other state, province, district, or territory;

(10) Forged another's name to an application for insurance;

(11) Cheated on an examination for an insurance license; or

(12) Knowingly accepted insurance business from an individual who is required to be licensed but is not licensed.

(b) In the event that the action by the department of business regulation is to nonrenew or to deny an application for a license, the department of business regulation shall promptly notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial or nonrenewal of the license. The applicant or licensee may make written demand upon the commissioner of insurance within thirty (30) days for a hearing to review the action of the department of business regulation. The hearing shall be conducted in accordance with regulations of the department of business regulation for hearings pursuant to chapter 35 of title 42. The hearing officer may affirm, revoke, or modify the decision of the department of business regulation.

(c) The license of a firm may be suspended, revoked, nonrenewed, or denied if the department of business regulation finds after an evidentiary hearing conducted in accord with the regulations of the department of business regulation pursuant to chapter 35 of title 42, that an individual insurance producer licensee's violation of this section was known or should have been known by one or more of the partners, officers, directors, or managers acting on behalf of the firm and the violation was not reported to the department of business regulation in a timely manner or corrective action taken in a timely manner in relation thereto.

(d) The commissioner of insurance shall have the authority to impose an administrative fine upon any person or firm that the department of business regulation found to have violated this chapter, in addition to or in lieu of any applicable denial, suspension, or revocation of a license. The administrative fine may be imposed only upon the conclusion of an evidentiary hearing as provided in subsection (b) or (c).

(e) In the event that a license is terminated because the licensee obtained or attempted to obtain the license through misrepresentation or fraud, improperly withheld, misappropriated, or converted to the licensee's own use moneys belonging to others received in the course of producing insurance, or forged another's name to an application for insurance, the department of business regulation shall refer the matter to the department of the attorney general.

27-2.3-13. Representatives of fraternal benefit societies -- Representatives of fraternal benefit societies who solicit and negotiate insurance policies shall be deemed insurance producers and subject to the same licensing requirements as insurance producers; provided, that no insurance producer license shall be required of:

(1) Any officer, employee, or secretary of any society, or of any subordinate lodge or branch thereof, who devotes substantially all of that person's time to activities other than the solicitation or negotiation of insurance contracts and who receives no commission or other compensation directly dependent upon the number or amount of contracts solicited or negotiated; or

(2) Any agent or representative of a society who devotes, or intends to devote, less than fifty percent (50%) of that person's time to the solicitation and procurement of insurance contracts for the society. Any person who in the preceding calendar year has solicited and procured life insurance in excess of fifty thousand dollars ($50,000) face amount, or, in the case of any other kind or kinds of insurance which the society may write, on more than twenty-five (25) individuals, and who has received or will receive a commission or other compensation therefore, shall be presumed to be devoting or intended to devote, fifty percent (50%) or more of that person's time to the solicitation or procurement of insurance contracts for the society.

27-2.3-14. Commissions -- Payments -- Acceptance -- No insurance company or insurance producer shall pay, directly or indirectly, any commission, service fee, brokerage, or other valuable consideration to any person for services as an insurance producer unless the person performing the service held a valid license regarding the class or classes of insurance as to which the service was rendered at the time the service was performed. No person, other than a person properly licensed in accordance with this chapter at the time the person performs services as an insurance producer, shall accept any commissions, service fee, brokerage, or other valuable consideration for the services. Acceptance of the consideration shall constitute operating without a license. This section shall not prevent payment or receipt of renewal or other deferred commissions to or by any person entitled thereto under this chapter.

27-2.3-15. Controlled business -- (a) No insurance producer license shall be granted or extended to any person if the license is used or if intended for use for the purpose of writing controlled business.

(b) "Controlled business" means insurance procured or to be procured by or through the person upon:

(1) The person's own life, person, property, or risks, or those of the person's spouse; or

(2) The life, person, property or risks of the person's employer or the person's own business.

(c) A license shall be deemed to have been, or intended to be, used for the purpose of writing controlled business if, during any twelve (12) month period, the aggregate amount of premiums on controlled business exceeds or would exceed the aggregate amount of premiums on all other insurance business of the applicant or licensee.

