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:

{ADD 27-4.6-1. Definitions. -- ADD} {ADD As used in this act, these terms shall have the following meanings:

(A) "Adjusted RBC report" means an RBC report which has been adjusted by the commissioner in accordance with section 27-4.6-20.

(B) "Corrective order" means an order issued by the commissioner specifying corrective actions which the commissioner has determined are required.

(C) "Domestic insurer" means any life and/or health insurance company organized in this state under chapter 1 of title 27.

(D) "Foreign insurer" means any life and/or health insurance company which is licensed to do business in this state under chapter 2 of title 27 but is not domiciled in this state.

(E) "NAIC" means the National Association of Insurance Commissioners.

(F) "Negative trend" means a negative trend over a period of time, as determined in accordance with the "Trend Test Calculation" included in the RBC instructions defined in section 27-4.6-1(G).

(G) "RBC instructions" means the RBC report including risk-based capital instructions adopted by the NAIC, as such RBC instructions may be amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC.

(H) "RBC level" means an insurer's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where:

(1) "Company action level RBC" means, with respect to any insurer, the product of 2.0 and its authorized control level RBC;

(2) "Regulatory action level RBC" means the product of 1.5 and its authorized control level RBC;

(3) "Authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions;

(4) "Mandatory control level RBC" means the product of .70 and the authorized control level RBC.

(I) "RBC plan" means a comprehensive financial plan containing the elements specified in section 27-4.6-3(B). If the commissioner rejects the RBC plan, and it is revised by the insurer, with or without the commissioner's recommendation, the plan shall be called the "revised RBC plan".

(J) "RBC report" means the report required in section 27-4.6-2.

(K) "Total adjusted capital" means the sum of:

(1) An insurer's statutory capital and surplus; and

(2) Such other items, if any, as the RBC instructions may provide.

(L) "RBC" means risk based capital. ADD}

{ADD 27-4.6-2. RBC reports. -- ADD} {ADD (A) Every domestic insurer shall, on or prior to March 15 of each year (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, every domestic insurer 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 insurer is authorized to do business, if the insurance commissioner has notified the insurer of its request in writing, in which case the insurer shall file its RBC report not later than the later of:

(a) Fifteen (15) days from the receipt of notice to file its RBC report with that state; or

(b) The filing date.

(B) An insurer's RBC shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account (and may adjust for the covariance between):

(1) The risk with respect to the insurer's assets;

(2) The risk of adverse insurance experience with respect to the insurer's liabilities and obligations;

(3) The interest rate risk with respect to the insurer's business, and

(4) All other business risks and such other relevant risks as are set forth in the RBC instructions; determined in each case by applying the factors in the manner set forth in the RBC instructions.

(C) If a domestic insurer files an RBC report which in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the insurer 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". ADD}

{ADD 27-4.6-3. Company action level event. -- ADD} {ADD (A) "Company action level event" means any of the following events:

(1) The filing of an RBC report by an insurer which indicates that:

(a) The insurer's total adjusted capital is greater than or equal to its regulatory action level RBC; or

(b) The insurer has total adjusted capital which is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 2.5 and has a negative trend. ADD}

{ADD (2) The notification by the commissioner to the insurer of an Adjusted RBC Report that indicates the event in Paragraph (1) (a) or (b) of this subsection (provided the insurer does not challenge the Adjusted RBC Report under section 27-4.6-7); or

(3) If the insurer challenges an Adjusted RBC Report that indicates the event in Paragraph (1) (a) or (b) of this subsection under section 27-4.6-7, the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge.

(B) In the event of a Company Action Level Event, the insurer shall prepare and submit to the commissioner a comprehensive financial plan which shall:

(1) Identify the conditions in the insurer which contribute to the Company Action Level Event;

(2) Contain proposals of corrective actions which the insurer intends to take and would be expected to result in the elimination of the Company Action Level Event;

(3) Provide projections of the insurer's financial results in the current year and at least the four (4) succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, capital and/or surplus. 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 insurer's projections and the sensitivity of the projections to the assumptions; and

(5) Identify the quality of, and problems associated with the insurer'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 in each case, if any.

