230-RICR — Department of Business Regulation (includes the Office of the Health Insurance Commissioner)

Chapter 10 Central Operations

Subchapter 00

230-RICR-10-00-1 Access to Public Records

230-RICR-10-00-1 § 1.1 Authority

A.This Regulation is promulgated in accordance with R.I. Gen. Laws §§ 38-2-3 and 42-14-17.

History

Technical Revision — effective from 2025-06-23 to current
Periodic Refile — effective from 2022-01-04 to 06/23/2025
Technical Revision — effective from 2017-02-27 to 01/04/2022
Technical Revision — effective from 2017-02-27 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2003-04-08 to 01/22/2013
Periodic Refile — effective from 2001-12-27 to 04/08/2003

230-RICR-10-00-1 § 1.2 Purposes

A.To provide procedures for public records access.

History

Technical Revision — effective from 2025-06-23 to current
Periodic Refile — effective from 2022-01-04 to 06/23/2025
Technical Revision — effective from 2017-02-27 to 01/04/2022
Technical Revision — effective from 2017-02-27 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2003-04-08 to 01/22/2013
Periodic Refile — effective from 2001-12-27 to 04/08/2003

230-RICR-10-00-1 § 1.3 Policy

A.It is the policy of the Department that all files and records of the Department that are required to be disclosed by state or federal law, or otherwise ordered by a court of competent jurisdiction are available for public inspection and copying.

B.The Department shall not disclose files or records that are:

1.Prohibited from disclosure by any state or federal law; or

2.Otherwise prohibited by order of a court of competent jurisdiction.

C.Records that are not deemed public under R.I. Gen. Laws § 38-2-1 et seq. shall not be disclosed by Department employees without the express written approval of the Director of the Department.

History

Technical Revision — effective from 2025-06-23 to current
Periodic Refile — effective from 2022-01-04 to 06/23/2025
Technical Revision — effective from 2017-02-27 to 01/04/2022
Technical Revision — effective from 2017-02-27 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2003-04-08 to 01/22/2013
Periodic Refile — effective from 2001-12-27 to 04/08/2003

230-RICR-10-00-1 § 1.4 Procedure for Requesting Public Records

A.A person requesting inspection or copying of public records shall contact the Department of Business Regulation with their request:

1.Through the Department’s APRA portal, which is accessible on the Department’s website; or

2.By email, regular mail or facsimile using the form and designated mailing, email address or fax number on the Department’s website.

B.The Department’s preferred method of communication is the APRA portal but all other forms will be accepted. The request should indicate:

1.A complete description of the records sought in a manner that will permit their identification and location by Department personnel.

2.The method by which the requestor would like delivery of the response. Please include all information necessary for the Department to make that communication (e.g. email address, facsimile number or street address).

C.The Department will provide a form on its website as a template for information which would be sufficient to allow it to determine whether the records are available or to provide the records in the method selected by the requestor. This form is to be used only for guidance and is not required to make a public records request.

D.Within ten (10) business days of the request the Department will respond in the mode requested by the requestor or if no manner is specified by the mode in which the request was received, with one or more of the following:

1.That the Requestor should contact the Department to schedule an appointment to inspect the records;

2.A copy of the documents requested;

3.A response that the documents do not exist or are not within the custody or control of the Department;

4.A response that the documents are not “public documents” as defined by R.I. Gen. Laws § 38-2-2 and a description of the procedures for appealing that denial;

5.A response that the description of records sought in the request is not sufficient to allow the Department to identify and locate the requested records;

6.A response that the documents are being produced in a redacted fashion in accordance with R.I. Gen. Laws § 38-2-2;

7.A response that the records will be produced upon receipt of payment for an amount calculated in accordance with R.I. Gen. Laws §§ 38-2-3(k) and 38-2-4. The estimated amount owed will be set forth and the records will be produced after payment is received.

E.Should it appear that the request cannot be honored within ten (10) business days the Department will respond indicating that additional time is needed and specifying the reason for that additional time up to an additional twenty (20) business days in accordance with R.I. Gen. Laws § 38-2-3(e).

History

Technical Revision — effective from 2025-06-23 to current
Periodic Refile — effective from 2022-01-04 to 06/23/2025
Technical Revision — effective from 2017-02-27 to 01/04/2022
Technical Revision — effective from 2017-02-27 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2003-04-08 to 01/22/2013
Periodic Refile — effective from 2001-12-27 to 04/08/2003

230-RICR-10-00-1 § 1.5 Fees

A.The Department may charge a fee for copying and/or search and retrieval of requested documents consistent with R.I. Gen. Laws § 38-2-4.

B.All persons requesting delivery of records shall be responsible for the actual cost of delivery.

C.All payments for copies of records shall be paid in advance of delivery, or, at the option of the Department, at such later time as the Department may specify. All checks shall be payable to the General Treasurer, State of Rhode Island.

History

Technical Revision — effective from 2025-06-23 to current
Periodic Refile — effective from 2022-01-04 to 06/23/2025
Technical Revision — effective from 2017-02-27 to 01/04/2022
Technical Revision — effective from 2017-02-27 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2003-04-08 to 01/22/2013
Periodic Refile — effective from 2001-12-27 to 04/08/2003

230-RICR-10-00-1 § 1.6 Appeals

A.If the Department denies a request for access to records, the person who requested the records may appeal the denial in accordance with R.I. Gen. Laws § 38-2-8.

History

Technical Revision — effective from 2025-06-23 to current
Periodic Refile — effective from 2022-01-04 to 06/23/2025
Technical Revision — effective from 2017-02-27 to 01/04/2022
Technical Revision — effective from 2017-02-27 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2003-04-08 to 01/22/2013
Periodic Refile — effective from 2001-12-27 to 04/08/2003

230-RICR-10-00-1 § 1.7 Subpoenas

A.Subpoenas issued pursuant to the rules of any Court will be addressed in accordance with those rules. This regulation does not apply to such subpoenas.

History

Technical Revision — effective from 2025-06-23 to current
Periodic Refile — effective from 2022-01-04 to 06/23/2025
Technical Revision — effective from 2017-02-27 to 01/04/2022
Technical Revision — effective from 2017-02-27 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2003-04-08 to 01/22/2013
Periodic Refile — effective from 2001-12-27 to 04/08/2003

230-RICR-10-00-1 § 1.8 Severability

A.If any provision of these Rules and Regulations or the application thereof to any person or circumstances shall be held invalid, such invalidity shall not affect the provisions or application of the rules and regulations which can be given effect, and to this end the provisions of these rules and regulations are declared to be severable.

History

Technical Revision — effective from 2025-06-23 to current
Periodic Refile — effective from 2022-01-04 to 06/23/2025
Technical Revision — effective from 2017-02-27 to 01/04/2022
Technical Revision — effective from 2017-02-27 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 02/27/2017
Technical Revision — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2013-01-22 to 01/22/2013
Amendment — effective from 2003-04-08 to 01/22/2013
Periodic Refile — effective from 2001-12-27 to 04/08/2003

230-RICR-10-00-3 Declaratory Rulings and Petitions

230-RICR-10-00-3 § 3.1 Authority

This regulation (“Regulation”) is promulgated pursuant to the authority granted in R.I. Gen. Laws § 42-14-1 et seq., R.I. Gen. Laws § 42-35-6, and R.I. Gen. Laws § 42-35-8.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Technical Revision — effective from 2007-11-08 to 11/08/2007
Amendment — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2002-08-14 to 11/08/2007

230-RICR-10-00-3 § 3.2 Definitions

A.When used in this Regulation, the following words shall have the following meaning:

1.“Department” shall mean the Department of Business Regulation.

2.“Director” shall mean the Director of the Department.

3.“Filer” shall mean the person(s) or entity which files a request for Declaratory Ruling or a Petition for Promulgation, Amendment or Repeal of any rule or regulation with the Department.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Technical Revision — effective from 2007-11-08 to 11/08/2007
Amendment — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2002-08-14 to 11/08/2007

230-RICR-10-00-3 § 3.3 Declaratory Rulings

A.General. Pursuant to R.I. Gen. Laws § 42-35-8, any interested person may petition the Department for a declaratory ruling. The Department shall consider the petition. Within a reasonable time the Department shall, in its sole discretion, take one of the following actions:

1.Issue a declaratory ruling; or

2.Solicit written argument from the filer and any other person(s) that the Department reasonably believes would be interested in the issues; or

3.Set a reasonable time and place for hearing argument upon the matter and give reasonable notification to the filer and any other person(s) that the Department reasonably believes would be interested in the issue(s) of the time and place for such hearing and of the issues involved.

4.If either §§ 3.3(A)(2) or 3.3(A)(3) of this Part above is utilized, the Department shall within a reasonable time after receipt of written submission or after the hearing is held issue a binding declaratory ruling.

B.Form of Petition. Any interested person petitioning the Department for a declaratory ruling shall generally adhere to the following requirements for such purpose:

1.Petitions may be submitted electronically or in hard copy.

2.At the top of the page shall appear the wording “Before the Department of Business Regulation.” On the left side of the page below the foregoing, the following caption shall be set out: “In the Matter of the Petition of (name of the petitioning party) for a Declaratory Ruling.” Opposite the foregoing caption shall appear the word “Petition.”

3.The body of the petition shall be set out in numbered paragraphs. The first paragraph shall state the name and the address of the petitioning party. The second paragraph shall state all rules or statutes that may be brought into issue by the petition. Succeeding paragraphs shall set out the state of facts relied upon in form similar to complaints in civil actions before the superior courts of this state. The concluding paragraphs shall contain the prayer of the petitioner. The petition shall be subscribed and verified in the manner prescribed for verification of complaints in the superior courts of this state.

4.Petitions shall clearly identify the filer and/or his or her authorized representative and the date of submission of the petition.

5.If submitted in hard copy the original and two (2) copies shall be filed with the Department and petitions shall be on 8 and ½ x 11” white paper.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Technical Revision — effective from 2007-11-08 to 11/08/2007
Amendment — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2002-08-14 to 11/08/2007

230-RICR-10-00-3 § 3.4 Petitions for Promulgation, Amendment or Repeal of any Rule or Regulation

A.General. Pursuant to R.I. Gen. Laws § 42-35-6, any interested person may petition the Department requesting the promulgation, amendment or repeal of any rule or regulation. Where the petition requests the promulgation of a rule or regulation, the requested or proposed rule must be set out in full. The petition must also include all the reasons for the requested rule or regulation together with briefs of any applicable law. Where the petition requests the amendment or repeal of a rule or regulation presently in effect, the rule or regulation or the applicable portion thereof in question must be set out as well as a suggested amended form, if any. The petition must include all reasons for the requested amendment or repeal of the rule or regulation. All petitions shall be considered by the Department. Within a reasonable time the Department shall, in its sole discretion, take one the following actions:

1.Issue a declaratory ruling; or

2.Solicit written argument from the filer and any other person(s) that the Department reasonably believes would be interested in the issue(s). The Department will, thereafter, issue a declaratory based upon the written submissions; or

3.Set a reasonable time and place for hearing argument upon the matter and give reasonable notification to the filer and any other person(s) that the Department reasonably believes would be interested in the issues of the time and place for such hearing and of the issues involved.

4.If either § 3.4(A)(2) or 3.4(A)(3) of this Part above is utilized, the Department shall within a reasonable time after receipt of written submission or after the hearing is held issue a binding declaratory ruling.

B.Form of Petition. Any interested person petitioning the Department requesting the promulgation, amendment or repeal of any rule or regulation shall generally adhere to the following form for such purpose:

1.Petitions may be submitted electronically or in hard copy.

2.At the top of the page shall appear the wording “Before the Department of Business Regulation.” On the left side of the page below the foregoing, the following caption shall be set out: “In the Matter of the Petition of (name of petitioning party) for (state whether promulgation, amendment or repeal) of (identity rule or regulation).” Opposite the forgoing caption shall appear the word “Petition.”

3.The body of the petition shall be set out in numbered paragraphs. The first paragraph shall state the name and address of the petitioning party and whether petitioner seeks the promulgation of a new rule(s) or regulation(s). The second paragraph, in case of a proposed new rule or regulation or amendment of an existing rule or regulation shall set forth the desired rule or regulation in its entirety. Where the petition is for amendment, the proposed amendments shall be set forth in a manner which clearly indicates the additions and deletions proposed. Where the petition is for repeal of an existing rule or regulation, such shall be stated and the rule or regulation proposed to be repealed shall be referred to by Department number. The third paragraph shall set forth concisely the reasons for the proposal of petitioner and shall contain a statement as to the interest of the petitioner in the subject matter of the rule or regulation. Additional numbered paragraphs may be used to give full explanation or petitioner’s reasons for the action sought.

4.Petitions shall clearly identify the filer and/or his or her authorized representative and the date of submission of the petition.

5.If submitted in hard copy the original and two (2) copies shall be filed with the Department and petitions shall be submitted on 8 and ½ x 11” inch white paper.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Technical Revision — effective from 2007-11-08 to 11/08/2007
Amendment — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2002-08-14 to 11/08/2007

Chapter 20 Insurance

Subchapter 05 Personal Lines - Automobile and Homeowners Insurance

230-RICR-20-05-1 Uninsured and Underinsured Motorist Insurance

230-RICR-20-05-1 § 1.1 Authority

This regulation is promulgated in accordance with R.I. Gen. Laws §§ 27-7-2.1, 27-10-13 and 27-10.3-1.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-1 § 1.2 Purpose

The purpose of this Regulation is to implement the requirement of uninsured and underinsured motorist coverage in motor vehicle liability policies issued in this State.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-1 § 1.3 Definitions

A.The definitions set forth in R.I. Gen. Laws § 27-7-2.1 are hereby incorporated into this Regulation by reference. In addition, as used in this Regulation:

1.“Liability Limits” means the limit of liability shown in the policy of the insured for coverage of Bodily Injury or Property Damage as the result of a motor vehicle accident.

2.“Policy” means any contract or agreement of insurance delivered or issued for delivery in this state by or on behalf of any insurer licensed in this state.

3.“Signature” includes electronic signatures if the parties have agreed to conduct the transaction by electronic means in accordance with R.I. Gen. Laws § 42-127.1-7.

4.“Writing” includes electronic writings if the parties have agreed to conduct the transaction by electronic means in accordance with R.I. Gen. Laws § 42-127.1-7.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-1 § 1.4 Requirement for Uninsured Motorist Coverage

No motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury arising out of the ownership, maintenance, or use of a motor vehicle shall be delivered or issued for delivery in this State with respect to any motor vehicle registered or principally garaged in this State unless Uninsured/Underinsured Motorist bodily injury Coverage is provided therein or supplemental thereto, not less than the limit set forth in R.I. Gen. Laws § 31-31-7 or such coverage is rejected as provided in § 1.5 of this Part. The insurance company must offer uninsured/underinsured bodily injury liability limits equal to the bodily injury liability limits in the policy. The insurer must offer Uninsured Motorist Property Damage in a minimum amount of $25,000.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-1 § 1.5 Rejection of Uninsured Motorist Coverage

A.The insured may elect to purchase coverage in an amount less than the bodily injury liability limits in the policy. However, the named insured may not elect uninsured/underinsured motorist bodily injury liability limits less than the minimum under R.I. Gen. Laws § 31-31-7, unless the named insured has elected to purchase the bodily injury liability minimum liability limits in the policy under R.I. Gen. Laws § 31-31-7. Only if the named insured has elected to purchase the bodily injury minimum liability limits under R.I. Gen. Laws § 31-31-7, may the named insured elect to reduce the uninsured/underinsured motorist bodily injury liability limits to zero. With regard to uninsured/underinsured motorist bodily injury, if the named insured rejects uninsured/underinsured motorist bodily injury coverage, that election must be in writing in a form substantially similar to that set forth in a bulletin issued for that purpose.

B.If collision coverage is included in the policy no written rejection of Uninsured Motorist Property Damage is required. If the insured has not purchased collision a written rejection of Uninsured Motorist Property Damage is required. If a rejection is sent but not returned by the insured the Uninsured Motorist Property Damage shall be included in the policy at the $25,000 minimum limit. The named insured may reject Uninsured Motorist Property Damage.

C.The insurance company must notify the named insured of the availability of uninsured motorist coverage or increased optional limits any time the policy is renewed, reinstated, substituted, amended, altered, modified, transferred or replaced. A separate notice is not required but the notice must be prominent, clear and in writing.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-1 § 1.6 Results of Selection of Coverage

If an insured elects Uninsured/Underinsured Motorist liability limits that are less than the liability limits or rejects Uninsured Motorist Property Damage Liability coverage, these selections shall be followed and included in any renewal, supplementary, replacement or substitute policy, even if liability limits or insured vehicles are subsequently changed. Where the insured elects Uninsured/Underinsured Motorist liability limits equal to the bodily injury liability limits and the bodily injury liability limits are later changed, the Uninsured/Underinsured Motorist bodily injury Liability limits will also change to reflect the same amount. The insured may change any original or subsequent election by notifying the company in writing of his/her desire for such change.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-1 § 1.7 Waiver of Statutory Deductible

A.Property damage liability caused by collision shall have the statutory deductible waived:

1.Where a motor vehicle legally parked and unattended is involved in a motor vehicle accident with an uninsured owner or operator;

2.Where a motor vehicle is struck as the result of the operation by an uninsured motorist driving the wrong way on a one-way street;

3.Where there is property damage caused by collision to a vehicle struck in the rear by a vehicle owned or operated by an uninsured motorist; or

4.Where there is property damage caused by collision when struck by a stolen vehicle.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-1 § 1.8 Rates for Uninsured Motorist Property Damage Coverage

In accordance with R.I. Gen. Laws § 27-7-2.1(e), rates for Uninsured Motorist Property Damage coverage shall be established by a filing made by the insurer and approved by the Commissioner. The filed rates may not be excessive, inadequate or unfairly discriminatory.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-1 § 1.9 Arbitration

A.In accordance with R.I. Gen. Laws §§ 10-3-2 and 27-10.3-1(5) in all policies containing uninsured/underinsured motorist coverage, the provision requiring arbitration of benefits under that coverage must be placed immediately before the testimonium clause or the signatures of the parties.

B.If the arbitration provision is in violation of (a) above it may be enforced at the option of the insured, and in the event the insured exercises the option to arbitrate, then the provisions of this chapter shall apply and be the exclusive remedy available to the insured.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-1 § 1.10 Severability

If any provision of this Regulation or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Regulation which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Regulation are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2012-12-19 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/19/2012

230-RICR-20-05-4 Reinspection of Collision Damage Claims

230-RICR-20-05-4 § 4.1 Authority

This Regulation is promulgated pursuant to R.I. Gen. Laws § 27-10.1-9.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-05-13 to 01/04/2022
Amendment — effective from 2010-05-13 to 05/13/2010
Periodic Refile — effective from 2001-12-19 to 05/13/2010

230-RICR-20-05-4 § 4.2 Purpose

The purpose of this Regulation is to permit insurers to reinspect up to ten percent (10%) of all automobile insurance claims after collision damage is repaired. Nothing in this Regulation shall preclude an insurer from reinspecting more than ten percent (10%) of claims

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-05-13 to 01/04/2022
Amendment — effective from 2010-05-13 to 05/13/2010
Periodic Refile — effective from 2001-12-19 to 05/13/2010

230-RICR-20-05-4 § 4.3 Definitions

A.As used in this Regulation:

1."Director" means the Director of Business Regulation or his or her designee.

2."Insurer" means all persons, firms, corporations or associations authorized to offer automobile insurance in this state.

3."Collision Damage" means loss to the insured's vehicle caused by its collision with other vehicle or object or its upset, or damage caused by theft of the insured vehicle regardless of the coverage under which the claim is paid..

4."Claim" means a demand for payment of loss by a claimant.

5."First Party Claim" means a demand for payment of loss made by an individual, corporation, association, partnership, or other legal organization, under their own insurance policy, arising out of the occurrence of the contingency or loss covered by the policy

6."Third Party Claim" means a demand for payment made against another persons' insurance policy

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-05-13 to 01/04/2022
Amendment — effective from 2010-05-13 to 05/13/2010
Periodic Refile — effective from 2001-12-19 to 05/13/2010

230-RICR-20-05-4 § 4.4 Reinspection of Collision Damage Claims

A.Every insurer authorized to offer automobile insurance in this state may reinspect up to ten percent (10%) of all collision damage claims after any collision damage has been repaired

B.The insurer may at any time before a repaired vehicle is delivered to its owner, inform the auto body repair shop, corporation, business, partnership, or person, which has repaired the vehicle, of its intent to reinspect the vehicle.