27-2.3-16. Notification of termination -- (a) If a domestic or foreign insurance company should reasonably believe that any licensed insurance producer from whom it has accepted an application for insurance has committed or is engaged in any act or omission stated in section 27-2.3-12, the insurance company shall so notify the department and shall provide, upon request of the department, all relevant information, documents, records, or other data in its possession pertaining to the act or omission which may be used by the department.

(b) The disclosure of any information, documents, records, or statements provided pursuant to this section shall be privileged and there shall be no liability on the part of, nor shall a cause of action of any nature arise against, the department, the insurance company, or any authorized representative of either for its compliance with this section.

27-2.3-17. Fees -- Fees required by this chapter are as follows:

(1) Initial producer license: $50.00.

(2) Annual producer renewal: $50.00.

(3) Annual company contract fee: $25.00.

(4) The commissioner of insurance may, by rule and regulation, specify fees for letters of certification, clearance letters, duplicate licenses, and any other fees for services and documents that are reasonably determined by the commissioner of insurance.

27-2.3-18. Severability -- If any provisions of this chapter, or the application of any provision to any person or circumstances, shall be held invalid, the remainder of the chapter, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby.

27-2.3-19. Persons exempt because of prior licensure -- Any solicitor, broker, or agent licensed pursuant to chapter 3 of title 27 on December 31, 1993, shall be granted a producer license without being required to take and pass an examination or satisfy the prelicensing requirements contained in this title upon his or her application on a form prescribed by the department and payment of the fee prescribed by this chapter. The person shall be subject to all other provisions of this chapter.

27-2.3-20. Regulations -- The commissioner of insurance may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter.

27-2.3-21. Bond required of insurance producers -- (a) After January 1, 1995, each insurance producer who brokers insurance shall maintain in force while licensed a bond filed with the general treasurer in favor of the people of the state of Rhode Island executed by an authorized surety company and payable to any party injured under the terms of the bond. The bond shall be continuous in form and in the amount of five thousand dollars ($5,000) or one percent (1%) of the premiums brokered in the previous calendar year, whichever is greater, but not to exceed twenty-five thousand dollars ($25,000) total aggregate liability. The bond shall be conditioned upon full accounting and due payment to the person or company entitled thereto, of funds coming into the insurance producer's possession as an incident to insurance transactions under his license.

(b) Authorized insurance producers of a licensed firm may meet the requirements of this section with a bond in the name of the licensed firm, continuous in form and in the amounts set forth in subsection (a).

(c) The bond shall remain in force and effect until the surety is released from liability by the director or until the bond is cancelled by the surety. The surety may cancel the bond and be released from further liability thereunder upon thirty (30) days' written notice in advance to the director. The cancellation shall not affect any liability incurred or accrued thereunder before the termination of the thirty (30) day period. Upon receipt of any notice of cancellation, the director shall immediately notify the licensee.

(d) A license shall automatically terminate upon there being no bond in force, or if the producer acts without a bond which is required pursuant to this section, and the license shall be returned by its lawful custodian to the director for cancellation.

(e) For the purposes of this section, "brokering of insurance" shall mean placing business through another insurance producer or insurance producer firm, insurance company or underwriting association rather than directly with an insurance company for which the insurance producer is contracted.

27-2.3-22. Errors and omissions insurance required of insurance producers -- (a) Except as otherwise specifically provided below, all holders of insurance producers licenses by the insurance division of the state of Rhode Island department of business regulation shall, as a condition of retaining the license, carry and maintain errors and omissions insurance covering all business activities contemplated. Authorized insurance producers of a licensed firm may meet the requirements of this section with a policy in the name of the licensed firm insuring each licensee employed by or associated with the firm. Insurance producers who are employee-agents, independent contractor exclusive agents or captive agents of an insurer may also meet the requirements of this section, (i) if the insurer has in its name an errors and omissions policy insuring each producer, or (ii) if the insurer agrees in writing to assume responsibility for all errors and omissions claims against this producer, whether directly or in combination with all group errors and omissions coverage otherwise obtained by the insurer. This policy or coverage must comply with the terms and conditions to be determined by the department of business regulation under section 27-2.3-22(b).

(b) The insurance division of the department of business regulation shall determine the terms and conditions of coverage mandated under this section, including, but not limited to, the minimum limits of coverage, the permissible deductible, and permissible exemptions. The department of business regulation shall seek the assistance of insurance agents associations located in Rhode Island and insurers licensed to write business policies in Rhode Island as to the terms and conditions of coverage.