(C) The RBC Plan shall be submitted:

(1) Within forty-five (45) days of the Company Action Level Event; or

(2) If the insurer challenges an Adjusted RBC Report pursuant to section 27-4.6-7, within forty-five (45) days after notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge.

(D) Within sixty (60) days after the submission by an insurer of an RBC Plan to the commissioner, the commissioner shall notify the insurer 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 insurer 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 insurer 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 insurer challenges the notification from the commissioner under section 27-4.6-7, within forty-five days after a notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge.

(E) In the event of a notification by the commissioner to an insurer that the insurer's RBC Plan or Revised RBC Plan, is unsatisfactory, the commissioner may at the commissioner's discretion, subject to the insurer's right to a hearing under section 27-4.6-7, specify in the notification that the notification constitutes a Regulatory Action Level Event.

(F) Every domestic insurer 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 insurer is authorized to do business if:

(1) Such state has an RBC provision substantially similar to section 27-4.8-8(A); and ADD}

{ADD (2) The insurance commissioner of that state has notified the insurer of its request for the filing in writing, in which case the insurer shall file a copy of the RBC Plan or Revised RBC Plan in that state no later than the later of:

(a) Fifteen (15) days after the receipt of notice to file a copy of its RBC Plan or Revised RBC Plan with the state; or

(b) The date on which the RBC Plan or Revised RBC Plan is filed under section 27-4.6-3(C) and section 27-4.6-3(D). ADD}

{ADD 27-4.6-4. Regulatory action level event. -- ADD} {ADD (A) "Regulatory Action Level Event" means, with respect to any insurer, any of the following events:

(1) The filing of an RBC Report by the insurer which indicates that the insurer's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;

(2) The notification by the commissioner to an insurer of an adjusted RBC report that indicates the event in paragraph (1), provided the insurer does not challenge the adjusted RBC report under section 27-4.6-7.

(3) If the insurer challenges an adjusted RBC report that indicates a hearing under section 27-4.6-7, the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge;

(4) The failure of the insurer to file an RBC report by the filing date, unless the insurer has provided an explanation for such failure which is satisfactory to the commissioner and has cured the failure within ten (10) days after the filing date;

(5) The failure of the insurer to submit an RBC plan to the commissioner within the time period set forth in section 27-4.6-3(C);

(6) Notification by the commissioner to the insurer that

(a) The RBC plan or revised RBC plan submitted by the insurer is, in the judgment of the commissioner, unsatisfactory; and

(b) Such notification constitutes a regulatory action level event with respect to the insurer, provided the insurer has not challenged the determination under section 27-4.6-7;

(7) If the insurer challenges a determination by the commissioner under paragraph (6) pursuant to section 27-4.6-7, the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected such challenge;

(8) Notification by the commissioner to the insurer that the insurer has failed to adhere to its RBC plan or revised RBC plan, but only if such failure has a substantial adverse effect on the ability of the insurer to eliminate the regulatory action level event in accordance with its RBC plan or revised RBC plan and the commissioner has so stated in the notification, provided the insurer has not challenged the determination under section 27-4.6-7; or

(9) If the insurer challenges a determination by the commissioner pursuant to section 27-4.6-7, the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the challenge (unless the failure of the insurer to adhere to its RBC plan or revised RBC plan has no substantial adverse effect on the ability of the insurer to eliminate the regulatory action level event with respect to the insurer).

(B) In the event of a regulatory action level event the commissioner shall:

(1) Require the insurer 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 insurer 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 such factors as are deemed relevant with respect to the insurer based upon the commissioner's examination or analysis of the assets, liabilities and operations of the insurer 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: ADD}

{ADD (1) Within forty-five (45) days after the occurrence of the regulatory action level event.