C.Such reinspection shall not be performed in a manner that interferes with the operation of the auto body repair shop and shall occur no later than two (2) business days after the insurer is informed by the auto body repair shop, corporation, business, partnership, or person that has repaired the vehicle of is availability for reinspection

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-05-13 to 01/04/2022
Amendment — effective from 2010-05-13 to 05/13/2010
Periodic Refile — effective from 2001-12-19 to 05/13/2010

230-RICR-20-05-4 § 4.5 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-05-13 to 01/04/2022
Amendment — effective from 2010-05-13 to 05/13/2010
Periodic Refile — effective from 2001-12-19 to 05/13/2010

230-RICR-20-05-5 Pre-Inspection of Private Passenger Motor Vehicles (formerly Insurance Regulation 77)

230-RICR-20-05-5 § 5.1 Authority

This Part is promulgated pursuant to R.I. Gen. Laws § 27-10.1-10

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.2 Purpose

The purpose of this Part is to establish standards and procedures for inspection of private passenger vehicles weighing less than ten thousand (10,000) pounds prior to the issuance by insurers of Physical Damage Coverage.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.3 Scope

The provisions of this Part shall apply to all private passenger motor vehicle policies, unless an election to waive the requirements of R.I. Gen. Laws § 27-10.1-10, pursuant to § 5.6 of this Part, is made by the insurer. If the election is made, no portion of this Part is applicable to policies issued by the insurer that has made the election. This Part does not apply to commercial motor vehicle insurance

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.4 Definitions

A.For the purpose of this Part:

1."Director" means the Director of Business Regulation or his or her designee.

2."Insurer" means all persons, firms, corporations, or associations authorized to offer automobile insurance in this state.

3."Applicant" means the named insured, as defined in the policy, or an applicant for a motor vehicle insurance policy.

4."Authorized representative" means any person or legal entity, other than the applicant, authorized by an insurer to conduct pre-insurance inspections pursuant to this Part, and may include an employee of the insurer, or inspection service.

5."Producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.

6."Inspection service" means any person or legal entity, other than the applicant, which is approved by the insurer to perform inspections required by this Regulation. In determining whether to approve an inspection service, an insurer must take into consideration the service's professionalism, efficiency, and cost effectiveness.

7."Physical damage coverage" means the optional coverages in a policy for collision or comprehensive (other than collision) coverages.

8."Private passenger motor vehicle" means any owned or leased four-wheeled motor vehicle, except vehicles which have a gross weight equal to or in excess of ten thousand (10,000) pounds.

9."Policy" means any insurance policy, contract, or certificate under which a claim is made.

10."Temporary substitute motor vehicle" means any private passenger motor vehicle not owned by the applicant, which is used by the applicant, with the permission of the owner, as a temporary substitute due to breakdown, repair, servicing, loss or destruction of the applicant's own motor vehicle.

11."Existing customer" means an applicant who has been insured for two (2) years or longer, without interruption, under a private passenger motor vehicle policy which includes Physical Damage Coverage, by the insurer to which the application is submitted.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.5 Inspection Requirements

A.Unless an election to waive the requirements of R.I. Gen. Laws § 27-10.1-10, pursuant to § 5.6 of this Part, is made by the insurer, no motor vehicle liability policy or endorsement insuring a private passenger motor vehicle for Physical Damage Coverage shall be issued in this state unless the insurer has inspected the motor vehicle in accordance with this Part.

B.Unless an election to waive the requirements of R.I. Gen. Laws § 27-10.1-10, pursuant to § 5.6 of this Part, is made by the insurer, Physical Damage Coverage shall not be issued on an additional or replacement motor vehicle under an existing policy, unless otherwise exempted, until the insurer has inspected the motor vehicle in accordance with the Part.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.6 Exemptions to Inspection Requirement

A.An insurer may elect to waive the applicability of this Part pursuant to R.I. Gen. Laws § 27-10.1-10. If an insurer chooses to elect waiver, the insurer shall deliver to the Insurance Division a written notice that the election has been made. An insurer that files an election is not subject to the provision of this Part. An insurer may, upon written notice to the Insurance Division withdraw its election. If the election is withdrawn the insurer must comply with all provisions of this Part. The withdrawal of the election shall require compliance with the Part for all policies issued after the date of withdrawal.

B.The requirement of an inspection shall not apply to the following:

1.a new, unused motor vehicle, including demonstration vehicles, from an automobile dealership where the insurer is provided with either:

a.a copy of the bill of sale which contains a full description of the motor vehicle, including all options and accessories; or

b.a copy of the window sticker or the dealer invoice showing the itemized options and equipment in addition to the total retail price of the vehicle.

c.The Physical Damage Coverage on such new, unused motor vehicle, including demos, shall not be suspended during the term of the policy due to the applicant's failure to provide the required documents. Payment of a claim, however, may be conditioned upon the receipt by the insurer of such documents, and no physical damage loss occurring after the effective date of the coverage shall be payable until the documents are provided to the insurer. If the above documents are not submitted by the applicant at least sixty (60) days prior to the applicant's annual renewal date, the insurer, before renewing the Physical Damage Coverage, must require an inspection as set forth in this Part.

2.a motor vehicle which is already insured for such Physical Damage Coverages with the insurer by the applicant.

3.a temporary substitute motor vehicle.

4.a motor vehicle which is leased for less than six (6) months, provided the insurer receives the lease or rental agreement containing a description of the leased motor vehicle, including its condition. Payment of a physical damage claim may be conditioned upon receipt of the lease or rental agreement.

5.when requiring an inspection would cause a serious hardship to the insurer or the applicant, and such hardship is documented in the applicant's policy record.

C.An insurer shall state in the applicant's policy record the reason a vehicle is being exempted from the inspection requirement.

D.An insurer may require an inspection of a motor vehicle otherwise exempt, provided that the decision to inspect such motor vehicle is reasonable and supported by objective facts. The decision to require such an inspection shall not be based on the age, race, sex, or marital status of the applicant or the customary operators of the vehicle, or the principal place of garaging. A written statement of the reasons for requiring an inspection shall be placed in the applicant's policy record.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.7 Waiver of Inspection

A.An insurer may waive an inspection under any of the following circumstances

1.If the insurer has filed an election to waive all inspections pursuant to § 5.6 of this Part.

2.for policies which include Physical Damage Coverage on vehicles which are six (6) or more years old; or

3.when an individual applicant's coverage is being transferred by a producer to a new insurer and the producer provides the new insurer with a copy of the inspection report completed on behalf of the previous insurer, provided the producer represents both insurers, and the insured vehicle was physically inspected by the previous insurer. However, if the new insurer does not receive a copy of the inspection report sixty (60) days prior to the first annual renewal date, the insurer must, before renewing physical damage insurance, require an inspection as set forth in this Part.

4.when the applicant is an existing customer who has not had a total loss due to theft or fire in the preceding two (2) years.

B.Any decision to waive or not to waive an inspection pursuant to this Part, shall not be based on the age, race, sex, or marital status of the applicant or the customary operators of the vehicle, or the principal place of garaging.

C.Unless the insurer has waived all inspections pursuant to § 5.6 of this Part, an insurer shall state in the applicant's policy record the reason a waiver has been granted.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.8 Deferral of Inspection

A.An insurer may defer an inspection for ten (10) business days following coverage being bound or the effective date of coverage, whichever is earlier, for a new policy or for inclusion of additional or replacement vehicles to an existing policy.

B.When an inspection is deferred an insurer, through its producer, shall either:

1.if the applicant applied for coverage in person, immediately obtain the prescribed acknowledgment (Form D provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part) signed by the applicant, or

2.if the applicant has applied for coverage either by mail, by phone, or electronically, immediately orally confirm Physical Damage Coverage and remind the applicant of the inspection requirement on a prescribed notice letter (Form B provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part). The Form B notice must be mailed or delivered to the insured within three (3) business days following the effective date of coverage being bound or the effective date of coverage, whichever is earlier.

C.In addition to the notice requirements of (2) above, the insurer, through its producer, shall furnish the applicant, at the time coverage is effected, with a list of inspection sites where the inspection can be conducted. The location of an inspection site or sites, and the consequences of the applicant's failure to obtain a timely inspection shall be furnished immediately to the applicant either in person, by telephone, or in writing. Documentation of such notice, including the name of the person giving the notice and the identity of the site(s) provided must be contained in the applicant's policy record.

D.Producers must use the prescribed NOTICE OF MANDATORY PRE-INSPECTION REQUIREMENT letter (Form B) or the prescribed ACKNOWLEDGEMENT OF REQUIREMENT FOR PRE-INSPECTION letter (Form D), and immediately send a copy to the insurer. A copy of the confirmation letter addressed to the applicant or the completed acknowledgement letter shall be retained by the producer in the applicant's policy record.

E.Any decision to waive or not to waive an inspection pursuant to this Part, shall not be based on the age, race, sex, or marital status of the applicant or the customary operators of the vehicle, or the principal place of garaging.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.9 Standards and Procedures for Inspections

A.Inspections required or permitted pursuant to this Part shall be made by a designated authorized representative of the insurer at a time and place reasonably convenient to the applicant.

B.The inspection shall:

1.Be recorded on a form which contains, as a minimum, the information described on the Motor Vehicle Pre-Inspection Report (Form A provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part);

2.Include two (2) color photographs of the motor vehicle, taken as directed on the inspection report, which shall be attached to the report;

3.Include a close-up color photograph (using a special camera attachment if necessary) showing the Vehicle Identification Number (VIN) located on the Environmental Protection Agency/Federal Certification Label (EPA) sticker affixed to the driver's side door jamb. The photograph must be of sufficient clarity that the information contained on the EPA sticker and VIN is legible. If the EPA sticker is damaged, faded, missing, or otherwise not legible, a photograph of the EPA sticker or of the area of the door jamb where the sticker is normally located, is still required.

4.Include any additional photographs, taken at the discretion of the authorized representative, showing any damaged areas. Such photographs shall also be attached to the report.

C.The original report and photographs shall be immediately sent to the insurer who shall retain the report and photographs in the applicant's policy record for three (3) years from the date of inspection, except as provided by § 5.6(D) of this Part. The authorized representative shall also provide a copy of the report, without photographs, to the applicant and producer of record.

D.The insurers shall maintain an up-to-date list of all authorized representatives and inspection sites performing inspections for the insurer. The list must include the names, addresses, and business phone numbers of all authorized representatives, and the insurer shall make such a list accessible to the Director upon request.

E.There shall be no charge to the applicant in connection with an inspection.

F.An insurer shall utilize authorized representatives who shall:

1.verify the accuracy, completeness and signature of the inspector for each inspection report in writing;

2.maintain a control system on such inspection reports, including the use of sequentially numbered reports;

3.retain and supply to other insurers, upon request, a copy of any inspection report which was completed within three (3) years of the date of inspection;

4.provide an optional service, on an additional fee basis, to insurers whereby the original inspection reports and photographs are retained by the authorized representative who shall maintain such original inspection reports and photographs in a manner so as to facilitate rapid retrieval for a period of at least three (3) years from the date of inspection. The authorized representative shall, upon request of an insurer, mail or deliver the original inspection report and photographs to the insurer within two (2) business days of such request.

G.The inspection report and photographs shall be used by the insurer to document previous damage, prior condition, options, and mileage of the motor vehicle on physical damage claims whenever:

1.the appraisal indicates prior damage;

2.the vehicle is a total loss or unrecovered theft; or

3.the damage exceeds three thousand dollars ($3,000).

H.A copy of the inspection report and photographs must be utilized, and made a part of the insurer's claim file, in settlement of all total loss claims. The inspection report must be made a part of the claim file regardless of whether or not the payment is reduced based on the information contained therein.

I.Access to an electronic file containing images of inspection reports and images of color photographs will suffice in lieu of physically placing hard copies of forms and/or photos in a paper file; providing, the system allows for the printing of hard copies of forms and color photographs if required in litigation.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.10 Standards for Suspension of Physical Damage Coverages

A.Unless the insurer has elected to waive all inspections pursuant to § 5.6 of this Part or inspection of the specific vehicle pursuant to § 5.7 of this Part, if the inspection is not conducted prior to the expiration of the ten (10) business day deferral period, motor vehicle Physical Damage Coverage on the motor vehicle shall be suspended at 12:01 a.m. of the day following the tenth business day, and such suspension shall continue until the inspection is done. The insurer must inspect the motor vehicle and reinstate Physical Damage Coverage (effective at the time of the inspection) if the applicant thereafter requests an inspection.

B.Whenever Physical Damage Coverage is suspended, the insurer shall within three (3) business days give notice to the applicant, the producer of record, and any lienholders a completed prescribed NOTICE OF SUSPENSION OF PHYSICAL DAMAGE COVERAGE (Form C provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part). The insurer shall complete a certificate of mailing of the suspension to the applicant and shall retain the certificate and a copy of the suspension in the applicant's policy record.

C.Whenever there is a suspension of Physical Damage Coverage for more than ten (10) days, the insurer shall make a pro-rata premium adjustment (return premium or credit) which shall be mailed to the applicant no later than forty-five (45) days after the effective date of the suspension. After the insurer makes the pro-rata premium adjustment, reinstatement of Physical Damage Coverage shall only be effective upon inspection and payment by the applicant to the insurer of the adjusted premium for the Physical Damage Coverage in full or in accordance with the insurer's normal payment plan, at the insurer's option.

D.If the motor vehicle is not inspected pursuant to this Part due to the fault of the insurer, or if its producer fails to give the verbal or telephone notice required by this Part, or fails to mail or deliver the NOTICE OF MANDATORY PRE-INSPECTION REQUIREMENT (Form B provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part) or obtain the ACKNOWLEDGMENT OF REQUIREMENTS FOR PRE-INSPECTION INSPECTION (Form D provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part), Physical Damage Coverage on the motor vehicle shall not lapse. The failure of the insurer to act promptly does not relieve it of its obligation to inspect.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.11 Records

Unless a waiver has been made pursuant to § 5.6 of this Part, insurers shall maintain records as to the costs and savings related to this Part and shall make such records available to the Director upon request.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-5 § 5.12 Severability

If any section, term, or provision of this Part should be adjudged invalid for any reason, that judgment should not effect, impair, or invalidate any remaining section, term, or provision, which shall remain in full force and effect.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Technical Revision — effective from 2004-11-28 to 02/18/2018
Amendment — effective from 2004-11-28 to 11/28/2004
Amendment — effective from 2002-09-03 to 11/28/2004
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-6 Procedures in Payment of Automobile Damage Claims

230-RICR-20-05-6 § 6.1 AUTHORITY

This Regulation is promulgated pursuant to R.I. Gen. Laws §§ 27-10.1-6 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-03-21 to 01/04/2022
Amendment — effective from 2013-03-21 to 03/21/2013
Amendment — effective from 2012-03-01 to 03/21/2013
Periodic Refile — effective from 2001-12-19 to 03/01/2012

230-RICR-20-05-6 § 6.2 PURPOSE

The purpose of this Regulation is to clarify insurers’ obligations with regard to requests for payment to unlicensed automobile body shops and to prescribe the language of a warning to consumers that choose to accept the value of automobile damage rather than have the automobile repaired.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-03-21 to 01/04/2022
Amendment — effective from 2013-03-21 to 03/21/2013
Amendment — effective from 2012-03-01 to 03/21/2013
Periodic Refile — effective from 2001-12-19 to 03/01/2012

230-RICR-20-05-6 § 6.3 DEFINITIONS

A.For the purpose of this Regulation:

1."Automobile Body Shop" means an auto body shop as defined in R.I. Gen. Laws § 5-38-1.

2."Consumer" means a person or entity making a claim under an insurance policy issued in the State of Rhode Island.

3."Director" means the Director of Business Regulation or his or her designee.

4."Insurer" means any person engaged in the business of property and casualty insurance.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-03-21 to 01/04/2022
Amendment — effective from 2013-03-21 to 03/21/2013
Amendment — effective from 2012-03-01 to 03/21/2013
Periodic Refile — effective from 2001-12-19 to 03/01/2012

230-RICR-20-05-6 § 6.4 PROCEDURES IN PAYMENT OF AUTOMOBILE DAMAGE CLAIMS

A.Any insurer that settles a property damage claim arising out of an insurance policy issued in the State of Rhode Island in which the consumer requests to receive payment directly rather than have the automobile repaired, shall inform the consumer of the following prior to or contemporaneously with payment of the claim:

1."If you do not repair all or part of the damages allowed by the insurer, and you have a subsequent loss, previous damage may affect the subsequent loss. If you subsequently repair the damage, you should notify the insurer. The insurer may elect to inspect your automobile. No insurer or its representative may make payment on a claim to an automobile body shop if the shop is required to be but is not licensed in accordance with R.I. Gen. Laws § 5-38-1 et seq."

B.Insurers adjusting automobile damage claims in Rhode Island must assure that their actions are compliant with Rhode Island law and regulation governing their conduct, including but not limited to, R.I. Gen. Laws §§ 27-9.1-1 et seq., 27-10-1 et seq., 27-10.1-1 et seq., 27-29-1 et seq. and Subchapter 40 Part 2 of this Chapter (Unfair Property/Casualty Claims Settlement Practices); Subchapter 50 Part 3 of this Chapter (Motor Vehicle Damage Appraisers) and Subchapter 50 Part 4 of this Chapter (Insurance Claim Adjusters). The Department also releases bulletins to interpret the statutes and regulations under its jurisdiction and insurers should be fully apprised of the bulletins currently in effect at the time of adjusting a Rhode Island loss.

C.An insurer shall not negotiate, agree to a price or pay an unlicensed automobile body shop for the performance of any work for which a license is required by R.I. Gen. Laws § 5-38-4 or regulations promulgated thereunder.

1.The provisions of this section do not prohibit payment to an automobile body shop which is not required to hold a license under R.I. Gen. Laws § 5-38-4, including shops located in other states, and shall not prohibit payment for goods or services for which the facility is not required to hold a license.

2.The provisions of this section do not prohibit the insurer from paying the consumer the value of the repairs directly. If an insurer has a concern about licensing of an automobile body shop it shall not delay payment to the consumer as a result of those concerns.

3.If an insurer has reason to believe that a shop chosen by a consumer does not hold a required license, the insurer should notify the Commercial Licensing Division of the Department of its concern along with all supporting facts and documentation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-03-21 to 01/04/2022
Amendment — effective from 2013-03-21 to 03/21/2013
Amendment — effective from 2012-03-01 to 03/21/2013
Periodic Refile — effective from 2001-12-19 to 03/01/2012

230-RICR-20-05-7 Automobile Theft and Insurance Fraud Assessment

230-RICR-20-05-7 § 7.1 Authority

This Regulation is promulgated pursuant to R.I. Gen. Laws §§ 31-50-4 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-09-03 to 01/04/2022
Technical Revision — effective from 2002-09-03 to 09/03/2002
Amendment — effective from 2002-09-03 to 09/03/2002
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-7 § 7.2 Purpose

The purpose of this Regulation is to set forth the method by which payments made to fund The Office of Automobile Theft and Insurance Fraud are to be implemented

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-09-03 to 01/04/2022
Technical Revision — effective from 2002-09-03 to 09/03/2002
Amendment — effective from 2002-09-03 to 09/03/2002
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-7 § 7.3 Definitions

A.As used in this Regulation:

1."Director" means the Director of Business Regulation or his or her designee.

2."Insurer" means all persons, firms, corporations, or associations authorized to write automobile insurance in this state.

3."Superintendent" means the Superintendent of the State Police.

4."Market Share" means an insurer's percentage share of the total of the automobile liability and physical damage written premiums in this state in a calendar year.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-09-03 to 01/04/2022
Technical Revision — effective from 2002-09-03 to 09/03/2002
Amendment — effective from 2002-09-03 to 09/03/2002
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-7 § 7.4 Method of Funding

A.At such times as deemed appropriate by the Director, each insurer shall be notified in writing by the Department of Business Regulation of the amount owed which amount shall be

1.based upon the insurer's most recently determinable annual percentage market share on or before March 1 of each year, and

2.equal to one ($1) dollar times the total of registrations of vehicles having a gross weight of ten thousand (10,000) pounds or less, as determined by the Director.

