Chapter 031
2013 -- H 5609 SUBSTITUTE A
Enacted 05/24/13
A N A C T
RELATING TO INSURANCE
Introduced By: Representatives Kennedy, Palumbo, and Keable
Date Introduced: February 27, 2013
It is enacted by the General
Assembly as follows:
SECTION 1. Sections 27-2.1-1 and 27-2.1-2 of the General
Laws in Chapter 27-2.1
entitled "Additional Fees for Foreign Insurance
Companies" are hereby amended to read as
follows:
27-2.1-1. New application fee. -- Any foreign insurance
company applying for licensure
within the state of
submit to the insurance commissioner a non-refundable
application fee of one thousand dollars
($1,000) one thousand, two hundred dollars ($1,200). Any foreign insurance company that has
previously filed an application for licensure within the state
of
application is currently pending must also submit a
non-refundable filing fee of one thousand two
hundred dollars ($1,200) to keep the application current.
27-2.1-2.
Review of application fee. -- Whenever any foreign
insurance company has
made application to transact insurance business within the
state, the applicant shall be assessed
for the actual time incurred in conducting the analysis
in accordance with the expense calculation
for examinations under subdivision 27-13.1-7(a)(1). and the
application is to be reviewed by the
insurance division, as a condition precedent to the review, the
company shall pay to the insurance
commissioner a non-refundable fee of one thousand eight hundred
dollars ($1,800) to cover the
costs of the review by the insurance division.
SECTION 2. Section 27-2.4-16 of the General Laws in Chapter
27-2.4 entitled "Producer
Licensing Act" is
hereby amended to read as follows:
27-2.4-16.
Notification to insurance commission of termination.
-- Notification to
insurance commissioner of termination. -- (a)
Termination for cause.
- An insurer or authorized
representative of the insurer that terminates the employment
contract or other insurance business
relationship with an insurance producer shall notify the insurance
commissioner within thirty (30)
days following the effective date of the termination,
using a format prescribed by the insurance
commissioner, if the reason for termination is one of the reasons
set forth in section 27-2.4-14 or
the insurer has knowledge the insurance producer was found
by a court, government body, or
self-regulatory organization authorized by law to have engaged in any
of the activities in section
27-2.4-14. Upon the written
request of the insurance commissioner, the insurer shall provide
additional information, documents, records or other data
pertaining to the termination or activity
of the insurance producer.
(b) Termination
without cause. - An insurer or authorized representative of the insurer
that terminates the employment or contract with an insurance
producer for any reason not set
forth in section 27-2.4-14 shall notify the insurance
commissioner within thirty (30) days
following the effective date of the termination, using a format
prescribed by the insurance
commissioner. Upon written request of the insurance commissioner,
the insurer shall provide
additional information, documents, records or other data
pertaining to the termination.
(c)(b)
Ongoing notification requirement. - The insurer or the authorized
representative of
the insurer shall promptly notify the insurance
commissioner in a format acceptable to the
insurance commissioner if, upon further review or
investigation, the insurer discovers additional
information that would have been reportable to the insurance
commissioner in accordance with
subsection (a) of this section had the insurer then known of its
existence.
(d)(c)
Copy of notification to be provided to the insurance producer.
(1) Within fifteen (15)
days
(2) Within thirty (30) days
after the insurance producer has received the original or
additional notification, the insurance producer may file written
comments concerning the
substance of the notification with the insurance commissioner.
The insurance producer shall, by
the same means, simultaneously send a copy of the
comments to the reporting insurer, and the
comments shall become a part of the insurance commissioner's
file and accompany every copy of
a report distributed or disclosed for any reason about
the insurance producer as permitted under
subsection (f)(e) of this section.
(e)(d)
Immunities. - (1) In the absence of actual malice, an
insurer, the authorized
representative of the insurer, an insurance producer, the insurance
commissioner, or an
organization of which the insurance commissioner is a member and
that compiles the information
and makes it available to other insurance commissioners
or regulatory or law enforcement
agencies shall not be subject to civil liability, except as
provided in this section, and a civil cause
of action of any nature shall not arise against these
entities or their respective agents or
employees, except as provided in this section, as a result of
any statement or information required
by or provided pursuant to this section or any
information relating to any statement that may be
requested in writing by the insurance commissioner, from an
insurer or insurance producer; or a
statement by a terminating insurer or insurance producer to an
insurer or insurance producer
limited solely and exclusively to whether a termination for
cause under subsection (a) of this
section was reported to the insurance commissioner, provided
that the propriety of any
termination for cause under subsection (a) of this section is
certified in writing by an officer or
authorized representative of the insurer or insurance producer
terminating the relationship.