(2) If the insurer challenges an adjusted RBC report pursuant to section 27-4.6-7 and the challenge is not in the judgment of the commissioner frivolous, within forty-five (45) days after the notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge; or

(3) If the insurer challenges a revised RBC plan under section 27-4.6-7, within forty-five (45) days after notification to the insurer that the commissioner has, after a hearing, rejected the insurer'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 insurer's RBC plan or revised RBC plan, examine or analyze the assets, liabilities and operations of the insurer and formulate the corrective order with respect to the insurer. The fees, costs and expenses relating to consultants shall be borne by the affected insurer or such other party as directed by the commissioner. ADD}

{ADD 27-4.6-5. Authorized control level event. -- ADD} {ADD (A) "Authorized control level event" means any of the following events:

(1) The filing of an RBC report by the insurer which indicates that the insurer'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 insurer of an adjusted RBC report that indicates the event in subparagraph (a) of this paragraph (provided the insurer does not challenge the adjusted RBC report under section 27-4.6-7);

(3) If the insurer challenges an adjusted RBC report that indicates the event in subparagraph (A) under section 27-4.6-7, notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge;

(4) The failure of the insurer to respond, in a manner satisfactory to the commissioner, to a corrective order (provided the insurer has not challenged the corrective order under section 27-4.6-7); or

(5) If the insurer has challenged a corrective order under section 27-4.6-7 and the commissioner has, after a hearing, rejected the challenge or modified the corrective order, the failure of the insurer 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 an insurer, the commissioner shall:

(1) Take such actions as are required under section 27-4.6-4 regarding an insurer with respect to which an 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 insurer and of the public, take such actions as are necessary to cause the insurer to be placed under regulatory control under chapter 14.3 of title 27. 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 chapter 14.3 of title 27, and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in chapter 14.3 of title 27. In the event the commissioner takes actions under this subparagraph pursuant to an adjusted RBC report, the insurer shall be entitled to such protections as are afforded to insurers under the provisions of chapter 14.3 of title 27 pertaining to summary proceedings. ADD}

{ADD 27-4.6-6. Mandatory control level event. -- ADD} {ADD (A) "Mandatory control level event" means any of the following events:

(i) The filing of an RBC report which indicates that the insurer's total adjusted capital is less than its mandatory control level RBC;

(2) Notification by the commissioner to the insurer if an adjusted RBC report that indicates the event in paragraph (1), provided the insurer does not challenge the adjusted RBC report under section 7; or

(3) If the insurer challenges an adjusted RBC report that indicates the event in paragraph (1) under section 7, notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge.

(B) In the event of a mandatory control level event, the commissioner shall take actions as are necessary to cause the insurer to be placed under regulatory control under chapter 14.3 of title 27. In that event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under chapter 14.3 of title 27, and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in chapter 14.3 of title 27. In the event the commissioner takes actions pursuant to an adjusted RBC report, the insurer shall be entitled to such protections as are afforded to insurers under the provisions of chapter 14.3 of title 27 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 he or she finds there is a reasonable expectation that the mandatory control level event may be eliminated within the ninety (90) day period. ADD}

{ADD 27-4.6-7. Hearings. -- ADD}{ADD Upon:

(A) Notification to an insurer by the commissioner of an adjusted RBC report; or

(B) Notification to an insurer by the commissioner that

(1) The insurer's RBC plan or revised RBC plan is unsatisfactory; and

(2) Such notification constitutes a regulatory action level event with respect to such insurer; or

(C) Notification to any insurer by the commissioner that the insurer has failed to adhere to its RBC plan or revised RBC plan and that such failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event with respect to the insurer in accordance with its RBC plan or revised RBC plan; or

(D) Notification to an insurer by the commissioner of a corrective order with respect to the insurer; the insurer shall have the right to a departmental hearing, on a record, at which the insurer may challenge any determination or action by the commissioner. The insurer shall notify the commissioner of its request for a hearing within five (5) days after the notification by the commissioner under subsection (A), (B), (C) or (D). Upon receipt of the insurer's request for a hearing, the commissioner shall set a date for the hearing, which date shall be in a reasonable amount of time but in no event less than ten (10) days from the date of the insurer's request. ADD}

{ADD 27-4.6-8. Confidentiality and prohibition on announcements. -- ADD} {ADD (A) All RBC reports (to the extent the information therein 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 an insurer performed pursuant hereto and any corrective order issued by the commissioner pursuant to the examination or analysis) with respect to any domestic insurer or foreign insurer which are filed with the commissioner constitute information that might be damaging to the insurer if made available to its competitors, and therefore shall be kept confidential by the commissioner. This information shall not be made public and/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 act or any other provision of the insurance laws of this state. All RBC reports and RBC plans filed with the insurance commissioner shall not be deemed public records and shall not be subject to the access to public records act, section 38-2-1 et seq.