B.The number of registrations of vehicles shall be obtained from the Registry of Motor Vehicles. Said amount may be collected by an insurer as a policy surcharge, separately identifiable on either the policy declaration page or billing.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-09-03 to 01/04/2022
Technical Revision — effective from 2002-09-03 to 09/03/2002
Amendment — effective from 2002-09-03 to 09/03/2002
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-7 § 7.5 Payments

All amounts payable pursuant to § 7.4 of this Part shall be remitted by the insurer within thirty (30) days of receipt of the written notification by the Department of Business Regulation of the amount owed. All payments shall be made by check payable to the General Treasurer, delivered to the Superintendent.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-09-03 to 01/04/2022
Technical Revision — effective from 2002-09-03 to 09/03/2002
Amendment — effective from 2002-09-03 to 09/03/2002
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-7 § 7.6 Failure to Comply

Any insurer who fails to pay the amount owed pursuant to § 7.4 of this Part may be subject to suspension or revocation of its license.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-09-03 to 01/04/2022
Technical Revision — effective from 2002-09-03 to 09/03/2002
Amendment — effective from 2002-09-03 to 09/03/2002
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-7 § 7.7 Severability

If any section, term, or provision of this Regulation should be adjudged invalid for any reason, that judgment should not effect, impair, or invalidate any remaining section, term, or provision, which shall remain in full force and effect.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-09-03 to 01/04/2022
Technical Revision — effective from 2002-09-03 to 09/03/2002
Amendment — effective from 2002-09-03 to 09/03/2002
Periodic Refile — effective from 2001-12-19 to 09/03/2002

230-RICR-20-05-8 Rhode Island Automobile Insurance Plan (formerly Insurance Regulation 98)

230-RICR-20-05-8 § 8.1 Authority

This Part is promulgated pursuant to R.I. Gen. Laws §§ 27-9-43 and 31-33-8.

History

Amendment — effective from 2022-02-03 to current
Periodic Refile — effective from 2022-01-04 to 02/03/2022
Amendment — effective from 2019-01-01 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/01/2019
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-05-8 § 8.2 Purpose

A.The purpose of this Part is to:

1.Make automobile insurance available to eligible applicants who have been unable to secure such insurance in the voluntary market;

2.Establish the parameters under which insurers writing automobile insurance in Rhode Island will satisfy their obligation to provide for assigned risk policies;

3.Authorize the Plan to establish rates for insurance as authorized pursuant to R.I. Gen. Laws §§ 27-9-41 and 31-33-8;

4.Provide that amounts assessed by the Plan on Insurers may be included in the data used by those Insurers in the development of automobile insurance rates for voluntary business; and

5.Provide the Plan with the authority to issue policies on its own account as detailed in this Part and the Plan of Operation adopted by the Insurers.

History

Amendment — effective from 2022-02-03 to current
Periodic Refile — effective from 2022-01-04 to 02/03/2022
Amendment — effective from 2019-01-01 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/01/2019
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-05-8 § 8.3 Definitions

A.The following definitions shall apply to this Part:

1.“Assigned risk” means those policies issued by the Plan to eligible applicants who have been unable to secure such insurance in the voluntary market.

2.“Department” means Department of Business Regulation, Division of Insurance.

3.“Governing committee” means the body established by the Plan of Operation to administer the Plan and to perform the duties as outlined in the Plan of Operation.

4.“Insurer” means any licensed insurance company writing automobile insurance in this State which is required because of licensure to participate in the assigned risk plan in accordance with R.I. Gen. Laws §§ 27-9-43 and 31-33-8.

5.“Plan” means the Rhode Island Automobile Insurance Plan.

6.“Plan of operation” means that plan adopted by Insurers required to participate in the automobile assigned risk plan by the provisions of R.I. Gen. Laws §§ 27-9-43 and 31-33-8 and submitted to and approved by the Department which shall serve as the basis for the issuance and managing of insurance issued by the Plan.

History

Amendment — effective from 2022-02-03 to current
Periodic Refile — effective from 2022-01-04 to 02/03/2022
Amendment — effective from 2019-01-01 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/01/2019
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-05-8 § 8.4 Allocation of Plan Expenses and Losses

A.R.I. Gen. Laws § 27-9-4 provides in relevant part that, in making of rates, past and prospective loss experience and past and prospective expenses shall be given due consideration. This includes the amounts assessed by the Plan to provide the Plan’s operating expenses and to cover any net losses sustained by the Plan in the issuance of assigned risk insurance as authorized by this Part.

B.Assessments by the Plan for operating expenses or to cover any net losses, paid by Insurers, are considered as an expense of doing business in Rhode Island, and such expense may be considered in the development of rates for voluntary business.

C.The Plan of Operation will identify how the Plan will apportion the expenses of operation and losses of assigned risk policies among licensed Insurers writing in the Rhode Island market. All Insurers must pay their apportionment to continue to issue automobile insurance in Rhode Island.

History

Amendment — effective from 2022-02-03 to current
Periodic Refile — effective from 2022-01-04 to 02/03/2022
Amendment — effective from 2019-01-01 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/01/2019
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-05-8 § 8.5 Rate Adjustment

The Plan’s operations may indicate a need for adjustment of its rates. It is the responsibility of the Plan to file as needed with the Department to adjust such rates, and when it does so, to supply such evidentiary material to the Department as the Department needs in its review.

History

Amendment — effective from 2022-02-03 to current
Periodic Refile — effective from 2022-01-04 to 02/03/2022
Amendment — effective from 2019-01-01 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/01/2019
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-05-8 § 8.6 Authority to Issue Assigned Risk Automobile Insurance Policies

A.The Plan shall be authorized to:

1.Issue insurance policies in the name of the Plan for risks eligible pursuant to the Plan of Operation;

2.Investigate and adjust all claims under policies issued, defend all policyholders, pay losses, hold reserves and perform all such functions as are usual in servicing such policies;

3.Issue assessments to Insurers doing business in Rhode Island and make referrals to the Department if such assessments are not paid; and

4.Otherwise incur expenses consistent with the purposes of the Plan.

B.Obligations of participating Insurers

1.Each Insurer participating in the Plan shall share in the operating results of the Plan to the extent of the Insurers’ participation in the Rhode Island automobile insurance market for that calendar year. The Plan will file quarterly/annual statements with the Department and the National Association of Insurance Commissioners. Plan Insurers shall record their share of operating results as a Boards/Bureau expense.

2.Liability of each Insurer shall be several, each for itself, and not joint and no insurer shall be liable for the liability of any other insurers except as may otherwise be provided in the approved Plan of Operations.

C.Attorney In Fact

1.The Governing Committee shall from time to time designate in writing one (1) or more persons to act as attorney in fact for all Insurers to execute policies on behalf of all insurers.

2.No policy shall be affected or invalidated by any change of the attorney in fact who, at the time such policy was issued, shall have duly acted pursuant to the powers in him or her then vested.

3.Any policy of insurance issued pursuant to this Part may be executed on behalf of the Insurers by any attorney in fact appointed hereunder and each Insurer will be bound thereby to the extent of its participation in the Plan as determined in accordance with the Plan of Operation.

D.All policies shall be for automobile insurance as provided for in accordance with the approved provisions of the Plan of Operation.

1.All policies shall be issued on forms approved by the Department.

2.All policies shall be issued for a term of one (1) year.

E.In issuing these policies the Plan shall be subject to all statutes and Regulations applicable to insurers issuing private passenger automobile insurance, including the exemption for the plan in § 2.4(C) of this Subchapter, Automobile Insurance Cancellation, unless a contrary provision is specifically provided in this Part or the Department determines an exemption is in the public interest.

F.In order to accomplish the goals of this Part, the Plan is required to maintain a Certificate of Authority and file quarterly and annual financial statements electronically with NAIC. The Plan is subject to all laws and Regulations applicable to Rhode Island domestic insurance companies, except for:

1.The Plan is not a “member insurer” pursuant to R.I. Gen. Laws § 27-34-5(14).

2.The Plan is not an “insurance company” or “those corporations and other entities subject to this title and chapter” pursuant to R.I. Gen. Laws § 27-36-2.

3.The Plan is not an “insurance company doing business in this state” pursuant to R.I. Gen. Laws § 42-14-10.

4.The Plan is not required to maintain the statutory minimum capital and surplus requirements that apply to other domestic insurance companies.

5.The Plan is not required to maintain a minimum risk-based capital requirements that apply to other domestic and foreign insurance companies.

History

Amendment — effective from 2022-02-03 to current
Periodic Refile — effective from 2022-01-04 to 02/03/2022
Amendment — effective from 2019-01-01 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/01/2019
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-05-8 § 8.7 Severability

History

Amendment — effective from 2022-02-03 to current
Periodic Refile — effective from 2022-01-04 to 02/03/2022
Amendment — effective from 2019-01-01 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/01/2019
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-05-8 § 8.8 Effective Date

This Part shall be effective for all assigned risk insurance policies issued on or after January 1, 2019. All assigned risk insurance policies issued prior to that date shall be governed by the former Insurance Regulation 98.

History

Amendment — effective from 2022-02-03 to current
Periodic Refile — effective from 2022-01-04 to 02/03/2022
Amendment — effective from 2019-01-01 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/01/2019
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-05-9 Insurance Coverage for Lead Poisoning (formerly Insurance Regulation 101)

230-RICR-20-05-9 § 9.1 Authority

This Part is promulgated pursuant to R.I. Gen. Laws §§ 42-128.1-9, 42-14-17 and 42-35-3.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.2 Purpose and Applicability

A.The purpose of this Part is to establish a uniform policy regarding lead poisoning coverage in pre-1978 residential rental property liability insurance and to set forth requirements to assure the availability of insurance coverage for losses and damages caused by lead poisoning.

B.This Part applies to liability coverage written by licensed carriers on all pre-1978 residential rental properties. This Part does not apply to excess or umbrella coverage or coverage written, pursuant to R.I. Gen. Laws Chapter 27-3 and Part 11 of this Subchapter by approved surplus lines insurers.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.3 Definitions

A.“Act” means the Insurance Coverage portion of the Lead Hazard Mitigation Act codified at R.I. Gen. Laws § 42-128.1-9.

B.“Compliant rental property(ies)” means any pre-1978 residential rental property for which any one of the alternative methods of Prima Facie Evidence of Compliance can be produced by the owner of the property.

C.“Department” means the Rhode Island Department of Business Regulation.

D.“Dwelling” or “Dwelling unit” means an enclosed space used for living and sleeping by human occupants as a place of residence, including but not limited to, a house, an apartment, or condominium.

E.“FAIR plan” means the basic property insurance and placement program established by R.I. Gen. Laws Chapter 27-33 and Part 11 of this Subchapter.

F.“Lead liability” means the legal liability of owners of dwellings for losses to third parties arising from exposure to lead.

G.“Lead liability coverage” means an insurance policy providing coverage to an insured for that insured’s Lead Liability.

H.“Lead poisoning” means a confirmed venous blood lead level measured in micrograms of lead per deciliter of whole blood, established by rule of the Rhode Island Department of Health.

I.“Liability coverage” means any insurance policy providing coverage for the legal liability of owners of Rental Properties for losses to third parties.

J.“Non-Compliant rental property(ies)” means any pre-1978 residential rental property for which none of the alternative methods of Prima Facie Evidence of Compliance can be produced by the owner of the property.

K.“Prima facie evidence of compliance” means a certificate issued pursuant to the provisions of R.I. Gen. Laws § 42-128.1-4.

L.“Rental property(ies)” means pre-1978 premises containing dwelling unit(s) that are let, leased or rented to person(s) for the purposes of living, sleeping, cooking, or eating therein.

M.“Stand alone lead liability coverage” means an insurance policy which provides coverage only for the legal liability of owners of dwellings for losses to third parties arising from exposure to lead.

N.“Surplus lines broker” means a person or corporation licensed by the Department pursuant to R.I. Gen. Laws §§ 27-3-38 through 42 to place insurance with approved surplus lines insurers.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.4 Policy Exclusions for Lead Poisoning

A.Any policy form approved by the Department prior to the effective date of this Part which excludes liability coverage for Lead Poisoning, shall terminate on October 31, 2005.

B.As of November 1, 2005, if a liability policy is issued insuring a Compliant Rental Property then coverage for Lead Poisoning shall be included in the policy. Notwithstanding any other provision in this Part, if a Rental Property is Non-Compliant, coverage for Lead Liability may be excluded by an endorsement in accordance with R.I. Gen. Laws § 42-128.1-9 and this Part, including a previously approved endorsement that would otherwise be terminated by the first sentence of this section.

C.Insurers and insurance producers are encouraged to insert mailers, produced and made accessible in electronic format by the Housing Resources Commission or the Department of Health, with renewal notices sent to insureds to which this Part applies.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.5 Prospective Application and Notification to Insureds with Exclusions

A.This statute does not provide or contemplate a retrospective application and will only be applied prospectively.

1.Therefore, if an in-force policy has an approved exclusion in place prior to October 31, 2005, this exclusion will remain in effect until the expiration or other permissible termination of the policy.

2.Any policy issued, delivered or renewed after October 31, 2005 must follow R.I. Gen. Laws § 42-128.1-9.

B.If a policy issued prior to October 31, 2005 excludes coverage for lead liability and the policy will not expire until after October 31, 2005, persons covered by those policies will be able to obtain “stand alone” lead liability coverage from the FAIR Plan beginning November 1, 2005.

1.Therefore, all insurers that issued policies with lead liability exclusions where the policy period will extend past October 31, 2005 must provide written notification to insureds of the availability of FAIR Plan coverage.

a.The insurer shall provide this notification directly or indirectly by the insurer through its producer.

b.This written notice must be separately sent to the insured not later than October 1, 2005 for policies which have already been renewed or upon renewal of the policy prior to October 31, 2005.

c.The notice shall be in at least 16-point type, clearly state that the policy does not include lead liability coverage and that the insured is eligible for lead liability coverage through the FAIR Plan unless otherwise ineligible.

d.The notice must provide information on how the insured can contact the FAIR Plan, including the FAIR Plan's address and telephone number(s), including a toll-free number.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.6 Insurance Coverage for Lead Poisoning in Compliant Properties

A.With respect to Compliant Rental Properties, insurers issuing commercial and personal lines liability insurance policies covering Rental Properties are not permitted to insure said Rental Property against liability risks and refuse to issue Lead Liability Coverage if the property owner provides any form of Prima Facie Evidence of Compliance as defined herein.

B.§ 9.6(A) of this Part applies to all Compliant Rental Properties regardless of whether the property owner was required to obtain Prima Facie Evidence of Compliance or was exempted pursuant to R.I. Gen. Laws § 42-128.1-8. Therefore, if an owner of an exempt Rental Property voluntarily obtains Prima Facie Evidence of Compliance, the owner must be offered lead liability insurance in the same manner as if the owner was required to obtain the Prima Facie Evidence of Compliance pursuant to R.I. Gen. Laws § 42-128.1-8.

C.R.I. Gen. Laws § 42-128.1-9 does not restrict an insurer’s ability to establish and utilize underwriting guidelines. An insurer may refuse to issue insurance for a Rental Property even if the property owner provides any form of Prima Facie Evidence of Compliance. Such refusal must be in accordance with the insurers’ underwriting guidelines, § 9.6(A) of this Part and not in violation of any other insurance laws and/or regulations including but not limited to R.I. Gen. Laws Chapter 27-29 which restricts insurers from declining risks based upon age or geographic location.

D.If the policy provides lead liability coverage and further provides that coverage ceases during the policy term should the property become non-compliant during that period, insurers shall provide the following Notice on initiation and each renewal of the policy. The Notice must be in at least 16-point type and must be clearly identifiable by the insured. The written Notice shall provide the following in the language below or in substantially similar language:

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.7 Insurance Coverage for Lead Poisoning in Non-Compliant Properties

A.With respect to Non-Compliant Rental Properties including exempted residential rental properties as set forth in R.I. Gen. Laws § 42-128.1-8(e), an insurer issuing commercial and personal lines liability policies may decline to insure the Non-Compliant Rental Property against liability risks or may accept general liability coverage but reject that portion of the risk related to Lead Liability Coverage.

B.If the insurer declines to issue coverage for Lead Liability, the insurer must assist the insured in placing Lead Liability coverage through the FAIR Plan. The insurer’s duty to assist the insured in placing the insurance through the FAIR Plan may be accomplished by providing a written notice to the insured either directly by the insurer or through one of the insurer’s own agents or brokers, in at least 16-point type, clearly stating that the policy coverage does not include Lead Liability and that the insured is eligible for Lead Liability coverage through the FAIR Plan unless otherwise ineligible as provided in § 9.11 of this Part. The notice must be clearly identifiable by the insured. The notice must provide information on how to contact the FAIR Plan, including address and telephone number(s), including a toll free number. The notice must also comply with Subchapter 20 Part 1 of this Chapter and Subchapter 05 Part 14 of this Chapter, where applicable. Such written notice shall be given on each renewal of the policy, unless the insurer decides to accept the Lead Liability Coverage.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.8 Limits of Coverage

A.For Compliant Properties, if Lead Liability is included in the policy coverage pursuant to the requirements of this Part and R.I. Gen. Laws § 42-128.1-9, the coverage must be equal to the underlying policy limits of Liability Coverage for personal injury/bodily injury coverage. Such coverage is not severable by either the insured or the insurer.

B.With regard to Non-Compliant Rental Properties, if an insurer offers Lead Liability in the policy coverage pursuant to the requirements of this Part and R.I. Gen. Laws § 42-128.1-9, the coverage offered must be equal to the underlying policy limits of Liability Coverage for personal injury/bodily injury coverage. For Non-Compliant rental properties, Lead Liability coverage is severable from general liability at the discretion of the insured or the insurer as long as the requirements of § 9.7 of this Part are met.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.9 Rates and Forms for Lead Coverage

A.Insurers shall file with the Department rates for Lead Liability Coverage for approval. The rates filed shall not be excessive, inadequate or unfairly discriminatory and shall give consideration to the standards set forth in R.I. Gen. Laws § 42-128.1-9(e). Approval from the Department must be obtained before the rates may be used.

B.Insurers shall file with the Department the proposed language of endorsements for Lead Liability exclusions for Non-Compliant properties. Approval from the Department must be obtained before the form may be used.

C.Insurers shall file rates and forms for proposed coverage and endorsements no later than October 1, 2003. Subsequent to initial approval, all changes to rates and/or forms must be filed with and approved by the Department before being used.

D.Insurers that qualify for an exemption from filing requirements pursuant to R.I. Gen. Laws §§ 27-65-1(a)(2), (3) or (4) are subject to this Part and shall make the filings required hereunder.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.10 Information to be Filed with the Department

A.Each insurer writing liability insurance for Rental Properties in Rhode Island shall file with the Department annually, prior to February 1 of each year, a report detailing the following information with regard to personal and commercial lines for the prior calendar year. The insurer shall utilize the "Information Concerning Lead Liability Coverage" set forth in a bulletin issued for that purpose.

1.The number of policies in force covering Rental Properties for which the insurer wrote any Liability Coverage and the total direct written premium for the liability coverage provided;

2.The number of policies in force covering Rental Properties for which the insurer wrote liability coverage and excluded Lead Liability Coverage by endorsement and the total direct written premium for the liability coverage provided;

3.The number of Rental Properties for which notice of eligibility to the FAIR Plan was given by the insurer;

4.The average premium for policies including Lead Liability Coverage;

5.The average premium for policies excluding Lead Liability Coverage;

6.Claim information including the number of claims made, settlements or judgments under Lead Liability Coverage and the total amount of payments made for Lead Liability during the calendar year;

7.Disclosure of underwriting rules restricting business based upon age or geographic location of the risk and the legal basis for said rule; and

8.Identification of the type(s) of Prima Facie Evidence of Compliance which the insurer is accepting for Compliant Rental Properties.

B.Each Surplus Lines Broker procuring liability insurance for Rental Properties in Rhode Island shall file with the Department annually, prior to February 1 of each year, a report detailing the following information with regard to personal and commercial lines for the prior calendar year. The insurer shall utilize the "Information Submitted by Surplus Lines Broker Regarding Lead Liability Coverage" set forth in a bulletin issued for that purpose.