(c) The errors and omissions insurance requirement mandated by this section shall become effective January 1, 1995.

27-3-36. Fiduciary capacity of insurance producers -- Misappropriation as theft -- That portion of all premiums or moneys which a licensed insurance producer, hereinafter referred to as a licensee, collects from a policyholder and which is to be paid to an insurance company, its agents, or his or her employer because of the assumption of liability through the issuance of insurance contracts, or which the licensee collects from an insurance company or its agents and which is to be paid to a policyholder or claimant under any contract of insurance, shall be held by the licensee in a fiduciary capacity and shall not be misappropriated or converted to the licensee's own use or illegally withheld by the licensee. Any licensee who converts or misappropriates these funds shall be held guilty of theft and punishable for theft as provided by law. Nothing herein contained shall be deemed to require any licensee to maintain separate bank accounts or deposits for these funds if and so long as the funds so held are reasonably ascertainable from the books of account and records of the licensee.

27-3-45. Revocation or modification of insurance producer's contract -- Procedures -- (a) No company shall cancel the authority of any independent insurance producer for fire or casualty insurance, or both, if the insurance producer is not an employee of the company, and no company shall modify a contract with that insurance producer unless the company gives written notice of its intent to cancel that insurance producer or its intent to modify the contract at least one hundred eighty (180) days before the proposed effective date of any cancellation or at least one hundred eighty (180) days before the proposed effective date of any modification. No company shall allow the license of that insurance producer to expire unless the company gives written notice of its intent to do so at least one hundred eighty (180) days before the proposed effective date of expiration because of cancellation. Except as otherwise provided herein, any insurance producer receiving notice of cancellation, modification, or expiration may, within sixty (60) days after receipt thereof, make a written demand for reference to three (3) referees of the question as to whether or not the cancellation, modification, or expiration will so affect the renewal, continuation, or replacement of any policies placed with the company through the efforts of the insurance producer, or the services needed by any policyholder doing business with the company as a result of the efforts of the insurance producer, as to justify renewal or continuation of any policies then in effect having been placed with the company by that insurance producer. In the event the referees find that the cancellation, modification, or expiration will so affect the renewal, continuation, or replacement of any policies placed with the company through the efforts of the insurance producer, or the services needed by any policyholders doing business with the company as a result of the efforts of the insurance producer, then the referees shall order continuance or renewal of any policies expiring within a period of twelve (12) months of the issuance of the notice, at a rate of compensation to the insurance producer equal to that as provided in the agreement expiring or being so cancelled or modified, for one additional policy period equal in length to the most recent policy period of the expiring policy, but in no event for more than one year. However, the referees shall not order continuance or renewal of any policies if they find that the reason for the cancellation or expiration of the agreement by the company was legitimately based upon one of the following grounds:

(1) The insurance producer was convicted of a dishonest act related to his or her occupation as an insurance agent;

(2) The insurance producer's license to engage as an insurance producer was revoked; or

(3) The company surrendered its license to do business in the state.

(b) An insurance producer making a written demand for a reference shall accompany the written demand with the names and addresses of three (3) persons, whereupon the company shall, within fifteen (15) days, notify the insurance producer of its choice of one of the persons to act as one of the referees and at the same time submit the names and addresses of three (3) persons to the insurance producer, who shall, within fifteen (15) days after receiving these names, notify the company in writing of his or her choice of one of the persons to act as a second referee. At the same time the insurance producer shall notify the commissioner, the notice to be on a form prescribed by the commissioner, that both the company and insurance producer have chosen referees. Within ten (10) days of the receipt of this notice the commissioner shall appoint a person to serve as third referee, and shall notify that person, the insurance producer, and the company in writing of this appointment. Each person nominated or appointed as a referee shall be a disinterested person, shall be a resident of the state, and shall be willing to act as a referee. Within ten (10) working days of the appointment of the third referee, who shall serve as chairperson, the three (3) referees shall meet, hear evidence, and reduce their decisions to writing and sign it, and shall deliver a copy thereof to the insurance producer, to the company, and to the commissioner. In the event any company receiving a written demand for a reference fails to comply with the provisions of this subsection, then the insurance producer shall have the authority to renew or continue any policies placed with that company through the efforts of the insurance producer expiring within a period of thirteen (13) months from the date of the notice of cancellation, modification, or expiration of the agreement, at a rate of compensation to the insurance producer equal to that as provided in the agreement expiring or being so cancelled or modified, for one additional policy period equal in length to the most recent policy period of the expiring policy, but in no event for more than one year.