(B) It is the judgment of the legislature that the comparison of an insurer's total adjusted capital to any of its RBC levels is a regulatory tool which may indicate the need for possible corrective action with respect to the insurer, and is not intended as a means to rank insurers generally. Therefore, except as otherwise required under the provisions of this act, 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 any 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 insurer, or of any component derived in the calculation, by any insurer, 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 an insurer's total adjusted capital to its RBC levels (or any of them) or an inappropriate comparison of any other amount to the insurers' RBC levels is published in any written publication and the insurer is able to demonstrate to the commissioner with substantial proof the falsity of such statement, or the inappropriateness, as the case may be, then the insurer may publish an announcement in a written publication if the sole purpose of the announcement is to rebut the materially false statement. ADD}

{ADD 27-4.6-9. Supplemental provisions. -- ADD} {ADD The provisions of this act 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, chapter 14.3 of title 27 and chapter 14.2 of title 27. ADD}

{ADD 27-4.6-10. Foreign insurers. -- ADD} {ADD (A) Any foreign insurer 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:

(1) The date an RBC report would be required to be filed by a domestic insurer under this act; or

(2) Fifteen (15) days after the request is received by the foreign insurer.

Any foreign insurer 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 or regulatory action level event with respect to any foreign insurer as determined under the RBC statute applicable in the state of domicile of the insurer (or, if no RBC provision is in force in that state, under the provisions of this act), if the insurance commissioner of the state of domicile of the foreign insurer fails to require the foreign insurer to file an RBC plan in the manner specified under the RBC statute (or, if no RBC provision is in force in the state, under section 27-4.6-3 hereof), the commissioner may require the foreign insurer to file an RBC plan with the commissioner. In such event, the failure of the foreign insurer to file an RBC plan with the commissioner shall be grounds to order the insurer 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 any foreign insurer, if no domiciliary receiver has been appointed with respect to the foreign insurer under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign insurer, the commissioner may make application to the superior court for Providence County permitted under chapter 14.3 of title 27 with respect to the liquidation of property of foreign insurers found in this state, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application. ADD}

{ADD 27-4.6-11. Severability clause. -- ADD} {ADD If any provision of this act, or the application thereof to any person or circumstances, is held invalid, such determination shall not affect the provisions or applications of this act which can be given effect without the invalid provision or application, and to that end the provisions of this act are severable. ADD}

{ADD 27-4.6-12. Notices. -- ADD} {ADD All notices by the commissioner to an insurer which may result in regulatory action hereunder 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 insurer's receipt of such notice. ADD}

SECTION 2. Title 27 of the General Laws entitled "Insurance" is hereby amended by adding thereto the following chapter:

{ADD 27-14.4-1. Short title. -- ADD} {ADD This chapter may be cited as the "Uniform Insurers Liquidation Act". ADD}

{ADD 27-14.4-2. Definitions. -- ADD} {ADD For the purposes of this chapter:

(1) "Insurer" means any person, firm, corporation, association, or aggregation of persons doing an insurance business and subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization, or conservation by, the department of business regulation of this state, or the equivalent insurance supervisory official of another state.

(2) "Delinquency proceeding" means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving that insurer.

(3) "State" means any state of the United States, and also the District of Columbia and Puerto Rico.

(4) "Foreign country" means territory not in any state.

(5) "Domiciliary state" means the state in which an insurer is incorporated or organized, or, in the case of an insurer incorporated or organized in a foreign country, the state in which that insurer, having become authorized to do business in that state, has, at the commencement of delinquency proceedings, the largest amount of its assets held in trust and assets held on deposit for the benefit of its policyholders or policyholders and creditors in the United States; and any foreign insurer is deemed to be domiciled in that state.