1.The number of policies in force covering Rental Properties for which the Surplus Lines Broker placed any liability coverage and the total direct written premium for the liability coverage provided;

2.The number of policies in force covering Rental Properties for which the Surplus Lines Broker placed liability coverage which excluded Lead Liability Coverage and the total direct written premium for the liability coverage provided;

3.The average premium for policies procured including Lead Liability Coverage;

4.The average premium for policies procured excluding Lead Liability Coverage;

5.The identity of Approved Surplus Lines Insurers with whom the Broker placed insurance for Rental Properties by policy count.

C.The FAIR Plan shall file with the Department annually, prior to February 1 of each year, a report, detailing the following information with regard to personal and commercial lines for the prior calendar year.

1.The number of applications received for either Stand Alone Lead Liability Coverage or general liability coverage which includes Lead Liability Coverage;

2.The number of Rental Properties for which the FAIR Plan wrote general liability coverage;

3.The number of Rental Properties for which the FAIR Plan wrote general liability coverage which included Lead Liability Coverage;

4.The number of Rental Properties for which the FAIR Plan wrote Stand Alone Lead Liability Coverage;

5.With regard to the Stand Alone Lead Liability policies, the identity of the insurer writing the general liability insurance reported as the number of policies per insurance company;

6.The number of Rental Properties for which Lead Liability Coverage was offered by the FAIR Plan and rejected by the insured;

7.The number of properties rejected for Lead Liability Coverage by the FAIR Plan in accordance with § 9.11 of this Part;

8.The average premium for Stand Alone Lead Liability Coverage;

9.The average premium for general liability coverage which included Lead Liability Coverage;

10.The number of Compliant Rental Properties for which the FAIR Plan wrote Stand Alone Lead Liability Coverage;

11.The number of Non-Compliant Rental Properties for which the FAIR Plan wrote Stand Alone Lead Liability Coverage;

12.The geographic location, by zip code or other method approved in advance by the Department, of all Compliant Rental Properties for which the FAIR Plan provided Lead Liability Coverage; and

13.The geographic location, by zip code or other method approved in advance by the Department, of all Non-Compliant Rental Properties for which the FAIR Plan provided Lead Liability Coverage

D.An insurer or Surplus Lines Broker that fails to make such filing will be subject to administrative action pursuant to R.I. Gen. Laws § 42-14-16 and Chapter 42-35.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.11 Property Owners who are Ineligible for Lead Liability Coverage

A.The FAIR Plan is not required to issue Lead Liability Coverage to any property owner who fails to remediate the property after a notice of violation issued subsequent to October 31, 2005.

B.If a notice of violation is issued subsequent to October 31, 2005 and the property owner has not brought the property into compliance within ninety (90) days of the issuance of the notice, any insurance policy issued to that property owner shall be subject to cancellation and/or non-renewal.

C.If a residential rental property owner owns only one (1) property and has one (1) unremediated dwelling unit at which a child was poisoned prior to November 1, 2005, that property owner shall be ineligible for Lead Liability Coverage. If a residential rental property owner owns more than one (1) property and has more than two (2) unremediated dwelling units at which a child was poisoned prior to November 1, 2005, that property owner shall be ineligible for Lead Liability Coverage.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.12 FAIR Plan

A.The FAIR Plan shall be obligated to provide Lead Liability Coverage not only for Non-Compliant Rental Properties but also for Compliant Rental Properties either through its own homeowners or dwelling liability policies or a Stand Alone Lead Liability policy. The FAIR Plan shall be permitted to use reasonable underwriting guidelines as approved by the Department to underwrite the property. The Stand Alone Lead Liability policy and the underwriting guidelines shall be in accordance with Subchapter 05 Part 11 of this Chapter.

B.Subject to the provisions of § 9.11 of this Part, if requested by a residential rental property owner, the FAIR Plan will offer Stand Alone Lead Liability policies to property owners whose policies exclude coverage for lead liability. This includes policies issued prior to November 1, 2005.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-9 § 9.13 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-05-06 to 01/04/2022
Technical Revision — effective from 2005-10-17 to 05/06/2018
Amendment — effective from 2005-10-17 to 10/17/2005
Adoption — effective from 2003-04-08 to 10/17/2005

230-RICR-20-05-10 Auto Body Labor Rate Survey

230-RICR-20-05-10 § 10.1 Authority

This Regulation is promulgated in accordance with R.I. Gen. Laws §§ 27-29-4.4 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-10 § 10.2 Purpose

The purpose of this Regulation is to implement the provisions of R.I. Gen. Laws § 27-29-4.4.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-10 § 10.3 Applicability

A.Each insurer that writes one percent (1%) or more of the total premium volume of Motor Vehicle Liability Insurance during the immediately preceding calendar year shall conduct an auto body labor rate survey in accordance with R.I. Gen. Laws § 27-29-4.4 and this Part.

B.Insurers writing less than one percent (1%) of the total premium volume of Motor Vehicle Liability Insurance during the immediately preceding calendar year shall determine a prevailing auto body labor rate either by conducting an auto body labor rate survey in accordance with R.I. Gen. Laws § 27-29-4.4 or negotiating the payment of auto body labor rates with each licensed Full Collision Repair Auto Body Facility.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-10 § 10.4 Definitions

A.As used in this Regulation:

1."Auto body labor rate survey" means an analysis of information gathered from auto body repair shops regarding the rates of labor that repair shops charge in a certain geographic area.

2.“Contract rate” means any labor rate to which an auto body repair facility and an insurer have agreed in a formal agreement and/or written contract.

3."Department" means the Department of Business Regulation, Insurance Division.

4.“Full collision repair auto body facilities” means those facilities designated as such in Part 30-05-2 of this Title.

5."Motor vehicle liability insurance" means those lines of insurance reported by the insurer in an insurers’ annual statement as other private passenger auto liability, other commercial auto liability, private passenger auto physical damage, and commercial auto physical damage.

6.“Insurance group” means a number of insurers within a holding company who are assigned a single group code by the National Association of Insurance Commissioners.

7."Prevailing auto body labor rate" means the rate determined and set by an insurer as a result of conducting an auto body labor rate survey and used by insurers as a basis for determining the cost to settle automobile property damage claims.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-10 § 10.5 Determination of Market Share

The percentage of premium volume of Motor Vehicle Liability Insurance for the preceding calendar year will be determined by the Department in accordance with the premium reported in an insurers’ annual statement. Insurers may choose to survey on an Insurance Group basis. If so, one questionnaire may be sent for the Insurance Group indicating all of the insurers within that group writing Motor Vehicle Liability Insurance in Rhode Island. The one percent (1%) premium volume may be reached either by an individual insurer or by an Insurance Group whose writings reach one percent (1%) or more when combined.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-10 § 10.6 Procedure and Deadlines

A.Prior to May 1 of each calendar year, the Department will publish on its website a list of those insurers that meet the applicability requirement.

B.Each insurer to which this Regulation applies shall, prior to June 1 of each calendar year, send a questionnaire substantially in the form included hereto as § 10.10 of this Part to Full Collision Repair Auto Body Facilities. Separate and distinct questionnaires shall be sent to each classification of auto body repair facilities as designated by the Commercial Licensing division of the Department.

C.Concurrent with the posting of a list of insurers required to conduct a survey, the Department’s Commercial Licensing Division will provide a list of Full Collision Repair Auto Body Facilities with identification of Classification A and B shops which insurers must survey for that years’ compliance. The list will be posted on the Department’s website.

D.Insurers will omit those Full Collision Repair Auto Body Facilities with whom the insurer or Insurance Group, if reporting on a group basis, has a formal agreement and/or written contract to pay contract rates in order to provide auto body repair services.

E.Insurers will send the questionnaire to all of the Full Collision Repair Auto Body Facilities that remain after deletion of those facilities indicated in § 10.6(D) of this Part above.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-10 § 10.7 Report of Labor Rate Survey to the Department

A.The report must be filed no later than September 1 of each calendar year.

B.The Report of the Labor Rate Survey must include the following:

1.A list, including the name and address, of all Full Collision Repair Auto Body Facilities to which the labor rate survey was sent.

2.A list of the Full Collision Repair Auto Body Facilities that failed to respond to the questionnaire within the time specified by the insurer.

3.A list of questionnaires that were not taken into consideration by the insurer in its analysis of the survey, including the reason that each such questionnaire was rejected for consideration.

4.Results of the questionnaires considered by the insurer.

5.The total number of shops surveyed for each classification of shops.

6.A description of the formula or manner in which the insurer has calculated or determined the prevailing labor rate which it pays to auto body repair facilities including certification of compliance with R.I. Gen. Laws § 27-29-4.4 and this Part.

7.The separate prevailing labor rate(s) established by the insurer for each classification of full collision licensed auto body repair facilitates.

8.If the calculation or formula indicated in § 10.7(B)(6) of this Part above is not based on the results of the questionnaires identified in § 10.7(B)(4) of this Part above, a complete explanation as to why it is not so based.

C.Insurers should include, in detail, all costs associated with complying with this Regulation.

D.Insurers may choose to report on an Insurance Group basis. If so, one Labor Rate Survey may be filed with the Department for the Insurance Group indicating all of the insurers within that group writing Motor Vehicle Liability Insurance in Rhode Island.

E.The Department will publish the prevailing labor rates within a reasonable time after receipt and compilation of the surveys submitted by insurers.

F.Insurers writing less than one percent (1%) of the total premium volume of Motor Vehicle Liability Insurance during the preceding calendar year shall determine a prevailing labor rate(s) by either conducting an auto body labor rate survey or negotiating the payment of auto body labor rates with each licensed Full Collision Repair Auto Body Facility.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-10 § 10.8 Questionnaire

A.Each insurer to which this Regulation applies shall utilize a survey based on the questionnaire included hereto as § 10.10 of this Part. Insurers may customize the questionnaire with formatting; however, the substance must be in accordance with § 10.10 of this Part.

B.Insurers shall specify a date upon which the questionnaire must be returned to the insurer. The date specified must grant at least thirty (30) days notice for response.

C.Insurers may allow Full Collision Repair Auto Body Facilities to respond electronically (e.g. by email); however, insurers must allow response by hard copy if the Full Collision Repair Auto Body Facility does not consent to electronic submission.

D.Insurers may reject any questionnaire that is not properly completed or does not provide the full information requested and are not required to provide notification to the Full Collision Auto Body Facility. Insurers shall keep detailed records for such rejection to allow audit by the Department. Insurers may be ordered by the Department to consider any questionnaire so “rejected” to be accepted if the Department finds that enough information has been provided to allow for consideration of the questionnaire. All questionnaires and all other information regarding the survey shall be maintained by the insurer for a minimum of five years.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-10 § 10.9 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-10 § 10.10 Labor Rate Questionnaire

The following questionnaire is provided pursuant to R.I. Gen. Laws § 27-29-4.4(a)(6)(i).

Labor Rate Questionnaire

To: _______________________ (Auto Body Repair Facility)

From: ___________________ Insurance Company

Instructions:This questionnaire should be completed by the auto body repair facility to which it is addressed and returned to ____________ Insurance Company at [insert address] no later than [insert due date]. If the information is not complete the survey may be rejected.

Auto Body Repair Facility Classification A B (circle one)

Hourly Rate(s) Charged – Please indicate the hourly rate charged by your facility for auto body repair work. If the rate charged varies, please indicate each and every rate actually charged for all categories of customers, including but not limited to insurance related claims versus non-insurance related claims. The information on hourly rate charged must include all labor rate agreements other than those with insurance companies. This information must include, but is not limited to, labor rate agreements with any and all rental car companies for the repair of rental vehicles, labor rate agreements with any and all vehicle leasing companies for the repair of leased vehicles, labor rate agreements with the State of Rhode Island for the repair of state vehicles, and labor rate agreements made with the United States government for the repair of government vehicles.

Supporting Documentation: Please provide a full and complete description of all of the documents that evidence each actual rate charged (i.e. for each category of customer invoices, rates posted in shop, customer receipts, estimates or other applicable documentation). Please note that you may be requested to produce documentary evidence supporting your response to the Department of Business Regulation, Commercial Licensing Division.

Complete Description: Please describe the manner in which you calculate each labor rate charged, providing a complete description of the components, including, but not limited to salary costs, overhead (including a complete and detailed description of the costs you include in overhead) and margin for profit.

FAILURE TO COMPLETE THIS QUESTIONNAIRE IN FULL MAY RESULT IN ITS EXCLUSION FROM THE AUTO BODY LABOR RATE SURVEY FILED WITH THE DEPARTMENT OF BUSINESS REGULATION.

Name: _____________________________

Title: _______________________________

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-08-14 to 01/04/2022
Amendment — effective from 2017-08-14 to 08/14/2017
Technical Revision — effective from 2016-03-17 to 08/14/2017
Amendment — effective from 2016-03-17 to 03/17/2016
Adoption — effective from 2006-10-02 to 03/17/2016

230-RICR-20-05-11 Basic Property Insurance Inspection and Placement Program

230-RICR-20-05-11 § 11.1 Authority

This Regulation is promulgated in accordance with R.I. Gen. Laws §§ 27-33-11 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.2 Purpose

A.The purpose of this Regulation is to implement the Basic Property Insurance Inspection and Placement Program (hereinafter “this Program”) as follows:

1.To make Basic Property Insurance available to qualified applicants who have been unable to secure such insurance in the normal market, subject to the conditions hereinafter stated.

2.To mandate the participation of all domestic Insurers and all Insurers licensed to write those classes of insurance listed in R.I. Gen. Laws §§ 27-8-1 and 27-8-3 in the State of Rhode Island and to equitably apportion and distribute the writings, expenses, profits, if any, and losses of this Program among Insurers licensed to write Basic Property Insurance, as defined herein, in this State.

3.To encourage the improvement of properties located in urban areas and to further orderly community development.

4.To make public the purposes and procedures of this Program.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.3 Definitions

A."Basic Property Insurance" means, in addition to any and all coverages specifically enumerated in R.I. Gen. Laws § 27-33-10, insurance against direct loss to property as defined and limited in standard fire policies in:

1.Extended coverage;

2.Vandalism and malicious mischief;

3.Broad and special form dwelling coverage commonly referred to as DP-2 and DP-3;

4.Sprinkler leakage endorsements thereon;

5.Homeowners package coverage on owner-occupied habitational risks for one to four families, and for homeowners tenants forms;

6.The liability coverages for one to four family owner and non-owner occupied dwellings, either as a personal liability endorsement to a dwelling property policy or as a "stand alone" dwelling liability policy; and

7.Lead liability insurance for any pre-1978 residential rental property, either by endorsement to a homeowners or dwelling liability policy or as a "stand alone" lead poisoning liability insurance policy. It shall not include automobile or farm risks, with the exception of lead liability coverage as a "stand alone" policy for farmowners’ dwellings.

B."Commissioner" means the Director of the Department of Business Regulation or his or her designee.

C."Insurer" means any insurance company or other organization licensed to write, and writing property or liability insurance business, including the property and liability components of multi-peril policies, on a direct basis in this state who is a member of the Rhode Island Joint Reinsurance Association.

D."Producer" means licensed insurance producer, as defined in R.I. Gen. Laws § 27-2.4-1 et seq.

E."Program" means the Basic Property Insurance Inspection and Placement Program as set forth in this Regulation.

F."Premiums Written" means gross direct premiums written during the most recent calendar year for which data is available, as determined by the Association, with respect to property in this State on all property and liability policies (excluding "Flood", as written by the National Flood Insurance Program), including all homeowners policies and the fire, other allied lines and liability components of all dwelling policies and commercial multi-peril policies, as computed by the Association, less return premiums, dividends paid or credited to policyholders, or the unused or unabsorbed portion of premium deposits.

G."Rhode Island Joint Reinsurance Association" and the “Rhode Island FAIR Plan” (Fair Access to Insurance Requirements), and the “Association” shall be considered synonymous and herein referred to as the “Association,” which means the organization formed by Insurers to administer this Program herein set forth.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.4 Inspections and Reports

A.Any applicant may submit to the Association directly or through a licensed Producer designated by the applicant a completed application for a property inspection and insurance coverage or for immediate certification insurance coverage on a form prescribed by the Association, specifying the requested effective date for such coverage.

B.The Association shall have the right to inspect any property, on which immediate coverage is not requested, before accepting or declining coverage, provided that the Association may decline coverage if the application discloses that the property or applicant fails to meet the underwriting standards and other requirements of this Program, as set forth in this Regulation, without the need for an inspection.

1.The inspection shall be scheduled promptly and shall cover the construction, maintenance, materials and occupancy characteristics of the property and any other conditions, which increase the risk of loss or render it uninsurable. Photographs may be taken during the inspection to document observable conditions.

2.Except as provided in this Part, when the inspection is completed the Association shall accept or reject the application. If the application is rejected, the Association shall notify the applicant and Producer in writing of its reasons and shall provide to the applicant and Producer a copy of the Inspection Report, without charge, upon request. If the application is conditionally declined, the Association shall also give the applicant an opportunity to correct any physical conditions indicated on the written notification before making the declination final.

C.When a completed application for immediate coverage is submitted, and approved, the Association shall accept or reject the application without first performing an inspection, and, if accepted, issue a policy of Basic Property Insurance under this Program. The Association shall have the right to limit the amount of lead liability coverage provided to an applicant under the immediate coverage procedure.

2.If the inspection reveals conditions which make insurance coverage with the Plan unavailable pursuant to the Underwriting Standards detailed in § 11.8 of this Part, the Association shall notify the applicant/insured and the Producer in writing of the conditions rendering the property ineligible and shall provide to the applicant/insured and Producer a copy of the Inspection Report, without charge, upon request, and shall give the applicant/insured an opportunity to correct the condition before canceling the policy.

D.The owner of any building or condominium unit or any tenant seeking insurance coverage shall provide full access to the property, upon request by the Association, for purposes of a physical inspection.

E.The inspection will be without cost to an applicant.

F.The manner and scope of the inspection shall be prescribed by the Association.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.5 Provisional Binders

A.To prevent lapses of insurance coverage for risks eligible under this Program before coverage has been made available or declined, a provisional binder affording the insurance requested, subject to all provisions of this Program, including but not limited to a subsequent inspection of the property and compliance with the underwriting standards and other Program requirements, will be automatically issued if:

1.Through no fault of the applicant, coverage has not been either offered or denied within twenty (20) calendar days after the date the request for inspection was received by the Association; and

2.The applicant, at the time of requesting the inspection or at any time prior to the receipt of a written statement indicating that the property is uninsurable, pays the estimated annual premium or deposit premium.

B.The Association shall thereafter promptly conduct an inspection of the property as provided in § 11.4 of this Part above and may decline to continue or cancel any provisional coverage, unless the applicant corrects any conditions which increase the risk of loss or render the property uninsurable under this Program. Coverage provided under this Provisional Binder provision shall be at the rates approved by the Commissioner for the class of property to be insured, exclusive of any surcharge, but shall be subject to an appropriate premium adjustment, if necessary, after the property has been inspected.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.6 Limits of Coverage and Deductibles

A.Limits of coverage shall be established in rules adopted by the Governing Committee subject to approval by the Commissioner.

B.Standard and percentage deductibles, percentage participation clauses, and other underwriting devices may be imposed by the Association on any commercial, or non-owner occupied residential risk to meet special problems of insurability. In addition, the Association may require large or special deductibles on a “consent to rate basis” subject to approval by the Commissioner.

C.The Association may impose deductibles on all other risks only if there has been excessive loss frequency and the applicant has failed to take reasonable steps to correct any situation which has given rise to past losses. The deductibles used by the Association will either be those approved by the Commissioner for use by all insurers or those specifically approved by the Commissioner for the Association. The Association may impose other deductibles with the approval of the Commissioner.

D.No applicant shall be eligible to obtain lead liability limits in excess of the amount of the applicant’s general liability limits, subject to the further restriction that an applicant may not obtain lead liability coverage above the maximum limits established by the Governing Committee and approved by the Commissioner. Additionally, an applicant who does not produce valid and in force Prima Facie Evidence of Compliance issued pursuant to R.I. Gen. Laws § 42-128.1-9 may obtain less lead liability coverage than the amount of insurance offered by the Association, provided however that such an applicant shall not be entitled to an amount of insurance that is less than the minimum limits offered by the Association.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.7 Policy Issuance/Declination

A.Upon approval by the Association of an application for coverage, or renewal of coverage, and upon receipt by the Association of the full amount of the required premium, (or if the applicant chooses an approved installment payment plan, the full amount of the deposit premium) in cash, or by personal check, certified check, bank check, money order, postal money order, or the check of a licensed lending institution, the Association shall issue a policy in accordance with § 11.10 of this Part.