(2) In any action
brought against a person that may have immunity under this chapter for
making any statement required by this section or providing
any information relating to any
statement that may be requested by the insurance commissioner,
the party bringing the action
shall plead specifically in any allegation that subdivision
(e)(d)(1) of this section does not apply
because the person making the statement or providing the
information did so with actual malice.
(3) This chapter shall
not abrogate or modify any existing statutory or common law
privileges or immunities.
(f)(e)
Confidentiality. - (1) Any documents, materials or
other information in the control
or possession of the department that is furnished by an
insurer, insurance producer or an
employee or agent of the insurer or insurance producer acting
on behalf of the insurer or
insurance producer, or obtained by the insurance commissioner
in an investigation pursuant to
this section, shall be confidential by law and privileged,
shall not be subject to chapter 2 of title
38, shall not be subject to subpoena, and shall not be
subject to discovery or admissible in
evidence in any private civil action. The insurance
commissioner is authorized to use the
documents, materials or other information in the furtherance of
any regulatory or legal action
brought as a part of the insurance commissioner's duties.
(2) Neither the
insurance commissioner nor any person who received
documents,
materials or other information while acting under the authority
of the insurance commissioner
shall be permitted or required to testify in any private
civil action concerning any confidential
documents, materials, or information subject to this chapter.
(3) In order to assist
in the performance of the insurance commissioner's duties under
this chapter, the insurance commissioner:
(i)
May share documents, materials or other information, including the confidential
and
privileged documents, materials or information subject to this
chapter, with other state, federal,
and international regulatory agencies, with the NAIC, its
affiliates or subsidiaries, and with state,
federal, and international law enforcement authorities,
provided that the recipient agrees to
maintain the confidentiality and privileged status of the
document, material or other information;
(ii) May receive
documents, materials or information, including confidential and
privileged documents, materials or information, from the NAIC,
its affiliates or subsidiaries and
from regulatory and law enforcement officials of other
foreign or domestic jurisdictions, and shall
maintain as confidential or privileged any document, material
or information received with notice
or the understanding that it is confidential or
privileged under the laws of the jurisdiction that is
the source of the document, material or information;
(iii) May enter into
agreements governing sharing and use of information consistent with
this subsection;
(iv)
No waiver of any applicable privilege or claim of confidentiality in the
documents,
materials, or information shall occur as a result of disclosure
to the commissioner under this
section or as a result of sharing as authorized in this
chapter;
(v) Nothing in this
chapter shall prohibit the insurance commissioner from releasing
final, adjudicated actions including for cause terminations
that are open to public inspection
pursuant to chapter 2 of title 38 to a database or other
clearinghouse service maintained by the
NAIC, its affiliates or subsidiaries; and
(vi)
If the department releases to an unauthorized third party any documents,
materials or
other information provided to the department pursuant to
this section, then the department shall
be subject to a fine not to exceed one thousand dollars
($1,000) after a hearing on this violation
brought in the Superior Court.
(g)(f)
Penalties for Failing to Report. - An insurer, the authorized representative of
the
insurer, or insurance producer that fails to report as
required under the provisions of this section
or that is found to have reported with actual malice by
a court of competent jurisdiction may, after
notice and hearing, have its license or certificate of
authority suspended or revoked and may be
fined in accordance with section 42-14-16.
SECTION 3. Section 27-4.8-4 of the General Laws in Chapter
27-4.8 entitled "Group
Life Insurance" is
hereby amended to read as follows:
27-4.8-4.
Dependent group life insurance. -- Except for a
policy issued under
subdivision 27-4.8-1(2), a group life insurance policy may be
extended to insure the employees or
members against loss due to the death of their spouses and
dependent children, or any class or
classes thereof, subject to the following:
(1) The premium for the
insurance shall be paid either from funds contributed by the
employer, union, association or other person to whom the
policy has been issued, or from funds
contributed by the covered persons, or from both. Except as
provided in subdivision (2), a policy
on which no part of the premium for the spouse's and
dependent child's coverage is to be derived
from funds contributed by the covered persons shall insure
all eligible employees or members
with respect to their spouses and dependent children, or
any class or classes thereof.