(6) "Ancillary state" means any state other than a domiciliary state.

(7) "Reciprocal state" means any state other than this state in which in substance and effect the provisions of this chapter are in force, including the provisions requiring that the director of business regulation is the receiver of a delinquent insurer.

(8) "General assets" means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or a limited class or classes of persons, and as to specifically encumbered property the term includes all property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and assets held on deposit for the security or benefit of all policyholders, or all policyholders and creditors in the United States, shall be deemed general assets; provided that general assets shall not mean unearned premiums due or owed the insurer by the policyholder, agent or broker at the time an insolvency or liquidation is declared by a court of competent jurisdiction, nor shall general assets mean unearned premiums held in trust or held on deposit by the agent, broker, or insurer.

(9) "Preferred claim" means any claim with respect to which the law of a state or of the United States accords priority of payment from the general assets of the insurer.

(10) "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any general assets.

(11) "Secured claim" means any claim secured by mortgage, trust, deed, pledge, deposit as security, escrow, or otherwise, but not including special deposit claims or claims against general assets. The term also includes claims which more than four (4) months prior to the commencement of delinquency proceedings in the state of the insurer's domicile have become liens upon specific assets by reason of judicial process.

(12) "Receiver" means receiver, liquidator, rehabilitator, or conservator as the context may require. ADD}

{ADD 27-14.4-3. Director as domiciliary receiver. -- ADD} {ADD Whenever under this title, including section 27-1-14, a receiver is to be appointed upon the commencement of delinquency proceedings for an insurer domiciled in this state, the superior court shall appoint the director of business regulation as the receiver. The court shall direct the receiver forthwith to take possession of the assets of the insurer and to administer them under the orders of the court. The receiver may subject to the discreation of the court continue to be the receiver for the duration of the receivership proceedings and shall have all the powers and duties conferred upon the receivers by law including the powers and duties set forth in chapter 27-1 and chapter 27-14 of the general laws. ADD}

{ADD 27-14.4-4. Title vested in domiciliary receiver -- Official bond. -- ADD} {ADD The domiciliary receiver and his or her successors shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records, of the insurer wherever located, as of the date of entry of the order directing possession to be taken, and the receiver shall have the right to recover that property and reduce it to possession; except that ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers which are hereinafter prescribed for ancillary receivers appointed in this state as to assets located in this state. The filing or recording of the order directing possession to be taken, or a certified copy thereof, in the office where instruments affecting title to property are required to be filed or recorded shall impart the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded. The domiciliary receiver shall be responsible on his or her official bond for the proper administration of all assets coming into his or her possession or control. The court may at any time require an additional bond from the receiver or his or her deputies if deemed desirable for the protection of the assets. ADD}

{ADD 27-14.4-5. Administration of assets by receiver -- Employment of deputies and personnel. -- ADD} {ADD Upon taking possession of the assets of a delinquent insurer the domiciliary receiver shall, subject to the direction of the court, immediately proceed to conduct the business of the insurer or to take such steps as are authorized by the laws of this state for the purpose of liquidating, rehabilitating, reorganizing, or conserving the affairs of the insurer. In connection with delinquency proceedings the receiver may appoint one or more special deputies to act for him or her, and may employ such counsel, clerks, and assistants as he or she deems necessary. The compensation of the special deputies, counsel, clerks, or assistants and all the expenses of taking possession of the delinquent insurer and of conducting the delinquency proceedings shall be fixed by the receiver, subject to the approval of the court, and shall be paid out of the funds or assets of the insurer. Within the limits of the duties imposed upon them special deputies shall possess all the powers given to, and, in the exercise of those powers, shall be subject to all of the duties imposed upon the receiver with respect to delinquency proceedings. ADD}

{ADD 27-14.4-6. Director as ancillary receiver. -- ADD} {ADD Whenever under the laws of this state an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled in this state, the superior court shall appoint the director of business regulation as the ancillary receiver. The ancillary receiver shall file a petition in the court requesting appointment:

(a) If that he or she finds that there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver; or

(b) If ten (10) or more persons resident in this state having claims against the insurer file a petition with the director of business regulation requesting the appointment of an ancillary receiver. ADD}

{ADD 27-14.4-7. Powers and duties of receivers of foreign companies. -- ADD} {ADD The domiciliary receiver of an insurer domiciled in a reciprocal state shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records, of the insurer located in this state, and the receiver shall have the immediate right to recover all balances due from local agents and to obtain possession of any books and records of the insurer found in this state. The receiver shall also be entitled to recover the other assets of the insurer located in this state except that upon the appointment of an ancillary receiver in this state, the ancillary receiver shall during the ancillary receivership proceedings have the sole right to recover those other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. All remaining assets the ancillary receiver shall promptly transfer to the domiciliary receiver. Subject to the foregoing provisions the ancillary receiver and his or her deputies shall have the same powers and be subject to the same duties, with respect to the administration of the insurer's assets, as a receiver of an insurer domiciled in this state. ADD}

{ADD 27-14.4-8. Filing by claimants in reciprocal states against insurers of this state. -- ADD} {ADD In a delinquency proceeding begun in this state against an insurer domiciled in this state, claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary receiver. All of those claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceeding. ADD}

{ADD 27-14.4-9. Proof of controverted claims of nonresidents. -- ADD} {ADD Controverted claims belonging to claimants residing in reciprocal states may either (a) be proved in this state as provided by law, or (b), if ancillary proceedings have been commenced in those reciprocal states, be proved in those proceedings. In the event a claimant elects to prove his or her claim in ancillary proceedings, if notice of the claim and opportunity to appear and be heard is afforded the domiciliary receiver of this state as provided in section 27-14-11 with respect to ancillary proceedings in this state, the final allowance of that claim by the courts in the ancillary state shall be accepted in this state as conclusive as to its amount, and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within the ancillary state. ADD}

{ADD 27-14.4-10. Filing by claimants in this state against foreign insurer. -- ADD} {ADD In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, claimants against that insurer who reside within this state may file claims either with the ancillary receiver, if any, appointed in this state, or with the domiciliary receiver. All of those claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceeding. ADD}

{ADD 27-14.4-11. Proof of controverted claims of residents. -- ADD} {ADD Controverted claims belonging to claimants residing in this state may either (a) be proved in the domiciliary state as provided by the law of that state, or (b), if ancillary proceedings have been commenced in this state, be proved in those proceedings. In the event that any claimant elects to prove his or her claim in this state, the claimant shall file his or her claim with the ancillary receiver in the manner provided by the law of this state for the proving of claims against insurers domiciled in this state, and the claimant shall give notice in writing to the receiver in the domiciliary state, either by registered or certified mail or by personal service at least forty (40) days prior to the date set for hearing. The notice shall contain a concise statement of the amount of the claim, the facts on which the claim is based, and the priorities asserted, if any. If the domiciliary receiver, within thirty (30) days after the giving of notice, shall give notice in writing to the ancillary receiver and to the claimant, either by registered or certified mail or by personal service, of his or her intention to contest the claim, the domicillary receiver shall be entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim. The final allowance of the claim by the courts of this state shall be accepted as conclusive as to its amount, and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within this state. ADD}

{ADD 27-14.4-12. Preferred ancillary claims against domestic insurers. -- ADD} {ADD In a delinquency proceeding against an insurer domiciled in this state, claims owing to residents of ancillary states shall be preferred claims if like claims are preferred under the laws of this state. All claims whether owing to residents or nonresidents shall be given equal priority of payment from general assets regardless of where those assets are located. ADD}

{ADD 27-14.4-13. Preferred claims in this state against foreign insurers. -- ADD} {ADD In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of this state shall be preferred if like claims are preferred by the laws of that state. ADD}