B.Applications for coverage shall be declined where the property fails to meet reasonable underwriting standards of the Association as set forth in § 11.8 of this Part below or other requirements of the Association or this Program.

C.In the event of declination, the applicant shall be furnished a written statement of the conditions which make the property uninsurable and the measures, if any, which if taken would make the property insurable, or a written statement of any other reasons for declination. The applicant shall also be informed of his or her right to appeal such determination by the Association and be advised of the means whereby such an appeal may be initiated in accordance with § 11.13 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.8 Reasonable Underwriting Standards

A.In determining whether or not to accept the risk, the Association shall follow reasonable underwriting standards which shall include, but not be limited to, the following:

1.The right to decline or cancel insurance because of the physical condition of the property, such as its construction, heating, wiring, evidence of unrepaired damage or general deterioration (however, the mere fact that a property does not satisfy all current building code specifications would not, in itself, justify declining the risk);

2.The right to decline or cancel insurance because of the present use or housekeeping of the property, such as abandonment, vacancy, overcrowding, excessive rubbish or improper storage of flammable materials;

3.The right to decline or cancel insurance because of other specific characteristics of ownership, condition, occupancy, or maintenance which are violative of law or public policy and which result in unreasonable exposure to loss;

4.The right to decline or cancel insurance on buildings in which any one of the following exists:

a.Failure to pay real estate taxes on the property after the taxes have been delinquent for one (1) year or more (real estate taxes shall not be deemed to be delinquent for this purpose even if they are due and constitute a lien, so long as a grace period remains under local law during which such taxes may be paid without penalty);

b.Failure, within the insured's control, to furnish heat, water, sewer services or public lighting for thirty consecutive days or more;

c.Failure within a reasonable time to correct conditions dangerous to life, health or safety.

5.The right to decline or cancel insurance on property:

a.Where, because of physical conditions, there is an outstanding demolition order, outstanding order to vacate or which has been declared unsafe or uninhabitable in accordance with law;

b.Where fire damage exists and the owner has not taken reasonable steps to protect and secure the property;

c.Where, following a fire, permanent repairs have not commenced within sixty (60) days after satisfactory adjustment of loss; or

d.Where fire damage exists and the insured has stated or such time has elapsed as clearly indicates that the damage will not be repaired.

6.The right to decline or cancel insurance where the applicant is in arrears in the payment of insurance premiums to a licensed Producer or insurer for the types of coverage which are offered by the Association;

7.The right to decline or cancel insurance on any building where it is vacant or where sixty five percent (65%) of the building is unoccupied, unless the building is undergoing rehabilitation. Upon request, the Association must be provided with a schedule for such rehabilitation;

8.The right to decline or cancel insurance on any building which has been abandoned or where there has been removal of fixtures or salvageable material from the building and the owner can give no reasonable explanation for such removal;

9.The right to decline or cancel insurance where reliable information is secured indicating that the property will be burned for the purpose of collecting insurance on the property;

10.The right to decline or cancel insurance where the applicant, insured, mortgagee, loss payee, or any other person having a financial interest in the property is convicted or where an unresolved indictment for the crime of arson or for a crime involving a purpose to defraud an insurance company exists;

11.The right to decline or cancel insurance where the property has been subject to more than two (2) fires, each loss amounting to one percent (1%) of the insurance in force, in any twelve (12) month period; or more than three (3) such fires in any twenty four (24) month period, provided that the cause of such fires is due to conditions which are the responsibility of the owner-named insured;

12.The right to decline or cancel insurance in those instances where the Association has information which indicates that a moral hazard exists.

B.The Association shall not decline or cancel any risk for reasons of neighborhood or area location or any environmental hazard beyond the control of the property owner.

C.Reasonable underwriting standards with respect to any liability insurance policy form or endorsement offered by the Association and Section II of homeowners insurance shall include the general standards and, in addition, shall include, but not be limited to, the following:

1.Hazardous physical conditions including, but not limited to, unfenced swimming pools;

2.Presence of vicious animals;

3.Excessive loss frequency when the applicant has failed to take reasonable steps to correct any situation which has given rise to past losses.

D.The Association shall have the right to decline or cancel, non-renew or withdraw lead liability coverage of residential rental property owners who are ineligible for such coverage in accordance with § 20-05-9.10 of this Title, as follows:

1.A residential rental property owner who fails to remediate lead violations which occur after June 30, 2004 on any property within ninety (90) days of the issuance of a notice of violation.

2.A residential rental property owner who owns only one (1) property and has more than one (1) unremediated dwelling unit at which a child was poisoned prior to July 1, 2004.

3.A residential rental property owner who owns two (2) or more properties and has more than two (2) unremediated dwelling units at which a child was poisoned prior to July 1, 2004.

E.The right on the part of the Association to apply by endorsement in accordance with the waiver provisions of the statutory standard fire insurance policy of the State of Rhode Island a "Modern Materials" provision which would permit repairs with modern materials, not necessarily those of like kind and quality, provided the structure's integrity, utility and value are not impaired, and that the policyholder declines to insure the risk to its replacement cost value or a percentage thereof as required to qualify for coverage under the special loss settlement endorsement.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.9 Participation of Member Companies

A.The Association may purchase reinsurance including catastrophic coverage.

B.Each Insurer shall participate in the writings, expenses, profits, if any, and losses of the Association in the same proportion as its Premiums Written bear to the aggregate Premiums Written by all Insurers in this Program.

C.The Governing Committee, acting on behalf of the Association, shall be authorized to make a preliminary assessment upon all Insurers and such further assessments as may be deemed necessary, with respect to any policy year.

D.The Association shall distribute to the Commissioner and to each insurer its calculation of the insurer’s participation ratio for each policy year. The insurer shall notify the Association in writing within thirty (30) days from the date of mailing by the Association of any objection it may have to such calculation. If the Association does not receive any objection within such thirty (30) day period, the calculation shall be binding upon the insurer. Until the Association has received the necessary data to calculate a participation ratio for any year, it may use the participation ratio calculated for the prior policy year on a provisional basis, but shall adjust any assessments made on the basis of such provisional ratios when final participation ratios for the year are calculated.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.10 Authority to Issue Policies on Behalf of Members

A.The Association shall be authorized:

1.To issue policies or certificates of insurance in the name of the Association for risks found insurable by the Association under this Program;

2.To provide for the investigation and adjustment of claims, defense of policyholders, payment of losses and all such other functions as are usual in servicing the insured under such policies; and

3.To otherwise incur expenses consistent with the goals of this Program and the interests of the Association, its members, and its insureds.

4.Each insurer irrevocably designates the Association as its agent in carrying out such functions.

B.Each insurer shall be a direct insurer under each policy or certificate of insurance issued by the Association during any calendar year to the extent of its participation for that year as determined in accordance with § 11.9 of this Part. Liability of each insurer shall be several, each for itself, and not joint, and no insurer shall be liable under any such policy or certificate for the liability of any other insurer thereunder, except as provided in Article VII of the Articles of Agreement in case of the insolvency of an insurer.

C.The Governing Committee shall from time to time designate in writing one or more persons to act as attorney-in-fact for all companies to execute policies on behalf of the insurers. No policy or certificate of insurance shall be affected or invalidated by any change of the attorney-in-fact who, at the time such policy or certificate of insurance was issued, shall have duly acted pursuant to the powers in him or her then vested. Any policy or certificate of insurance issued pursuant to this Part may be executed on behalf of the insurers by any attorney-in-fact appointed hereunder, and each insurer agrees to be bound thereby to the extent of its participation in the writings of the Association, as determined under § 11.9 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.11 Rates and Forms

A.All policies shall be for Basic Property Insurance on standard policy forms and shall be issued for a term of one year.

B.The Association shall use such forms and rules consistent with this Program, as may be filed by or on its behalf and approved by the Commissioner.

C.Premiums for policies shall be calculated in accordance with classifications, rates and rating plans filed by or on behalf of the Association and approved by the Commissioner. The Commissioner shall approve rates filed by the Association based upon the standard that the rates shall not be excessive, inadequate or unfairly discriminatory, giving due consideration to the past and prospective loss and expense experience for Basic Property Insurance, written in this state, trends in the frequency and severity of losses, the investment income of the FAIR Plan and such other information as the Commissioner may require. All rates shall be calculated to be self-supporting consistent with sound actuarial principles. Rates for Basic Property Insurance shall be approved by the Commissioner, notwithstanding any limits on rate approval authority. Nothing in this Part shall be deemed to affect the duty of licensed insurers in the State of Rhode Island to participate, as needed, on a direct basis, in this Program pursuant to R.I. Gen. Laws §§ 27-33-2 and 27-33-11 and any rules and regulations promulgated thereunder, and to pay their proportionate share of losses and expenses incurred by this Program upon assessment by the Program. The cost of any rate filing subject to a public hearing shall be borne by the Association and its insurers based upon their proportional share of premiums written unless otherwise ordered by the Commissioner.

D.In addition to the above, rates for lead poisoning liability coverage shall also be subject to the standards set forth in R.I. Gen. Laws § 42-128.1-9(e).

E.Return premium on all policies shall be calculated on a pro-rata basis, effective as of the date of cancellation of the policy.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.12 Cancellation and Nonrenewal

A.All Insurers participating in this Program and the Association on their own business shall give thirty (30) days notice prior to cancellation or non-renewal of any risk eligible under this Program except in the following cases:

1.Owner or occupant incendiarism;

2.Material misrepresentation;

3.Non-payment of premium;

4.At least sixty-five percent (65%) of the rental units in the building are unoccupied, and the insured has not obtained prior approval from the participating Insurer or the Association of a rehabilitation plan which necessitates a high degree of unoccupancy;

5.Loss or damage exists and the insured has stated or such time has elapsed as clearly indicates that the damage will not be repaired;

6.Following a loss, permanent repairs following satisfactory adjustment of loss have not commenced within sixty (60) days;

7.Property has been abandoned or there has been removal of undamaged salvageable items from the building and the insured can give no reasonable explanation for such removal;

8.Utilities such as electric, gas, or water services have been disconnected and the insured has failed to pay his account for such services within one hundred twenty (120) days, or real estate taxes have not been paid for a two (2) year period after the taxes have become delinquent (real estate taxes shall not be deemed to be delinquent for this purpose even if they are due and constitute a lien, so long as a grace period remains under local law during which such taxes may be paid without penalty).

9.Where reliable information that good cause exists to believe that the building will be burned for the purpose of collecting the insurance on the property;

10.Conviction or unresolved indictment of a named insured or loss payee or any other person having a financial interest in the property of the crime of arson or crime involving a purpose to defraud an insurance company;

11.Where the building has been subject to more than two (2) fires, each loss amounting to at least one percent (1%) of the insurance in force in any twelve (12) month period; or more than three (3) such fires in any twenty four (24) month period, provided that the cause of such fires is due to conditions which are the responsibility of the owner-named insured;

12.Any reason which would have been grounds for declination of the risk under this regulation if such reason had been known or had been present at the time of acceptance and becomes known or present during the policy period.

13.Any reason which renders a residential rental property owner ineligible for lead liability coverage under § 20-05-9.10 of this Title shall be grounds to cancel or non-renew a policy which provides lead liability coverage, as follows:

a.A residential rental property owner who fails to remediate lead violations which occur after June 30, 2004 on any property within ninety (90) days of the issuance of a notice of violation.

b.A residential rental property owner who owns only one (1) property and has more than one (1) unremediated dwelling unit at which a child was poisoned prior to July 1, 2004.

c.A residential rental property owner who owns two (2) or more properties and has more than two (2) unremediated dwelling units at which a child was poisoned prior to July 1, 2004.

B.When a policy is cancelled or non-renewed, other than for non-payment of premiums or the insured's having obtained substitute coverage or if the policy had been issued through the Association, the insurer shall notify the insured and the insured’s producer, if any, of possible eligibility for insurance through the Association. Such notice shall accompany or be included in the cancellation or non-renewal notice. The notice must be clearly identifiable by the insured. The notice must provide information on how to contact the Association, including address and telephone number(s), including a toll free number, and, alternatively, to contact a licensed insurance producer for assistance in obtaining coverage through the Association.

C.Any cancellation upon less than thirty (30) days notice arising out of any of the conditions listed above in § 11.12 of this Part shall follow a procedure which includes as a minimum, notification to the insured by the Association of the cancellation, with a copy to the Commissioner, giving the reasons for the action and setting forth the insured's right to appeal to the Commissioner for review of the cancellation. The cancellation shall stand unless the Commissioner rules otherwise.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.13 Right of Appeal

A.Any applicant for insurance and any person insured under this Program may appeal to the Governing Committee within fifteen (15) days after mailing of notice of any final underwriting ruling, action, or decision of the Association. The Governing Committee shall issue its decision without undue delay. Any decision of the Committee may be further appealed to the Commissioner within thirty (30) days. Orders of the Commissioner shall be subject to judicial review pursuant to R.I. Gen. Laws § 42-35-15.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.14 Commissions

A.Commissions to the licensed Producer designated by the applicant shall be set by the Governing Committee with approval of the Commissioner.

B.In the event of cancellation of a policy, or if an endorsement is issued which requires premium to be returned to the insured, the Producer shall refund ratably to the Association commissions on the unearned portion of canceled liability and on reductions in premiums at the same rate at which such commissions were originally paid.

C.All Insurers shall solicit the cooperation of their agents with this Program and no Producer shall be penalized for submitting risks to the Association.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.15 Coding and Reports

A.Business written pursuant to this Program shall be regarded as a separate kind or class of business for statistical purposes and shall be separately coded.

B.The Association shall submit periodic reports to the Commissioner, as the Commissioner may request, setting forth the number of requests for inspection, the number of risks inspected, and the results of inspections by the Association together with such other information as the Commissioner may request.

C.The Association shall submit annual reports to the Commissioner in accordance with and setting forth the information required under § 20-05-9.9 of this Title.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.16 Administration

A.This Program shall be administered by a Governing Committee (hereinafter referred to as the Committee), subject to the supervision of the Commissioner.

B.The Governing Committee shall consist of eighteen (18) members. Ten members of the Committee shall be Insurers, at least two (2) of which shall be domestic Insurers. These members shall be elected annually by cumulative voting of the Insurers of the Association whose votes shall be weighed in accordance with the proportion that each Insurer's Premiums Written in the state during the most recent calendar year for which data is available bears to the aggregate premiums written by all Insurers in this Program. Not more than one (1) Insurer in a group under the same management or ownership shall serve on the Committee at the same time. Six (6) members of the Governing Committee shall be individuals who are not employed by or otherwise affiliated with Insurers, Producers or other entities of the insurance industry. These members shall be appointed annually by the Chair of the Committee. The Committee shall also include two (2) members who shall be licensed resident fire and casualty Producers in the State of Rhode Island. Both of the aforementioned licensed fire and casualty Producers shall be appointed by the Independent Insurance Agents of Rhode Island.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.17 Annual and Special Meetings

A.Meetings -- The annual meeting of the Insurers for the election of the Committee and such other business as may be necessary shall be held in the State of Rhode Island on a date fixed by the Governing Committee. At any regular or special meeting at which the vote of the Insurers is or may be required on any proposal, voting may be in person or by proxy. Voting at regular or special meetings, or any vote of the Insurers which may be taken by mail, shall be cast and counted on a weighted basis in the same proportion as each Insurer's Premiums Written bear to the aggregate Premiums Written by all Insurers in this Program. Notice of meetings of the Insurers shall be given by the Secretary and shall state the time, date and place and the principal purposes thereof. Such notice may be given to the Insurers by electronic mail or any other reasonable widely used electronic format or by regular US Postal mail.

B.As soon as practicable after election to membership on the Committee, and thereafter from time to time as it may elect, an Insurer shall designate a qualified representative and an alternate of such representative to serve for it and shall immediately notify in writing the Manager of the Association of such designation.

C.Officers -- The Committee shall elect a Chair, Vice Chair, Secretary, Treasurer, and Manager.

1.The Chair shall preside over all meetings of this Committee and at all meetings of the Insurers which are Members of the Rhode Island Joint Reinsurance Association. The Chair shall discharge such other duties as may be incidental to his office or as shall be required by these rules or by the Committee.

2.The Vice Chair shall preside at any meeting of the Committee in the absence of the Chair. In the event of death, incapacity, or disability of the Chair, the Vice Chair shall perform the duties of the Chair until such office has been filled by the Committee.

3.The Secretary shall issue all notices of meetings, record minutes of all meetings, keep the records of the Committee, and discharge such other duties as may be incidental to the office or as shall be required by these rules or by the Committee.

4.The Treasurer shall discharge such duties as may be incidental to the office or as shall be required by these rules or by the Committee.

5.The Manager shall discharge such duties as may be incidental to the office or as shall be required by these rules or by the Committee.

D.Special Meetings -- Special Meetings of the Committee or of the Insurers may be held upon the call of the Chair or in the event of resignation, death, or incapacity, upon the call of the Vice Chair. Any six (6) members of the Committee, acting by their designated representatives, may request the Chairman to call a meeting of the Committee and any six (6) Insurers may request the Chair to call a meeting of the Membership at such time and place and for such purposes as may be set out in writing in such request. Should the Chair decline to call such meetings, the same may be called by the six (6) members making the request. Such special meetings may be held at the principal office of the Association or at such other place within or without the State of Rhode Island as may be designated in the call.

E.Notices of Committee Meetings -- Notices of all Committee meetings shall be given by the Secretary to the members of the Committee and to the Insurers, and shall state the time and place and the principal purposes thereof, in order to legally constitute the meeting, provided a majority of the designated representatives of the Insurers shall be present at such meeting. Such notices may be given to the members of the Committee by electronic mail or any other reasonable widely used electronic format or regular US postal mail, and in the case of Insurers directed to the attention of the designated representatives of the Insurers and shall be sent or mailed at least ten (10) days in advance of the meeting. Any Insurer or the designated representative of any Insurer may waive notice of any meeting, and the presence of such representative at any meeting shall constitute a waiver of notice as to such Insurer.

F.Advance Agenda -- The Secretary, after consultation with the Chair, shall prepare in advance of each meeting of the Committee and each meeting of the Insurers an agendum which, with such supporting data and information as may be conveniently assembled, shall be forwarded to the members of the Committee or their designated representatives or to the Insurers, as the case may be, in advance of any such meeting.

G.Committees -- Subject to the Articles of Agreement, the Chair of the Committee may appoint or the Committee may elect such standing committees or such temporary or special committees as may be deemed necessary for the transaction of its business.

H.Ex-Officio Members -- The Chair of the Committee shall be an ex officio member of all standing or special committees, with right to vote.

I.Voting by Committee – Every committee member shall have one (1) vote. Any matter submitted to the Committee shall be carried if it is voted in the affirmative by a majority of the committee members present at a meeting or attending by teleconferencing, provided at least a quorum is participating. Committee voting shall be permitted only by the designated representatives or alternates of the committee members and by the public committee members and Producer committee members in person at a meeting of the Committee, by teleconference or by mail, in accordance with this Part. Voting by mail is permitted, provided that any matter submitted for a mail vote shall carry only if it is voted in the affirmative by a majority of the total number of committee members and receives no negative vote.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.18 Duties of the Committee

A.The Committee shall meet as often as may be required to perform the general duties of the administration of the Association. Ten (10) members of the Committee shall constitute a quorum.

B.The Committee shall be empowered: to appoint or otherwise contract for the services of a Manager; to budget expenses; to levy assessments including preliminary assessments provided herein, or necessary or incidental to the administration of this Program.

C.Annually the Manager shall prepare an operating budget which shall be subject to approval of the Committee.