(2) An insurer may
exclude or limit the coverage on any spouse or dependent child as to
whom evidence of individual insurability is not
satisfactory to the insurer.
(3) The amounts of
insurance for any covered spouse or dependent child under the policy
may not exceed the amount of insurance for which the
employee or member is insured.
SECTION 4. Section 27-9-4.1 of the General Laws in Chapter
27-9 entitled "Casualty
Insurance Rating" is
hereby repealed.
27-9-4.1.
Automobile insurance territories. --
The director of the department of
business regulation shall formulate a plan of automobile
insurance territories based upon the most
recent available actuarial data.
SECTION 5. Sections 27-14.5-3 and 27-14.5-4 of the General
Laws in Chapter 27-14.5
entitled "Voluntary Restructuring of Solvent
Insurers" are hereby amended to read as follows:
27-14.5-3.
Notice. -- (a) Wherever
in this chapter notice is required, the applicant shall,
within ten (10) days of the event triggering the
requirement, cause transmittal of the notice:
(1) By first class mail
and facsimile to the insurance regulator in each jurisdiction in
which the applicant is doing business;
(2) By first class mail
to the national conference of insurance guaranty funds and all
guarantee guaranty associations for the states in
which the applicant is doing business;
(3) Pursuant to the
notice provisions of reinsurance agreements or, where an agreement
has no provision for notice, by first class mail to all
reinsures of the applicant;
(4) By first class mail
to all insurance agents or insurance producers of the applicant;
(5) By first class mail
to all persons known or reasonably expected to have claims
against the applicant including all policyholders, at their
last known address as indicated by the
records of the applicant;
(6) By first class mail
to federal, state, and local government agencies and
instrumentalities as their interests may arise; and
(7) By publication in a
newspaper of general circulation in the state in which the
applicant has its principal place of business and in any other
locations that the court overseeing
the proceeding deems appropriate.
(b) If notice is given
in accordance with this section, any orders under this chapter shall
be conclusive with respect to all claimants and
policyholders, whether or not they received notice.
(c) Where this chapter
requires that the applicant provide notice but the commissioner
has been named receiver of the applicant, the
commissioner shall provide the required notice.
27-14.5-4.
Commutation plans. -- (a) Application.
- Any commercial run-off insurer
may apply to the court for an order implementing a
commutation plan.
(b) Procedure.
(1) The applicant shall
give notice of the application and proposed commutation plan.
(2) All creditors shall
be given the opportunity to vote on the plan.
(3) All creditors,
assumption policyholders, reinsurers, and guaranty associations shall be
provided with access to the same information relating to the
proposed plan and shall be given the
opportunity to file comments or objections with the court.
(4) Approval of a
commutation plan requires consent of: (i) fifty
percent (50%) of each
class of creditors; and (ii) the holders of seventy-five
percent (75%) in value of the liabilities
owed to each class of creditors.
(c) Implementation
order.
(1) The court shall enter
an implementation order if: (i) the plan is approved under
subdivision (b)(4) of this section; and (ii) the court determines
that implementation of the
commutation plan would not materially adversely affect either the
interests of objecting creditors
or the interests of assumption policyholders.
(2) The implementation
order shall:
(i)
Order implementation of the commutation plan;
(ii) Subject to any
limitations in the commutation plan, enjoin all litigation in all
jurisdictions between the applicant and creditors other than with
the leave of the court;
(iii) Require all
creditors to submit information requested by the bar date specified in the
plan;
(iv)
Require that upon a noticed application, the applicant obtain court
approval before
making any payments to creditors other than, to the extent
permitted under the commutation plan,
payments in the ordinary course of business, this approval to
be based upon a showing that the
applicant's assets exceed the payments required under the terms
of the commutation plan as
determined based upon the information submitted by creditors
under paragraph (iii) of this
subdivision;
(v) Release the
applicant of all obligations to its creditors upon payment of the amounts
specified in the commutation plan;
(vi)
Require quarterly reports from the applicant to the court and
commissioner
regarding progress in implementing the plan; and
(vii) Be binding upon
the applicant and upon all creditors and owners of the applicant,
whether or not a particular creditor or owner is affected by
the commutation plan or has accepted
it or has filed any information on or before the bar
date, and whether or not a creditor or owner
ultimately receives any payments under the plan.