{ADD 27-14.4-14. Special deposit claims. -- ADD} {ADD The owners of special deposit claims against an insurer for which a receiver is appointed in this or any other state shall be given priority against their several special deposits in accordance with the provisions of the statutes governing the creation and maintenance of special deposits. If there is a deficiency in any special deposit so that the claims secured thereby are not fully discharged therefrom, the claimants may share in the general assets, but any sharing shall be deferred until general creditors, and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit. ADD}

{ADD 27-14.4-15. Secured claims. -- ADD} {ADD The owner of a secured claim against an insurer for which a receiver has been appointed in this or any other state may surrender his or her security and file his claim as a general creditor, or the claim may be discharged by resort to the security, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as the claims of unsecured creditors. If the amount of the deficiency has been adjudicated in ancillary proceedings as provided in this chapter, or if it has been adjudicated by a court of competent jurisdiction in proceedings in which the domiciliary receiver has had notice and opportunity to be heard, that amount shall be conclusive; otherwise the amount shall be determined in the delinquency proceeding in the domiciliary state. ADD}

{ADD 27-14.4-16. Attachment, garnishment, and execution. -- ADD} {ADD During the pendency of delinquency proceedings in this or any reciprocal state no action or proceeding in the nature of an attachment, garnishment, or execution shall be commenced or maintained in the courts of this state against the delinquent insurer or its assets. Any lien obtained by any action or proceeding in the nature of an attachment, garnishment, or execution within four (4) months prior to the commencement of any delinquency proceeding or at any time thereafter shall be void as against any rights arising in the delinquency proceeding. ADD}

{ADD 27-14.4-17. Suit in this state by domiciliary receiver of foreign insurer. -- ADD} {ADD The domiciliary receiver of an insurer domiciled in a reciprocal state may sue in this state to recover any assets of that insurer to which the receiver may be entitled under the laws of this state. ADD}

{ADD 27-14.4-18. Severability. -- ADD} {ADD If any provision of this chapter or the application thereof to any person or circumstance is held invalid, that invalidity shall not affect other provisions or applications of the chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be severable. ADD}

{ADD 27-14.4-19. Uniformity of construction. -- ADD} {ADD This chapter shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it. ADD}

{ADD 27-14.4-20. Right of receiver to deposits. -- ADD} {ADD The provisions of section 27-1-8 shall not apply in any case where the director of business regulation has been appointed and is acting as a receiver, pursuant to the provisions of this chapter. ADD}

{ADD 27-14.4-21. Immediate access to assets. -- ADD} {ADD (1) Within 120 days of a final determination of insolvency of a company by a court of competent jurisdiction of this state, the receiver shall make an application to the court for the approval of a proposal to disburse assets out of that company's marshalled assets, from time to time as those assets become available, to the Rhode Island insurers' insolvency fund and to any similar organization in another state. The Rhode Island insurers' insolvency fund and similar organizations in other states shall hereinafter be referred to collectively as the funds.

(2) The proposal shall at least include provision for:

(a) Reserving amounts for the payment of the expenses of administration and claims falling within the priorities established in section 27-14-22 (a), (b), and (c) of the general laws.

(b) The disbursement of the assets marshalled to date and subsequent disbursements of assets as they become available.

(c) The equitable allocation of disbursements to each of the funds entitled thereto; and

(d) The securing by the receiver from each of the funds entitled to disbursements pursuant to this section, of an agreement to return to the receiver such assets previously disbursed as may be required to pay claims of secured creditors and claims falling within the priorities established in section 27-14-22(a), (b), (c), and (d) of the general laws in accordance with those priorities. No bond shall be required of any fund.

(3) The receiver's proposal shall provide for disbursements to the funds in amounts at least equal to the payments made or to be made thereby for which the funds could assert claims against the receiver, and shall further provide that if the assets available for disbursement from time to time do not equal or exceed the amount of those payments made or to be made by the funds then disbursements shall be in the amount of available assets.