D.The Committee shall furnish to all Insurers and to the Commissioner a written report of operations annually in such form and detail as the Committee may determine.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.19 Installment Payment Plan

The Association may offer applicants, on a nondiscriminatory basis, the option to pay premiums on an installment payment plan, consistent with plans offered to insureds in the voluntary market, as approved by the Commissioner.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.20 Public Education

The Association, on behalf of all Insurers shall undertake a continuing public education program, in cooperation with the Producers, to assure that this Program receives adequate public attention.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.21 Termination of the Program

This Program shall not be terminated without a two-thirds vote of the majority of the entire membership and the written consent of the Commissioner, and only after repeal of R.I. Gen. Laws § 27-33-1 et seq. by the Rhode Island General Assembly. Any obligations insured by the Association shall not be impaired by the expiration of this Program and the Association shall be continued for the purpose of performing its obligations to administer this Program. Any vote to terminate this Program shall specify an effective date on which the Association shall cease writing policies, but the Association shall continue in existence for as long as the Governing Committee shall determine necessary in order to settle claims, carry out its obligations to policyholders and wind up its affairs. The termination of the existence of the Association shall not relieve the Members of their obligations to the Association or among themselves, but such obligations shall continue until the affairs of the Association are finally wound up and all funds are distributed and assessments paid.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 § 11.22 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-11 Basic Property Insurance Inspection and Placement Program

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Amendment — effective from 2004-07-01 to 04/15/2009
Periodic Refile — effective from 2002-01-23 to 07/01/2004

230-RICR-20-05-13 § 13.1 Authority

This Part is promulgated in accordance with R.I. Gen. Laws §§ 27- 76-1 et seq., 27-29-4(7) and 27-29-4.1.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.2 Purpose

The purpose of this Part is to implement R.I. Gen. Laws § 27-76-1 et seq. Other than the provisions of § 13.12 of this Part, this Part applies to residential property insurance policies insuring dwelling houses issued or renewed in Rhode Island. Other than the provisions of § 13.12 of this Part, this Part is not applicable to commercial insurance policies. The provisions of § 13.12 of this Part apply to all insurance policies issued to Rhode Island residents regardless of the line of insurance.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.3 Definitions

A.As used in this Part:

1.“Deductible” means a policy provision that requires the insured to be responsible for a specific amount or percentage of a loss or the percentage of insured value on the policy and the insurer to pay covered losses in excess of that amount.

2.“Department” means the Insurance Division of the Department of Business Regulation.

3."Hurricane" means a weather-related event for which the National Weather Service has issued a hurricane warning for the applicable part of Rhode Island as indicated in § 13.4(F) of this Part.

4."Hurricane Deductible" means a Deductible applicable to an event which is a Hurricane. This term does not include traditional all perils deductibles.

5.“National Weather Service” means the weather information service, of which the National Hurricane Center is a part, that is a line office of the National Oceanic and Atmospheric Administration (NOAA).

6."Residential property insurance" means a personal lines insurance policy providing coverage to a domicile.

7.“Rhode Island Building Code” means "RISBC-2 Rhode Island State One and Two Family Dwelling".

8."Windstorm deductible" means a deductible applicable to an event involving damage to property as a result of wind which is not a Hurricane. This term does not include traditional all perils deductibles.

9.“Written” means a writing or electronic communication in accordance with R.I. Gen. Laws § 42-127.1-1 et seq.

10.“Zone” means the Wind Zone pursuant to "RISBC-2 Rhode Island State One and Two Family Dwelling", as indicated on the attached maps, in which the property is located.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.4 Deductibles

A.Insurers are not required to include a deductible in residential property insurance policies. If a Hurricane Deductible is not included in the policy or is not applicable to a particular loss the policy may provide for application of a policy deductible. If an insurer chooses to include a deductible relating specifically to weather related events, the insurer must comport with the following:

1.Windstorm deductibles may not be included in residential property insurance policies.

B.The maximum hurricane deductible that can be offered and/or included in a residential property insurance policy is a deductible of five percent (5%) of the insured value of the dwelling (i.e. Coverage A).

C.Insurers may not offer optional hurricane deductibles in excess of five percent (5%).

D.Insurers may offer a flat dollar hurricane deductible in place of or in addition to a percentage deductible.

1.If a flat dollar deductible is offered, in place of or in addition to a percentage deductible, that total deductible may not exceed five percent (5%) of the insured value of the property.

E.All deductibles must provide for a premium credit that is actuarially supported.

F.The trigger of a hurricane deductible must be clearly stated and must be applicable only to losses due to a hurricane during the period commencing with the issuance of a hurricane warning for the applicable part of the state (as defined by §§ 13.4(F)(1) and (2) of this Part) by the National Weather Service and concluding 24 hours after the termination of the last hurricane warning for any part of the state. All terms are defined by the National Weather Service.

1.For the application of the hurricane deductible in Block Island, a loss is due to a hurricane when a hurricane results in hurricane force sustained winds in Block Island as reported by the National Weather Service.

2.For the remainder of the state, a loss is due to a hurricane when a hurricane results in hurricane force sustained winds anywhere in the state other than Block Island as reported by the National Weather Service.

G.If an insured incurs a loss from more than one hurricane in a calendar year, the insurer may only apply the hurricane deductible provided in the policy once for all hurricane occurrences in that calendar year. This provision applies whether or not the same policy is in force or a new policy has been obtained during the calendar year. For any calendar year in which a hurricane has occurred prior to the issuance of the policy, the insurer may obtain information on losses due to that hurricane (whether or not a loss payment was made) prior to the issuance of the policy and that information shall control in the application of the hurricane deductible to any other hurricanes in that calendar year.

1.If the amount of the loss in the first of multiple hurricanes in one calendar year is less than the hurricane deductible provided for in the policy, the insurer may at its option apply the remaining portion of the hurricane deductible or the all perils deductible to the subsequent loss(es).

2.To determine the amount to be applied to the deductible the insurer may require the insured to produce documentation of the first loss.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.5 Notice of Hurricane Deductibles

A.Insurers are required to provide clear and prominent notice of all hurricane deductibles. Notices of hurricane deductibles must comply with the provisions of this Part as well as the provisions of Part 14 of this Subchapter.

1.The notice shall be included in the policy issuance or renewal package or by a separate mailing sent at the time of policy issuance or renewal.

2.The notice shall clearly and fully disclose all details pertaining to all hurricane deductibles.

a.While the information provided will vary depending upon the specifics of the deductible, at a minimum the insurer must explain how the deductible will be applied (e.g. applied as a percentage of loss or as a percentage of Coverage A) and the details regarding the trigger of the deductible regardless of whether it is stated as a percentage or otherwise.

b.The purpose of the notice is to assure that the insured will have all information necessary to make an informed decision concerning the coverage, exclusions and deductibles in the policy.

c.Insurers are strongly encouraged to include the actual dollar amount of the deductible on the notice. If the insurer is unable to do so, the notice must specify that the actual dollar amount is included on the declarations page.

B.Insurers must offer at least two practical examples of how the hurricane deductible(s) work.

1.If the insurer is offering both flat dollar and percentage hurricane deductibles, the insurer must provide at least one example of each.

2.The examples do not have to be tailored to the insured value of the specific property but must show clearly how the deductible works in a hurricane scenario (i.e. a five percent (5%) deductible on a home with an insured value of $200,000 means that the insured must pay the first $10,000 of the covered loss).

3.The actual dollar amount of a percentage deductible applicable to the policy must be shown on the declaration page.

C.The provisions of this Part provide the minimum that must be included in the notice. Insurers may provide any other information to assist in the insureds understanding of the deductible and its application to the insurance policy.

D.The institution and/or modification of a hurricane deductible is considered a material change and is subject to the requirements of Part 14 of this Subchapter.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.6 Mitigation Measures

A.For purposes of the application of R.I. Gen. Laws §§ 27-76-2(c)(4) and (e) the mitigation measures approved by the Commissioner are:

1.With regard to properties within Rhode Island Building Code (“SBC2”) Zone 1:

a.Insurers may not require any mitigation measures, however, if an insured voluntarily implements any of the mitigation measures allowed for Zones 2 and 3 the insurer shall waive the hurricane deductible.

2.With regard to properties within Rhode Island Building Code Zone 2:

a.The maximum mitigation measure that can be required is plywood shutters cut to fit over all window and door openings. Installation must meet SBC2 standards and the plywood must be pre-cut, in good condition and stored onsite in an accessible, dry and secure location on the property. Anchorage hardware must be pre-installed on all window and door openings.

b.If an insured voluntarily implements this mitigation measure or any of the mitigation measures allowed for Zone 3, subject to inspection by the insurer and/or submission of satisfactory proof of installation, the insurer shall waive the hurricane deductible.

3.With regard to properties within Rhode Island Building Code Zone 3:

a.The maximum mitigation measures that can be required are:

(1)Plywood shutters cut to fit over all window and door openings. Installation must meet SBC2 standards and the plywood must be pre-cut, in good condition and stored onsite in an accessible, dry and secure location on the property. Anchorage hardware must be pre-installed on all window and door openings and

(2)Roof tie downs in accordance with SBC2.

b.If an insured voluntarily implements this mitigation measure, subject to inspection by the insurer and/or submission of satisfactory proof of installation, the insurer shall waive the hurricane deductible.

4.Permanent storm shutters or hurricane glass or an equivalent or higher mitigation procedure delineated in SBC2 are acceptable alternatives to plywood shutters. Although the insurer may not require such alternatives to be installed, if the insured makes such installation the insurer shall waive the hurricane deductible. Before waiving the deductible, an insurer may require that permanent storm shutters and/or hurricane glass meet SBC2 requirements or other recognized manual or local equivalents and that such installations be subject to inspection by the insurer and/or submission of satisfactory proof of installation.

5.In all Rhode Island Building Code Zones mobile homes must meet the current FEMA regulations governing mobile homes in order to qualify as “mitigated.”

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.7 Waiver of Deductible

A.If the insured installs the mitigation measures set forth in § 13.6 of this Part, the policy must provide that upon installation and use of such mitigation measure, subject to inspection by the insurer and/or submission of satisfactory proof of installation, the hurricane deductible applicable to the policy shall be waived.

B.If the insurer has reserved its rights to inspection or receive proof of installation, upon successful completion of that process the insurer may issue a new policy or modify its existing policy in accordance with statute and regulation to provide for waiver of the hurricane deductible.

C.An insured may elect in writing to decline the waiver of deductible, despite meeting the mitigation requirements delineated herein, in order to accept a lower policy premium. The writing should indicate the deductible to be applied and the difference in premium.

D.Insurers are required to provide clear and prominent notice of mitigation requirements and any change in mitigation requirements is considered a material change and is subject to Part 14 of this Subchapter.

E.If the insurer requires the installation of any of the mitigation measures delineated in § 13.6 of this Part, the insurer shall provide the following information to the insured in writing:

1.Explain the mitigation measure(s) which the insurer is requiring be installed.

2.Describe the credit to be applied to the premium (stated in terms of dollars) if the mitigation measure(s) is installed and used by the insured.

3.Affirmatively state the length of time during which the credit given for the mitigation measure(s) will apply.

4.That the insurer will not non-renew the insured as a result of a risk associated with a catastrophic loss.

F.In the event a Hurricane Deductible does not apply to a loss, an insurer may apply the all perils deductible as included in the policy to the loss.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.8 Nonrenewal, Cancellation and Premium Increases

A.Nonrenewal

1.No insurer shall subsequently non-renew an insured who has taken the mitigation steps requested by the insurer for reasons of the insurers exposure to catastrophe loss, unless for non-payment of premium, fraud, breach by the insured of a provision of the policy, reversal or a lack of maintenance of the mitigation steps, or insurer solvency concerns or adverse loss history or on any other grounds not prohibited by statute or regulation.

2.No insurer shall non-renew or cancel solely as a result of:

a.a policy or claim inquiry, a loss with no payout or a loss with a payout of less than $500 unless there has been more than one non-catastrophic claim in a three-year period which has resulted in a loss payout;

b.a loss sustained as a result of a catastrophic event; or

c.prior claims experience of the property while under ownership of someone other than the current insured unless the risk from which the claim originated has not been mitigated.

B.Nonrenewal Plans

1.In the following circumstances, insurers must file a comprehensive nonrenewal plan with the department at least 90 days prior to the proposed date of implementation.

a.If an insurer plans to non-renew or cancel policies for failure to comply with mitigation measures requested by the insurer.

b.If an insurer plans to non-renew a book of business or group of policies which constitute more than twenty-five percent (25%) of the insurers premium volume in the state or more than twenty-five percent (25%) of the insurers premium volume in homeowners insurance in any one building code Zone in the state.

c.If an insurer plans to non-renew contracts with agencies that will result in nonrenewal of the policies placed through those agencies which constitute more than twenty-five percent (25%) of the insurers premium volume in the state or more than twenty-five percent (25%) in homeowners insurance of the insurers premium volume in any one building code Zone in the state.

2.Comprehensive nonrenewal plans must include the following:

a.A demonstration that the proposed non-renewals are in accordance with R.I. Gen. Laws Chapter 27-76-1 and §§ 27-29-4(7) and 27-29-4.1.

b.The insurer must identify all plan variables (i.e. percentage of business non-renewed, the time period for full implementation of the plan, the selected methodology for individual risks to be nonrenewed, etc.) and demonstrate how each variable will be fair and reasonable to Rhode Island insureds as well as relevant and proportionate to the risk of adverse impact to the insurer.

c.This section does not apply to nonrenewal or cancellation of individual policies for specific reasons related solely to that property.

C.Cessation of New Business

1.If an insurer plans to cease writing new residential property insurance policies, a notice of that action must be filed with the Department at least ninety (90) days prior to the proposed date of implementation. The notice shall provide all implementation information (date, applicability, categories of new business the insurer will continue to write) and will demonstrate that such action is in compliance with R.I. Gen. Laws §§ 27-29-4(7)(iii) and 27-29-4.1.

D.Premium Increase or Surcharge

1.No insurer shall impose a surcharge or increase in premium solely as a result of:

a.a policy or claim inquiry, a loss with no payout or a loss with a payout of less than $500 unless there has been more than one non-catastrophic claim in a three year period which has resulted in a loss payout;

b.a loss sustained as a result of a catastrophic event; or

c.prior claims experience of the property while under ownership of someone other than the current insured unless the risk from which the claim originated has not been mitigated.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.9 Rate and Policy Form Filings

A.All filings must provide sufficient actuarial justification for rate variances, premium offsets and premium credits for deductible programs.

B.Insurers must demonstrate that rates are not excessive, inadequate or unfairly discriminatory.

C.Insurers that choose to utilize hurricane models in the setting of rates must identify the model(s) used (including the version of the model(s) used) as well as provide a complete explanation of (1) the reason(s) that the particular model(s) was chosen and (2) the effect of use of the model(s) on the rates requested. Any changes in the model(s) utilized from a prior filing must be fully explained.

D.If an insurer is requesting an increase in premium due to increased reinsurance costs, the insurer must provide an explanation of the increased cost. This explanation should include an explanation of alternatives to reinsurance (i.e. CAT bonds, surplus notes, etc.). Insurers should fully disclose how reinsurance costs are allocated to Rhode Island. The Department considers the explanation of alternative to reinsurance considered to be exempt from the Access to Public Records Act by virtue of R.I. Gen. Laws § 38-2-2(4)(i)(B), therefore, an insurer may request that this portion of their filing be retained as confidential.

E.Insurers may not continue to use forms and rates previously approved which are not in compliance with this Part and R.I. Gen. Laws § 27-76-2.

F.Residential property filings falling under this Part may not be made under R.I. Gen. Laws § 27-6-8.1 (Flex Rating Statute).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.10 Surplus Lines Insurance and Insurance Producers

A.The provisions of this Part and R.I. Gen. Laws § 27-76-1 et seq. do not apply to residential property insurance issued by approved surplus lines insurers.

B.Upon policy renewal insurance producers and surplus line brokers should review existing surplus lines business to determine if it qualifies for the voluntary market or the RI FAIR Plan Part 11 of this Subchapter if available coverage meets the customer’s needs.

C.Insurance producers should reach out to their customers to fully explain the coverages and exclusions and assist the insured in selecting the best product for their circumstances.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.11 Mediation Program

A.Following a hurricane, the Department may issue a Bulletin that subjects all claims under personal lines insurance policies that occurred as a result of damage to residential property caused by a specific hurricane to nonbinding mediation at the election of the insured in accordance with this Part.

1.A Bulletin announcing of the establishment of a mediation program will be related to a specific hurricane and will be posted on the Department’s website and sent to all persons who have requested notice of insurance division announcements.

2.The decision as to whether to announce a mediation program due to a specific hurricane will be determined in part by the number and nature of claims in Rhode Island.

3.The Department may announce that the mediation program will include claims to a single property caused by more than one hurricane in twelve (12) month period.

4.Flood insurance claims insured through the National Flood Insurance Program (“NFIP”) pursuant to 42 U.S.C. § 4011 et seq. will not be available for participation in the mediation program.

B.Definitions. For purposes of this section the following terms shall have the following meanings:

1.“Administrator” means the entity administering the mediation program as designated by the Department by Bulletin with regard to a specific hurricane. The Department may administer the program itself or with the assistance of other governmental agencies or may enter into a contract with an outside vendor or any combination of these alternatives.

2.“Claim” means an open and unresolved dispute between an insurer and an insured of a personal lines insurance policy arising out of damage to residential property caused by a hurricane and relating to a material issue of fact, except for a dispute with respect to:

a.coverage under the insurance policy;

b.the amount in controversy is less than an amount specified by the Department in the Bulletin establishing the mediation program;

c.a loss has been incurred that was not related to the hurricane; or

d.the denial is based on the nonexistence of the policy at the time of the loss;

3.“Days” means business days.

4.“Insurer” means an insurance company authorized to transact the business of insurance in Rhode Island, a surplus lines insurer transacting business in Rhode Island, the Rhode Island FAIR Plan and a risk retention group operating in Rhode Island.

5.“Mediation” means a procedure in which a mediator facilitates communication between the parties concerning the matters in dispute and explores possible solutions to promote reconciliation, understanding and settlement.

6.“Mediator” means an individual approved by the Department to mediate claims pursuant to this Part.

7.“Parties” means the insurer and the insured.

C.General Requirements

1.The mediation program shall not be operative until issuance of the Department’s Bulletin advising of same. The mediation program is not intended to be a substitute for or an appeal from the normal claims process and, as such, the Department will not activate the program until a sufficient period of time, at least ninety (90) days, has passed since the occurrence of the hurricane.

2.All insureds with open and unresolved claims against insurers arising from the designated hurricane may request a mediation conference pursuant to the procedures described below and any additional technical procedures to be established by the Department and announced in the Bulletin establishing the mediation program.

3.Participation in the mediation program by insureds is voluntary and it is their option to request a mediation conference.

4.Insurers licensed to transact business in Rhode Island and the Rhode Island FAIR Plan Part 11 of this Subchapter shall be required to participate in the mediation program and resulting mediation conferences. Surplus lines insurers and risk retention groups may elect whether or not to participate in such mediation conferences on a case-by-case basis.

5.When a mediation program has been activated by the Department under this Part, insurers (other than surplus lines insurers and risk retention groups) shall provide written notice to insureds with open and unresolved claims arising out of damage to residential property caused by a hurricane of the opportunity to request a mediation conference and the process to request a mediation conference, as provided herein. A sample notice for issuance to insureds shall be provided as an attachment to the Bulletin activating the mediation program.

6.Unless otherwise provided herein, the fees of the mediator and the Administrator shall be borne by the insurer, including surplus lines and risk retention groups that opt to participate in the mediation program. All other mediation costs, fees, or expenses shall be borne by the party incurring such costs, fees, or expenses unless otherwise provided in a settlement agreement.

7.The Department shall act as an Administrator for the program alone or with the assistance of other state agencies or may select a private party to act as Administrator on its behalf. The selection of an Administrator along with detailed contact and fee information will be included in the Bulletin issued to establish the mediation program for a particular hurricane.

D.Requests for Mediation

1.Insureds shall be able to request mediation conferences by written request transmitted to the Administrator as detailed in the Bulletin establishing the mediation program. The insured may only request one mediation for each claim with all open and disputed issues related to the claim included in the mediation.

2.Requests for mediation by insureds shall include the following information:

a.Name, address, and daytime telephone number of the insured and location of the property (if applicable and if different from address of insured);

b.The claim number and policy number for the insured at issue;

c.A brief description of the nature of the dispute;

d.The name of the insurer and any contact person at the insurer if known to the insured; and

e.Information with respect to any other policies of insurance that may provide coverage of the insured property for named perils such as flood or windstorm.