(3) The applicant shall
give notice of entry of the order.
(d) Applicable law
and procedure with respect to dispute resolution procedures.
(1) Any dispute
resolution procedure in any commutation plan brought by a ceding
insurance creditor to challenge the value of its claim assessed
in any commutation plan will be
consistent with the provisions of title 9,
(2) The adjudicator
and the court, if applicable, hearing any appeal from an adjudication
proceeding where the ceding insurance creditor challenges the
value of its claim assessed by the
applicant in its commutation plan, shall:
(i)
Not attempt to enforce a reinsurance contract on terms different than those set
forth in
the reinsurance contract;
(ii) Not apply the
laws of
domiciled in
apply;
(iii) Apply the law applicable
to the underlying contract between the ceding insurer and
the applicant or, if the underlying reinsurance contract
has no choice of law provision, the law of
the state of domicile of the ceding insurer shall apply.
(d)(e)
Order of dissolution or discharge.
(1) Upon completion of
the commutation plan, the applicant shall advise the court.
(2) The court shall
then enter an order that:
(i) Is effective upon filing with the court proof that
the applicant has provided notice of
entry of the order;
(ii) Transfers those
liabilities subject to an assumption reinsurance agreement to the
assumption reinsurer, thereby notating the original policy by
substituting the assumption reinsurer
for the applicant and releasing the applicant of any
liability relating to the transferred liabilities;
(iii) Assigns each
assumption reinsurer the benefit of reinsurance on transferred
liabilities, except that the assignment shall only be effective
upon the consent of the reinsurer if
either:
(A) The reinsurance
contract requires that consent; or
(B) The consent would
otherwise be required under applicable law; and
(iv)
Either:
(A) The applicant be
discharged from the proceeding without any liabilities; or
(B) The applicant be dissolved.
(3) The applicant shall
provide notice of entry of the order.
(e)(f)
Reinsurance. - Nothing in this chapter shall be construed as authorizing the
applicant, or any other entity, to compel payment from a reinsurer
on the basis of estimated
incurred but not reported losses or loss expenses, or case
reserves for unpaid losses and loss
expenses.
(f)(g)
Modifications to plan. - After provision of notice and an opportunity to
object, and
upon a showing that some material factor in approving the
plan has changed, the court may
modify or change a commutation plan, except that upon entry
of an order under subdivision (d)
(e) (2) of
this section, there shall be no recourse against the applicant's owners absent
a showing
of fraud.
(g)(h)
Role of commissioner and guaranty funds; relationship to
rehabilitation/liquidation statutes.
(1) The commissioner
and guaranty funds shall have the right to intervene in any and all
proceedings under this section; provided, that notwithstanding
any provision of title 27, any
action taken by a commercial run-off insurer to restructure
pursuant to chapter 14.5, including the
formation or re-activation of an insurance company for the sole
purpose of entering into a
voluntary restructuring shall not affect the guaranty fund
coverage existing on the business of
such commercial run-off insurer prior to the taking of
such action.
(2) If, at any time,
the conditions for placing an insurer in rehabilitation or liquidation
specified in chapter 14.3 of this title exist, the commissioner
may request and, upon a proper
showing, the court shall order that the commissioner be named
statutory receiver of the applicant.
(3) If no
implementation order has been entered, then upon being named receiver, the
commissioner may request, and if requested, the court shall order,
that the proceeding under this
chapter be converted to a rehabilitation or liquidation
pursuant to chapter 14.3 of this title. If an
implementation order has already been entered, then the court may
order a conversion upon a
showing that some material factor in approving the original
order has changed.
(4) The commissioner,
any creditor, or the court on its own motion may move to have
the commissioner named as receiver. The court may enter
such an order only upon finding either
that one or more grounds for rehabilitation or liquidation
specified in chapter 14.3 of this title
exist or that the applicant has materially failed to follow
the commutation plan or any other court
instructions.
(5) Unless and until
the commissioner is named receiver, the board of directors or other
controlling body of the applicant shall remain in control of the
applicant.
SECTION 6. This act shall take effect upon passage.
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LC01669/SUB A
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