(4) Notice of the application shall be given to the funds in each of the states and to the commissioners of insurance of each of the states. Any notice shall be deemed to have been given when deposited in the United States certified mails, first class postage prepaid, at least 30 days prior to the submission of the application to the court. Action on the application may be taken by the court provided the above required notice has been given and provided further that the receiver's proposal complies with subsections (2)a and (2)d. ADD}

{ADD 27-14.4-22. Priority of distribution. -- ADD} {ADD The priorities of distribution in a liquidation proceeding shall be in the following order:

(a) The cost and expenses of administration, including the claims handling expenses of the Rhode Island insurers' insolvency fund and of any similar organization in any other state.

(b) Wages actually owing to employees for services rendered within three months prior to the date of the filing of the delinquency petition, not exceeding three hundred dollars ($300) to each employee.

(c) Federal, state, and local taxes.

(d) Claims by policyholders, beneficiaries, and insureds arising from and within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company, and liability claims against the insured which claims are within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company, and claims of the Rhode Island insurers' insolvency fund and any similar organization in another state.

(e) all other claims. ADD}

{ADD 27-14.4-23. Agent's responsibilities. -- ADD} {ADD In the event of the entry of a decree ordering liquidation of an insurer, the responsibility of the agent to render premiums to the receiver shall be as follows:

(a) Any agent upon receiving notice that a policy of insurance is being cancelled shall as of the date of policy termination immediately remit unearned premiums in the possession of the agent to the insured who paid them, or with the written approval of the insured, purchase new coverage for the insured with a different insurer. The agent shall not owe, or remit to the insurer or to the liquidator-receiver any premiums that are unearned as of the date of commencement of such proceedings. The insurance commissioner shall promulgate rules in accordance with the administrative procedures act, chapter 35 of title 42, establishing guidelines for use by agents to calculate unearned premium.

(b) An agent who places initial insurance coverage, or renewal coverage, with an insurer admitted to do business in this state or with any insurer conducting business in Rhode Island which is an admitted carrier on the date of the coverage placement shall be deemed to have fulfilled his or her duty to the insured regarding the financial condition of the insurer and a claim for monetary damages shall not be brought or maintained against the agent for breach of duty or for any other cause of action resulting from the financial condition of the insurer.

(c) An agent who places initial insurance coverage, or renewal coverage, with an insurer that is not admitted to do business in this state or with any insurer conducting business in Rhode Island which is a non-admitted carrier on the date of the coverage placement, or if the insurer is not rated in the most recent published issue of Best's Key Rating Guide, shall be deemed to have fulfilled his or her duty to the insured regarding the financial condition of the insurer and a claim for monetary damages shall not be brought or maintained against the agent for breach of duty or for any other cause of action resulting from the financial condition of the insurer but only if the insured voluntarily signs this statement:

(Name of insured of (street, city or town, state), being duly sworn, deposes and says that on (date), he (she) directed his (her) insurance agent or broker to obtain insurance against certain risks covering property as described on the reverse side; that his (her) insurance agent or broker informed him (her) that (only part of) (no part of) the required insurance could be obtained from companies admitted to transact business in the state of Rhode Island, to wit: ($ ); and that he (she) informed me that he (she) made a diligent effort to procure the full amount of insurance from admitted insurers, but was unable to do so.

The following companies or groups and officer(s) or agent(s) thereof are among those which have declined the offering or accepted a part thereof: ADD}

{ADD I was further informed that the amount of insurance shown below could be obtained from certain insurers not admitted to transact business in the state of Rhode Island. I therefore directed ADD} {ADD ADD} {ADD a licensed Rhode Island agent (broker) to obtain this insurance from these non-admitted companies through the office of __________________________ a licensed surplus line broker. This insurance was only the excess over the amounts procurable from admitted insurers. ADD} {ADD ADD} {ADD personally appeared before me ADD} {ADD ADD} {ADD and made oath that the above affidavit signed by him (her) is true to the best of his knowledge and belief. ADD}

{ADD (Signature of Insured) ADD}

{ADD (Notary Public) ADD}

SECTION 3. Section 2 of this act shall continue to apply to all insurance company delinquency proceedings commenced prior to July 23, 1993 and shall have the same force and effect as if chapter 14 of title 27 of the general laws was continuously in existence and the remainder of this act shall take effect upon passage.