3.Upon receipt of a request for mediation, the Administrator shall review same to determine whether the matter satisfies the definition of “claim” above.

4.After review, the Administrator shall notify the insured and the insurer within three (3) days of receipt of the request for mediation that either:

a.the request for a mediation conference is rejected and specify the reason for the rejection, or

b.the request has been accepted. If the insurer is a surplus lines insurer or a risk retention group, the Administrator shall include in the notice a request that the insurer advise the Administrator whether it will participate in a mediation conference within five (5) days of the insurer’s receipt of the notice.

E.Scheduling of Mediation Conferences and Mediator Requirements or Disqualification Requests:

1.If the mediation request is accepted, the Administrator shall select a mediator and schedule the mediation conference so as to limit the travel and expense to the parties. The Administrator will notify each party of the date, time and place of the mediation conference at least ten (10) days prior to the date of the conference, unless a shorter period is agreed to by the parties.

2.All mediation conferences shall be scheduled no later than 30 days after receipt of a request for mediation if deemed eligible for participation in the Mediation Program by the Administrator.

3.The Department will establish a list of mediators prior to the issuance of the Bulletin establishing the mediation program. In doing so the Department shall look to the list of mediators utilized by the Rhode Island Superior Court mediation program and shall consider the objectivity and qualifications of the mediators. Qualifications shall include consideration of experience with insurance claims.

4.A party may move to disqualify a mediator for good cause at any time. The request shall be directed to the Administrator if the grounds are known prior to the mediation conference. Good cause includes a conflict of interest between a party and the mediator, inability of the mediator to handle the conference competently, or other reasons that would reasonably be expected to impair the conference.

5.The Department may implement a public outreach program before, during or after the mediation is announced to assist consumers in an understanding of the mediation process.

F.Conduct of Mediation Conferences:

1.The mediator shall provide each party with the opportunity to present their side of the controversy.

2.Every effort shall be made by the mediator to include all issues between the parties in the mediation rather than engage in piecemeal consideration of the issues.

3.Parties may present relevant documents and bring individuals with knowledge of the issues to the mediation conference, such as adjusters, appraisers and contractors. The parties will notify each other and the mediator of the person(s) attending the mediation and the documents to be provided to the mediator five (5) days prior to the date scheduled for the mediation.

4.The mediation will be scheduled for three (3) hours of meeting time. Under extraordinary circumstance and with the agreement of the parties the mediator may engage in a longer mediation or schedule a second meeting.

5.The mediator may meet with the parties separately, encourage meaningful communications and negotiations, and otherwise assist the parties in reaching a settlement.

6.The representative of the insurer attending the mediation conference shall bring a copy of all relevant portions of the policy and the claims file to the conference. He or she shall possess knowledge of the facts and circumstances of the claim, be knowledgeable of the provisions of the applicable policy and have authority to settle the full amount of the claim and to disburse the settlement amount at the conclusion of the mediation conference.

7.The parties may be represented by counsel or public adjusters at the mediation conference provided that five (5) days’ notice of the representation is provided to the opposing party and the Administrator or assigned mediator.

8.The mediator may terminate the conference if he or she determines that either party is not negotiating in good faith, (e.g. is continuously disruptive, becomes unduly argumentative or adversarial, or otherwise inhibits the negotiations as determined by the mediator).

9.If the parties achieve an agreement on resolution of the claim at the mediation conference, the resolution shall be memorialized and signed by the parties or their representatives. If the resolution includes payment of settlement funds by the insurer to the insured, the insurer shall disburse the settlement amount to the insured and any lienholder(s) as required by the insurer’s business within five (5) days of the settlement agreement, unless both parties agree otherwise.

10.The Department may, at its discretion, have a representative attend and be present at any mediation conference.

G.Post Mediation:

1.The mediation shall be non-binding. However, if a settlement is reached at the mediation conference, the insured shall have three (3) business days within which he or she may rescind any settlement agreement, provided that the insured has not cashed, deposited or otherwise negotiated funds disbursed to him or her for the disputed matters as a result of the mediation conference.

2.If the mediation settlement is rescinded, the insurer is not required to participate in additional mediation on the particular claim under the mediation program.

3.If a settlement agreement is reached and is not rescinded by the insured within three (3) business days as provided above, it shall act as a full and final release of all specific claims that were presented and actually settled at the mediation conference.

4.Mediation conferences shall be confidential. If a settlement agreement is not reached, oral or written statements made during the mediation conference shall not be admissible as evidence in a civil action concerning the claim, except with respect to any proceeding concerning an investigation of insurance fraud. Evidence otherwise admissible in a civil action shall not be excluded merely because it was disclosed during the mediation conference.

H.Mediation Fees and Bills:

1.The fees of the mediator and the Administrator shall be borne by the insurer as provided above unless the insured fails to appear at a scheduled mediation conference and fails to have good cause for the failure to appear. Good cause shall consist of severe illness, injury or other unforeseen and uncontrollable emergency that could not have been reasonably remedied prior to the conference. If the insured fails to present good cause for a failure to appear at the mediation conference, then the costs of the cancelled mediation conference and any rescheduled conference shall be split evenly between the parties.

2.The Administrator shall submit a bill to the insurer for the Administrator and mediator fees of each mediation conference. At the discretion of the Administrator and with the consent of the insurer, alternate billing arrangements are permissible, such as monthly or bulk billings.

3.The bill to the insurer shall be itemized and shall conform to the fee structure set forth in the Department’s Bulletin establishing the Mediation Program.

I.Mediation Report

1.The mediator shall submit a report to the Administrator detailing data identified by the Department in its Bulletin announcing the mediation concerning the outcome of the mediation in a format provided by the Administrator.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.12 Emergency Measures

A.The Insurance Division will utilize the declaration of a catastrophe by the Insurance Services Offices (“ISO”) or its successor organization for purposes of the declaration of emergency measures pursuant to R.I. Gen. Laws § 27-76-6.

B.When ISO declares a catastrophe the Insurance Division may require insurers to take any of the following actions:

1.Allow grace periods for the payment of insurance premiums for a time period established by the Insurance Division;

a.The Department will establish the time period indicated above by considering the severity of the catastrophe and the number and severity of claims.

b.The Department shall order a maximum grace period of 90 days by bulletin. This requirement does not prevent the Department from amending this Part during the grace period to establish a longer grace period.

c.At the end of the grace period insurers may bill insureds that have elected to take advantage of the grace period for the premium accumulated during the grace period as long as the insurer has notified the insured at the time of the request that premium will accumulate during the grace period.

d.Insurers may treat nonpayment of accumulated premium in the same manner as nonpayment of premium under the policy as long as the insurer has notified the insured at the time the request for the grace period is requested that the premium will be due upon expiration of the grace period or at whatever longer interval is established by the insurer.

2.Suspending performance of other duties under the policy for persons displaced by the catastrophic event.

a.The insureds duty under the policy to mitigate damages shall not be excused.

b.The Department will determine what duties will be suspended by consideration of the severity of the catastrophe and the number and severity of claims in Rhode Island.

c.The Department will notify insurers of the exact duties for a specific catastrophe by issuance of a bulletin or industry alert.

3.Suspension of cancellations and non-renewals of insurance policies for a time period established by the Insurance Division;

a.The Department will establish the time period by taking into consideration the severity of the catastrophe and the number and severity of claims.

b.The Department shall order a maximum period of 90 days by bulletin.

c.This requirement does not prevent the Department from moving to amend this Part to establish a longer grace period.

d.This provision will not apply to cancellations that were sent out prior to the hurricane but which had not yet become effective on the date of the occurrence.

4.The Department may establish additional emergency measures depending upon the circumstances of the catastrophe. In such a circumstance the Department will, at the same time the bulletin or industry alert establishing the requirement is issued, begin the process of amending this Part to solicit comment on the emergency requirements.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.13 Severability

If any provision of this Part or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Part which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Part are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-13 § 13.14 Property Insurance and Weather Related Claims

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-10-03 to 01/04/2022
Amendment — effective from 2013-10-03 to 10/03/2013
Amendment — effective from 2009-11-23 to 10/03/2013
Technical Revision — effective from 2008-08-24 to 11/23/2009
Adoption — effective from 2008-08-24 to 08/24/2008
EMERGENCY RULE Adoption — effective from 2008-04-30 to 08/24/2008

230-RICR-20-05-14 Notice of Material Changes upon Renewal of Personal Motor Vehicle, Homeowner and Residential Fire Insurance

230-RICR-20-05-14 § 14.1 Authority

This Regulation is promulgated pursuant to R.I. Gen. Laws §§ 27-76 and 27-8-11.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-07-01 to 01/04/2022
Technical Revision — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2008-08-06 to 07/01/2015
EMERGENCY RULE Amendment — effective from 2008-04-30 to 08/06/2008
Periodic Refile — effective from 2001-12-19 to 08/06/2008

230-RICR-20-05-14 § 14.2 Applicability

This Regulation shall apply to the renewal of (1) personal lines auto insurance, (2) homeowners insurance, and (3) residential fire insurance, or any components thereof. This Regulation requires notification to insureds upon policy renewal of any coverage reductions, elimination or increased deductibles unless the change was requested by the insured.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-07-01 to 01/04/2022
Technical Revision — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2008-08-06 to 07/01/2015
EMERGENCY RULE Amendment — effective from 2008-04-30 to 08/06/2008
Periodic Refile — effective from 2001-12-19 to 08/06/2008

230-RICR-20-05-14 § 14.3 Definitions

A.“Expiration date” means the date upon which coverage under a policy ends or, for a policy written for a term longer than one (1) year or with no fixed expiration date, each annual anniversary date of such policy.

B.“Insurer” means an individual insurer or an insurance group. For example, if an insured is transferred from one insurer to another within an insurance group, the notice requirements of this regulation apply.

C.“Material Change” means any coverage reductions, elimination or increased deductibles not made at the request of the insured.

D.“Renewal” or “to renew” means the issuance of, or the offer by an insurer to issue, a policy succeeding a policy previously issued and delivered by the same insurer, or the issuance of a certificate or notice extending the term of an existing policy for a specified period beyond its expiration date.

E.“Writing” means any writing including electronic writings if the parties have agreed to conduct the transaction by electronic means in accordance with R.I. Gen. Laws § 42-127.1-1.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-07-01 to 01/04/2022
Technical Revision — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2008-08-06 to 07/01/2015
EMERGENCY RULE Amendment — effective from 2008-04-30 to 08/06/2008
Periodic Refile — effective from 2001-12-19 to 08/06/2008

230-RICR-20-05-14 § 14.4 Notice of Material Changes upon Renewal

A.Upon an offer to renew, an insurer shall provide, at least thirty (30) days prior to the expiration of the policy, written notice of any Material Change in policy to the named insured. The notice must be prominent, in clear and unambiguous language and must fully disclose all details of the change.

B.The notice must be included in or sent at the same time as the policy issuance or renewal package.

C.The notice shall itemize and describe the Material Change.

D.The policyholder shall be notified that the policy renewal contains the "NOTICE OF REDUCTION IN COVERAGE" by one of the following manners:

1.By mailing the "NOTICE OF REDUCTION IN COVERAGE" separate from the renewal policy package mailing;

2.By printing "NOTICE OF REDUCTION IN COVERAGE ENCLOSED on the policy renewal package envelope and including said reductions in the first few pages of the renewal policy package;

3.By printing "NOTICE OF REDUCTION IN COVERAGE ENCLOSED" in the first few pages of the renewal policy package;

4.If the renewal policy package is made available by email, the email notifying the policyholder of the renewal shall contain a statement that the policy contains a “NOTICE OF REDUCTION IN COVERAGE” and such reductions shall be in the first few pages of the renewal policy package.

E.§ 14.4 of this Part shall not apply to a material change requested by the insured, including changes requested by the insured at the time of application that would typically occur at the renewal date for as long as the policy is in force, such as inflation coverage adjustment features and other similar policy elements.

1.There is no exception to notice of hurricane deductibles under R.I. Gen. Laws § 27-76. Therefore, even if the introduction of or the change to a hurricane deductible is requested by the insured, notice as described above must still be given.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-07-01 to 01/04/2022
Technical Revision — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2008-08-06 to 07/01/2015
EMERGENCY RULE Amendment — effective from 2008-04-30 to 08/06/2008
Periodic Refile — effective from 2001-12-19 to 08/06/2008

230-RICR-20-05-14 § 14.5 Failure to Comply

If an insurer fails to provide notice in accordance with this Regulation, the coverage provided to the named insured in the expiring policy shall remain in effect, without the coverage modification, until notice is provided or until the effective date of replacement coverage obtained by the named insured, whichever occurs first regardless of the policy language. For the purposes of this Regulation, the notice period begins on the date notice is given pursuant to § 14.4 of this Part. If the named insured elects not to renew, any earned premium for the period of extension of the terminated policy shall be calculated pro rata at the lower of the current or previous year’s premium. If the insured accepts the renewal, the material changes of which the insured was notified in accordance with this Regulation shall be effective on the renewal date.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-07-01 to 01/04/2022
Technical Revision — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2008-08-06 to 07/01/2015
EMERGENCY RULE Amendment — effective from 2008-04-30 to 08/06/2008
Periodic Refile — effective from 2001-12-19 to 08/06/2008

230-RICR-20-05-14 § 14.6 Proof of Notice

An insurer shall be responsible for ensuring that a notice of material changes is provided to the named insured as provided in this regulation and shall be able to demonstrate that such notice was provided.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-07-01 to 01/04/2022
Technical Revision — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2008-08-06 to 07/01/2015
EMERGENCY RULE Amendment — effective from 2008-04-30 to 08/06/2008
Periodic Refile — effective from 2001-12-19 to 08/06/2008

230-RICR-20-05-14 § 14.7 Conflicts

To the extent that this Regulation conflicts with existing regulation(s), the notice of material changes requirements enumerated herein shall apply.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-07-01 to 01/04/2022
Technical Revision — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2008-08-06 to 07/01/2015
EMERGENCY RULE Amendment — effective from 2008-04-30 to 08/06/2008
Periodic Refile — effective from 2001-12-19 to 08/06/2008

230-RICR-20-05-14 § 14.8 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-07-01 to 01/04/2022
Technical Revision — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2015-07-01 to 07/01/2015
Amendment — effective from 2008-08-06 to 07/01/2015
EMERGENCY RULE Amendment — effective from 2008-04-30 to 08/06/2008
Periodic Refile — effective from 2001-12-19 to 08/06/2008

230-RICR-20-05-15 Use of Credit - Extraordinary Life Events

230-RICR-20-05-15 § 15.1 Authority

This regulation is promulgated in accordance with R.I. Gen. Laws Chapters 27-6, 27-9 and 27-44.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-07-01 to 01/04/2022
Adoption — effective from 2011-07-01 to 07/01/2011

230-RICR-20-05-15 § 15.2 Scope

This Part shall apply to all insurers that issue homeowners and/or private passenger automobile insurance to residents of Rhode Island. An insurer that chooses to utilize insurance scores in the underwriting and rating of these policies must comply with the requirements of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-07-01 to 01/04/2022
Adoption — effective from 2011-07-01 to 07/01/2011

230-RICR-20-05-15 § 15.3 Purpose

The purpose of this Part is to establish guidelines regarding insurer’s use of insurance scores in underwriting and rating of homeowners and/or private passenger automobile insurance when a consumer experiences an extraordinary life event as defined in this Part and/or to address the absence of or insufficient credit history for an applicant or insured.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-07-01 to 01/04/2022
Adoption — effective from 2011-07-01 to 07/01/2011

230-RICR-20-05-15 § 15.4 Definitions

A.As used in this Part:

1.“Consumer” means either an applicant for insurance or an existing insured.

2.“Department” means the Insurance Division of the Department of Business Regulation.

3.“Extraordinary Life Event” means an event identified in § 15.6 of this Part that directly influences a consumer’s credit history.

4.“Homeowners Insurance” means any personal lines insurance policy providing coverage to a domicile.

5.“Insurance Score” means a number, rating or any categorization that is derived from an algorithm, computer application, model or other process that is based in whole or in part on credit history for the purposes of predicting the future insurance loss experience of an individual applicant or insured.

6.“Private Passenger Automobile” means any vehicle insured by a personal automobile insurance policy.

7."Renewal" or "to renew" means the issuance and delivery by an insurer of a policy superseding at the end of the policy period a policy previously issued and delivered by the same insurer, or the issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term; provided, however, that any policy with a policy period or term of less than twelve (12) months shall for the purpose of this section be considered as if written for a policy period or term of twelve (12) months. Provided, further, that for purposes of this Part any policy written for a term longer than one (1) year or any policy with no fixed expiration date shall be considered as if written for successive policy periods or terms of one (1) year and any termination by an insurer effective on an anniversary date of such policy shall be deemed a failure to renew.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-07-01 to 01/04/2022
Adoption — effective from 2011-07-01 to 07/01/2011

230-RICR-20-05-15 § 15.5 Absence of or Insufficient Credit History

A.An insurer using an insurance score for underwriting and rating of homeowners and/or private passenger automobile insurance must comply with the following conditions:

1.If an insurer issuing or delivering a policy is unable to obtain credit history from a consumer report or in cases where an insured or applicant has insufficient credit history to produce an insurance score, the insurer shall underwrite, tier, or rate the individual risk in one of the following ways:

a.as if the risk received a neutral or average insurance score, as defined by the insurer,

b.by excluding the use of insurance score as a factor and using only other underwriting, tiering, or rating criteria; or

c.in accordance with established underwriting guidelines or filed tiering or rating criteria.

2.The application and definition of a neutral or average insurance score; the manner in which credit history is excluded; and the use of other underwriting, tiering, or rating criteria are subject to the Department’s review and approval. Any such established underwriting guidelines or filed tiering or rating rules shall consider other actuarially justified factors associated with the risk in addition to the inability to obtain credit history or the insufficiency of the credit history.

3.The absence of or inability to obtain an insurance score or insufficient credit history does not include situations where an applicant or insured refuses to allow the insurer access to the customer’s credit history. Insurers are not required to provide a quote, or issue or renew a policy should a customer or existing insured refuse to provide access to a customer’s credit history.

B.The provisions of this Part are in addition to the requirements of R.I. Gen. Laws §§ 27-6-53 and 27-9-56 and Parts 2 and 3 of this Subchapter where applicable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-07-01 to 01/04/2022
Adoption — effective from 2011-07-01 to 07/01/2011

230-RICR-20-05-15 § 15.6 Extraordinary Life Events

A.Notwithstanding any other law or regulation, an insurer that uses insurance scores shall, on written request from an applicant for insurance coverage or an insured, provide reasonable exceptions to the insurer's rates, rating classifications, company or tier placement, or underwriting rules or guidelines for a consumer who has experienced and whose credit history has been directly influenced by any of the following events:

1.Catastrophic event, as declared by the federal or state government;

2.Serious illness or injury, or serious illness or injury to an immediate family member;

3.Death of a spouse, child, or parent;

4.Divorce or involuntary interruption of legally-owed alimony or support payments;

5.Identity theft;

6.Temporary loss of employment for a period of 3 months or more, if it results from involuntary termination;

7.Military deployment overseas; or

8.Other events, as determined by the insurer

B.If an applicant or insured submits a request for an exception as set forth in § 15.6(A) of this Part, an insurer may, in its sole discretion:

1.Require the consumer to provide reasonable written and independently verifiable documentation of the event. Such documentation may be submitted electronically;

2.Require the consumer to demonstrate that the event had direct and meaningful impact on the consumer’s credit history; and/or

3.Require that the request from the consumer be made no more than 60 days from the date of the application for insurance or the policy renewal;

C.§ 15.6(B) of this Part is not mandatory. Insurers may grant the exception whether or not the consumer provides the information allowed in § 15.6(B) of this Part. Insurers may also grant an exception even if the initial request for an exception is not in writing or where the consumer asks for consideration of repeated events or the insurer has considered the event previously.

D.Notice requirements. Insurers are required to establish internal procedures for notifying an applicant or insured of the availability of Extraordinary Life Event exceptions as provided for in above § 15.6(A) of this Part, including customer notices. These notices shall be provided by the insurer any time the insurer utilizes a insurance score which has an adverse effect on the insureds rating as part of the policy issuance and/or renewal process. This notice corresponds to and shall be sent under the same conditions as the Fair Credit Reporting Act adverse action notices. Notices are not required to be filed with the Department for approval.