(c) Any insurance company and any insurance producer may by written contract agree to modify the provisions of subsections (a) and (b), other than the requirement of a one hundred eighty (180) day notice in the event of cancellation or a one hundred eighty (180) day notice in the event of modification of a contract or of intent to allow the expiration of a license, by provisions presented to and approved by the commissioner which he or she finds after due hearing and investigation will adequately protect both the right of the policyholder to a continuance of insurance and the services of any insurance producer of his or her own choosing and the right of the insurance producer to fair compensation for the insurance placed with a company as a result of the insurance producer's efforts. The commissioner may make reasonable rules of general application regarding these modified provisions.

(d) The decision of the referees may provide for the renewal or continuance of any or all policies expiring within a period of twelve (12) months of the issuance of any notice, at a rate of compensation to the insurance producer equal to that as provided in the agreement expiring or being so cancelled or modified, for one additional policy period equal in length to the most recent policy period of the expiring policy, but in no event for more than one year. The decision of the referees may also provide for the continuance of previous contractual provisions, if the referees, or a majority of them, find that the decision will best protect the right of a policyholder to a continuance of insurance and the services of an insurance producer of his or her own choosing and the right of any insurance producer to compensation for the insurance placed with a company as a result of his or her efforts, giving due consideration to the possibility the affected insurance producer has of obtaining similar coverage for policyholders affected from other companies at reasonable compensation. The decisions rendered in accordance with the provisions of this section providing for reference shall be binding on all companies and insurance producer affected thereby. If a decision orders the renewal or continuance of any policies, policyholders and the affected insurance producer shall be entitled in all respects to the same services and practices as were in effect prior to reference insofar as amounts and types of coverage, credit terms, commissions paid to the insurance producer, and insurance producer services are also continued.

(e) All policies expiring within twelve (12) months of the notice may be renewed for the policy periods as provided above, but no insurance producer or company relying on this section shall again refer the same issue to referees. Where other provisions of the general laws require notice to policyholders before nonrenewal of any coverages, the company shall, at the request of the insurance producer who is unable to replace any policy which has been renewed for one or more policy periods in accordance with this section, comply with those provisions of law.

(f) An insurance producer initiating reference under this section and the company receiving written demand shall each be liable for the payment of the reasonable charges and expenses of his or her nominee for referee and one half (1/2) of the compensation for the reasonable charges and expenses of the third referee. The third referee shall upon the execution of the decision furnish the insurance producer and the company with a written statement specifying in detail his or her charges for compensation and expenses. The insurance producer or the company, if aggrieved by these charges, may petition the commissioner for review. The petition shall set forth with particularity the specific item or charges in dispute. The commissioner shall, within ten (10) days of receipt of the petition, notify the interested parties of the date established for a hearing on the petition and, after the hearing, the commissioner shall approve or disapprove the charges in whole or in part; his or her findings and decisions shall be final and conclusive.

27-3-49. Insurance producer's liability for illegal contracts -- An insurance producer shall be personally liable on all contracts of insurance unlawfully made by or through him or her, directly or indirectly, for or in behalf of any company not authorized or approved to do business in this state. The department of business regulation shall promulgate rules and regulations for implementing a certification program to allow insurance producers to determine which insurance companies are authorized or approved to do business in this state.

27-3-50. Examinations -- The director of business regulation or the director's designee may, whenever the director may see fit, make an examination of the financial condition and/or market conduct of every person licensed pursuant to this chapter and chapter 2.3. The expenses of examinations under this section shall be assessed against the licensee being examined and remitted to and for the use of the insurance division of the department of business regulation. The total cost of the examinations shall be the same amount as provided for in section 27-13-1. The assessment shall be in addition to any taxes and fees otherwise payable to the state. In instances where the examination is performed by outside consultants, the expenses shall be borne by the licensee so examined.