E.If the insurer grants an exception, an insurer may consider only credit history not affected by the event if such score can be reasonably recalculated, or shall assign a neutral or average insurance score as defined by the insurer and subject to the Department’s review and approval.

F.The provisions of this Part are in addition to the provisions provided for in R.I. Gen. Laws §§ 27-6-53 and 27-9-56 and Parts 2 and 3 of this Subchapter where applicable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-07-01 to 01/04/2022
Adoption — effective from 2011-07-01 to 07/01/2011

230-RICR-20-05-15 § 15.7 Policy Forms, Rules and Rates

Insurers are required to review existing policy forms, rules and rates and bring all filings into compliance with the provisions of this Part. Revised filings must be submitted to the Department via SERFF no later than April 1, 2011. Underwriting guidelines are not required to be filed but may be requested by the Department. The insurer may request that the documents produced be accorded treatment under R.I. Gen. Laws § 38-2-2(4)(B).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-07-01 to 01/04/2022
Adoption — effective from 2011-07-01 to 07/01/2011

230-RICR-20-05-15 § 15.8 Severability

If any provision of this Part or the application thereof to any person or circumstance is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Part which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Part are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-07-01 to 01/04/2022
Adoption — effective from 2011-07-01 to 07/01/2011

Subchapter 10 Medical Malpractice Insurance

230-RICR-20-10-1 Medical Malpractice Joint Underwriting Association (formerly Insurance Regulation 21)

230-RICR-20-10-1 § 1.1 Authority

This Regulation is promulgated pursuant to R.I. Gen. Laws §§ 27-16-2.6, 42-14-2.3, 42-14.1-1 and 2 and 42-35-3.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-11-28 to 01/04/2022
Amendment — effective from 2016-03-17 to 11/28/2017
Amendment — effective from 2013-11-24 to 03/17/2016
Amendment — effective from 2007-08-15 to 11/24/2013
Amendment — effective from 2001-12-26 to 08/15/2007

230-RICR-20-10-1 § 1.2 Applicability and Purpose

A.The purpose of this Part is to provide for medical malpractice insurance in Rhode Island including a residual market for those risks that are unable to procure coverage from competitive market insurers.

B.By this Part the Department implements R.I. Gen. Laws § 42-14.1-2(a) requiring licensed healthcare facilities and medical or dental professionals to obtain and be covered by professional liability insurance for claims of bodily injury or death arising out of malpractice, professional error, or mistake.

C.By this Part the Department implements the provisions of R.I. Gen. Laws § 42-14.1-2 allowing certain entities to self-insure. All persons and entities not granted permission to self-insure by this Part must be covered by professional liability insurance issued by a licensed insurer, or an approved surplus lines insurer or through a program established by a hospital affiliated with an accredited medical school in compliance with R.I. Gen. Laws § 27-16-2.6.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-11-28 to 01/04/2022
Amendment — effective from 2016-03-17 to 11/28/2017
Amendment — effective from 2013-11-24 to 03/17/2016
Amendment — effective from 2007-08-15 to 11/24/2013
Amendment — effective from 2001-12-26 to 08/15/2007

230-RICR-20-10-1 § 1.3 Definitions

A.As used in this Regulation:

1.“Active Health Care Professional” means a health care professional who, as part of his/her professional practice, provides treatment directly or indirectly to patients in exchange for remuneration.

2.“Department” means the Rhode Island Department of Business Regulation, Insurance Division.

3."Director" means the Director of the Department of Business Regulation of the State of Rhode Island or his or her designee.

4."Health Care Facility" means, for purposes of §§ 1.5, 1.6 and 1.7 of this Part, any licensed health care facility as defined by R.I. Gen. Laws § 23-17-2.

5."Incidental coverage" means any other type of liability insurance covering activities directly related to the continued and efficient delivery of health care that would normally be available and underwritten under a comprehensive general liability form of insurance, except liabilities that may arise out of the ownership or use of any motor vehicles and workers compensation insurance.

6."Medical Malpractice Insurance" means insurance coverage against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death or injury of any person as the result of negligence or malpractice in rendering or failing to render professional service by healthcare facilities and medical or dental professionals.

7.“MMJUA” means the Medical Malpractice Joint Underwriting Association of Rhode Island established pursuant to the provisions of this Part.

8."Medical or Dental Professional" means, for purposes of R.I. Gen. Laws § 42-14.1-2 and §§ 1.5, 1.6 and 1.7 of this Part, any physician or dentist licensed under the General Laws of Rhode Island.

9."Net direct premiums" means gross direct premiums written on personal injury liability insurance (as defined in R.I. Gen. Laws § 27-9-2 ) including the liability component of multiple peril package policies as computed by the Department, less all premiums and dividends credited or returned to policyholders or the unused or unabsorbed portions of premium deposits.

10.“NAIC” means the National Association of Insurance Commissioners.

11."Provider of Health Care" means, for purposes of § 1.4 of this Part means

a.any licensed physician, hospital or other licensed health care provider as defined in the General Laws of Rhode Island; and

b.any other group, type or category of individual or health related facility that the Department determines, with or without a hearing, to be necessary for the continued delivery of health care in Rhode Island.

12.“Teaching Hospital” means a hospital affiliated with an accredited medical school which has the right to implement and maintain an indemnity/self-insurance program as recognized by R.I. Gen. Laws § 27-16-2.6.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-11-28 to 01/04/2022
Amendment — effective from 2016-03-17 to 11/28/2017
Amendment — effective from 2013-11-24 to 03/17/2016
Amendment — effective from 2007-08-15 to 11/24/2013
Amendment — effective from 2001-12-26 to 08/15/2007

230-RICR-20-10-1 § 1.4 Medical Malpractice Joint Underwriting Association of Rhode Island

A.Creation

1.The MMJUA is hereby created, consisting of all insurers authorized to write, within this state on a direct basis, personal injury liability insurance as defined in R.I. Gen. Laws § 27-9-2, including insurers covering such perils in multiple peril package policies. Every such insurer shall be a member of the MMJUA and shall remain a member as a condition of its authority to continue to transact such kinds of insurance in this State.

2.The purpose of the MMJUA shall be to continue to provide a market for medical malpractice insurance on a self-supporting basis.

3.The MMJUA shall continue to underwrite medical malpractice insurance without interruption under the programs approved under Emergency Regulation XXI (21) (“Emergency Regulation”) promulgated on June 16, 1975, including all policies and obligations assumed thereunder. The MMJUA shall also be authorized to underwrite incidental coverages for any provider of health care but only if such provider of health care shall be insured by the MMJUA for medical malpractice.

4.The MMJUA need not be the exclusive agency through which medical malpractice insurance may be written in this state. Any insurer authorized to write medical malpractice insurance in this State or any approved surplus lines insurer shall be allowed to do so subject to the provisions of Rhode Island General Laws and promulgated regulations.

5.The MMJUA shall, pursuant to the provisions of this Part and the plan of operation with respect to medical malpractice insurance, have the power on behalf of its members:

a.to issue, or to cause to be issued, policies of insurance to applicants, including incidental coverages and subject to limits as specified in the plan of operation but not to exceed one (1) million dollars for each claimant under one (1) policy in any one (1) year and three (3) million dollars for all claimants under one (1) policy in any one (1) year;

b.to underwrite such insurance and to adjust and pay losses with respect thereto, or to appoint service companies to perform those functions;

c.to assume reinsurance from its members; and

d.to reinsure its risks in whole or in part.

B.Plan of Operation

1.The plan of operation of the MMJUA submitted to the Department under the Emergency Regulation shall stand as approved for the MMJUA and shall serve as the accepted plan for the purpose of this Part subject to § 1.4(H) of this Part relating to directors.

2.The plan of operation shall continue to provide for economic, fair and non-discriminatory administration and for the prompt and efficient availability of medical malpractice insurance and incidental coverages and shall contain other provisions including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the MMJUA, assessment of members to defray losses and expenses, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, appointment of servicing carriers or other servicing arrangements and procedures for determining amounts of insurance to be provided by the MMJUA

3.Amendments to the plan of operation may be made by the directors of the MMJUA, subject to the approval of the Department, or shall be made at the direction of the Department.

C.Policy Forms and Rates

1.All policies issued by the MMJUA shall be on an annual basis unless sooner terminated in accordance with the provisions of this Part. All such policies shall be issued subject to the group retrospective rating plan and the stabilization reserve fund authorized by this Part. Policies may be written on a "claims made" or "occurrence" basis. No policy form shall be used by the MMJUA unless it has been filed with and approved by the Department.

2.Cancellation of the MMJUA’s policies shall be governed by the General Laws of Rhode Island, except that the MMJUA may also cancel any of its policies in the event of non-payment of any stabilization reserve fund charges by mailing or delivering to the insured at the address shown on the policy written notice stating when not less than ten (10) days thereafter cancellation shall be effective.

3.The rates, rating plans, rating rules, rating classifications and territories applicable to the insurance written by the MMJUA and statistics relating thereto shall be subject to R.I. Gen. Laws § 27-9-1 et seq., giving due consideration to the past and prospective loss and expense experience for such insurance written and to be written in this state, trends in the frequency and severity of losses, the investment income of the MMJUA, and such other information as the Department may require. All rates shall be on an actuarially sound basis, giving due consideration to the group retrospective rating plan and the stabilization reserve fund, and shall be calculated to be self-supporting.

4.All policies issued by the MMJUA shall be subject to a nonprofit group retrospective rating plan to be approved by the Department under which the final premium for all policyholders of the MMJUA, as a group, will be equal to the administrative expenses, loss and loss adjustment expense and taxes, plus a reasonable allowance for contingencies and servicing. Policyholders shall be given full credit for all investment income, net of expenses and a reasonable management fee on policyholder supplied funds. The standard premium (before retrospective adjustment) for each policy issued by the MMJUA shall be established for portions of the policy period coinciding with the MMJUA's fiscal year on the basis of the MMJUA’s rates, rating plan, rating rules, rating classifications and territories then in effect. The maximum final premium for all policyholders of the MMJUA, as a group shall be limited as provided in § 1.4(E) of this Part.

5.The Department shall examine the business of the MMJUA as set forth in § 1.4(K) of this Partto make certain that the group retrospective rating plan is being operated in a manner consistent with this Part. If the Department finds that it is not being so operated, the Department shall issue an order to the MMJUA, specifying in what respects its operation is deficient and stating what corrective action shall be taken.

6.The MMJUA shall certify to the Department the estimated amount of any deficit remaining after the stabilization reserve fund has been exhausted in payment of the maximum final premium for all policyholders of the MMJUA. Within sixty (60) days after such certification the Department shall authorize the members of the MMJUA to commence recoupment of their respective shares of the deficit by one of the following procedures:

a.applying a surcharge to be determined by the MMJUA at a rate not to exceed one (1%) percent of the annual premiums on future policies affording those kinds of insurance which form the basis for their participation in the MMJUA, under procedures established by the MMJUA, or

bdeducting their share of the deficit from past or future taxes due the State of Rhode Island.

7.The MMJUA shall amend the amount of its certification of deficit to the Department as the values of its incurred losses become finalized and the members of the MMJUA shall amend their recoupment procedure accordingly. This Section and any authorizations hereunder shall only apply to medical malpractice insurance and no other forms of insurance.

8.In the event that sufficient funds are not available for the sound financial operation of the MMJUA, pending recoupment as provided in § 1.4(C)(6) of this Part, all members shall, on a temporary basis contribute to the financial requirements of the MMJUA in the manner provided for in § 1.4(G) of this Part. Any such contribution shall be reimbursed to the members by recoupment as provided in § 1.4(C)(6) of this Part.

D.Stabilization Reserve Fund

1.There is hereby created a Stabilization Reserve Fund. The Fund shall be administered by the Department. All investment income of the Stabilization Reserve Fund, less all expenses of administering the Fund, shall be credited annually to the Underwriting Fund. All funds received by the Stabilization Reserve Fund, together with all income therefrom, less all expenses of administering the Fund, are to be held in trust and used to replenish the Underwriting Fund if and when necessary in the sole discretion of the Department to enable the Underwriting Fund to pay its claims and expenses and to pay return premiums under the Group Retrospective Rating Plan. Policyholders shall be given full credit for all Stabilization Reserve Fund income, net of expenses, under the Group Retrospective Rating Plan. Funds will be transferred from the Stabilization Reserve Fund to the Underwriting Fund only for the following purposes:

a.To reimburse the Underwriting Fund for any expenses paid by the Underwriting Fund which in the sole discretion of the Department are properly chargeable to the Stabilization Reserve Fund;

b.To replenish the Underwriting Fund if and when necessary in the sole discretion of the Department to enable the Underwriting Fund to pay its claims and expenses and return premiums under the Group Retrospective Rating Plan;

c.If any monies remain in the Fund after all retrospective premium charges have been paid, such monies shall be returned to policyholders under procedures authorized by the Department.

E.Group Retrospective Rating Plan

1.This Group Retrospective Rating Plan shall apply to all policies issued by the MMJUA on or after June 16, 1975.

2.Definitions.

a.Actual Surplus means the amount appearing as "Surplus As Regards Policyholders", as determined in accordance with the National Association of Insurance Commissioners ("NAIC") requirements and found in the MMJUA's Annual Statement for the calendar year immediately preceding the Settlement Year.

b.Annual Rating Period means specific policy year inclusive of all Written Premium on MMJUA policies issued or renewed between January 1 and December 31 of the respective year.

c.Authorized Control Level means the generally accepted measure of insurer solvency as established by the NAIC and found in the MMJUA's Annual Statement.

d.Company Action Level means an amount determined by multiplying the Authorized Control Level (found in the MMJUA's Annual Statement) times two (2).

e.Deficit Premium means the amount by which the Final Premium exceeds the Written Premium for such Annual Rating Period.

f.Excess Premium means the amount by which the Written Premium exceeds the Final Premium for such Annual Rating Period.

g.Excess Surplus means the amount by which the Actual Surplus exceeds the Minimum Policyholder Surplus.

h.Final Premium means the balance of Policyholder Experience less Net Investment Income for such Annual Rating Period.

i.Final Settlement means the calculation of the Final Premium for each Annual Rating Period, which shall be made within each Settlement Year.

j.Minimum Policyholder Surplus means an amount equal to the greater of:

1.Seven point five (7.5) times the MMJUA's Company Action Level as set forth in the MMJUA's most recently filed Annual Statement prior to the Settlement Year, or

2.Seven point five (7.5) times the average of the MMJUA's Company Action Level for the five (5) calendar years preceding the Settlement Year.

k.Net Investment Income means the accrued investment income from the Stabilization Reserve Fund and the Underwriting Fund on the Written Premium received during the Annual Rating Period in question. Appreciation and depreciation in the value of securities held in the Stabilization Reserve Fund and the Underwriting Fund shall not be taken into account in the calculation of Net Investment Income.

l.Policyholder Experience means the sum of all administrative expenses, including actual commission, board, bureau and association expenses, general expenses and actual expenses of the MMJUA, taxes, licenses and fees, servicing carrier expense, losses (including paid claims and the estimated amount for unpaid or undetermined claims at the end of the Annual Rating Period) and loss adjustment expenses including all paid and estimated allocated and unallocated adjustment expense.

m.Return Premium means the lesser of the policyholder's Written Premium or the policyholder's proportionate share of Excess Premium for such Annual Rating Period.

n.Settlement Year means the calendar year in which the Final Premium for an Annual Rating Period shall be calculated. The Settlement Year shall occur at the later of: Ten (10) years after the end of each Annual Rating Period or when all reported claims for such Annual Rating Period have been closed.

o.Written Premium: The amount paid by policyholders to the MMJUA for insurance coverage as to each Annual Rating Period.

3.The MMJUA shall return to its policyholders insured during each Annual Rating Period any Excess Premium computed for such Annual Rating Period. Such Excess Premium returns shall be made through the Stabilization Reserve Fund during a Settlement Year.

4.Upon Final Settlement, policyholders in an Annual Rating Period are eligible for a Return Premium only if:

a.There was Excess Premium in such Annual Rating Period;

b.The total of all Excess Premium and Deficit Premium Annual Rating Periods prior to the Settlement Year is positive; and

c.The Actual Surplus exceeds the Minimum Policyholder Surplus.

5.The Return Premium calculated as above shall, upon Final Settlement, be paid promptly by the MMJUA to the Stabilization Reserve Fund or at the direction of the Stabilization Reserve Fund.

6.Premiums returned to the Stabilization Reserve Fund pursuant to § 1.4(E)(5) of this Part, above, shall be paid to the policyholders as soon as practicable after receipt by the Stabilization Reserve Fund.

7.Stabilization reserve funds on policies which have been terminated at the insured's request or otherwise shall be held in trust for a period of ten (10) years from the date of termination and shall be distributed at that time or when all reported claims against the policyholder are closed, whichever is later. Such distributions shall consist of the lesser of the policyholder's original contribution to the Stabilization Reserve Fund or the policyholder's pro rata share of the balance of the Stabilization Reserve Fund at the end of the month preceding the date of distribution. The policyholder's pro rata share of the balance of the Stabilization Reserve Fund shall be determined by multiplying the balance of the Stabilization Reserve Fund as of the end of the month preceding the date of distribution by the ratio of the policyholder's original contributions to such fund to the total original contributions to such fund by all then existing policyholders. Such distributions shall not be made if the balance of the Stabilization Reserve Fund at the end of the month preceding the date of distribution does not exceed Two Million Dollars ($2,000,000), except this stipulation will not apply if the MMJUA has ceased to exist and has no outstanding liabilities.

8.In construing and applying this Part, all provisions shall be construed and applied so as to provide for the equitable return of any surplus funds earned by both funds of the MMJUA from underwriting and investment activities to MMJUA policyholders in accordance with § 1.4(C)(4) of this Part.

F.Procedures

1.Any provider of health care shall, on or after the effective date of the plan of operation, be entitled to apply to the MMJUA for medical malpractice insurance and incidental coverage. Such application may be made on behalf of an applicant by a broker or agent authorized by the applicant.

2.If the MMJUA determines that the applicant meets the underwriting standards of the MMJUA as prescribed in the plan of operation and there is no unpaid, uncontested premium due from the applicant for prior insurance (as shown by the insured having failed to make written objection to premium charges within thirty (30) days after billing), then the MMJUA, upon receipt of the premium or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy or policies of insurance.

G.Participation

1.All insurers which are members of the MMJUA shall participate in its writings, expenses, servicing allowance, management fees and losses in the proportion that the net direct premiums of each such member (excluding that portion of premiums attributable to the operation of the MMJUA) written during the preceding calendar year bears to the aggregate net direct premiums written in this state by all members of the MMJUA. Each insurer's participation in the MMJUA shall be determined annually on the basis of such net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the Department.

H.Directors

1.The MMJUA shall be governed by a board of eleven (11) directors. Seven (7) directors shall represent member companies and be elected annually by cumulative voting by the members of the MMJUA, with each member having one vote. The remaining four (4) directors shall be appointed annually by the Department. All four (4) directors shall be representatives of health care providers nominated by the Rhode Island Medical Society and the Hospital Association of Rhode Island. The Director of the Department, or his or her designee, serves on the Board in an ex officio capacity. The annual meeting of the board of directors shall be the anniversary of the original enactment of this Part. Directors shall serve until their successors are duly elected or appointed as the case may be.

I.Appeals and Judicial Reviews

1.Any applicant to the MMJUA, or any person insured pursuant to this Part, or their representatives, or any affected insurer, may appeal to the Director within thirty (30) days after any ruling, action or decision by or on behalf of the MMJUA, with respect to those items the plan of operation defines as appealable matters.

2.All orders of the Director made pursuant to this Part shall be subject to judicial review as provided in the R.I. Gen. Laws § 42-35-15.

J.Annual Statements

1.The MMJUA shall file in the office of the Department annually on or before the first day of March, a statement which shall contain information with respect to its transactions, condition, operations and affairs during the preceding year. Such statement shall contain such matters and information as are prescribed and shall be in such form as is approved by the Department. The Department may, at any time, require the MMJUA to furnish additional information with respect to its transactions, conditions or any matter connected therewith considered to be material and of assistance in evaluating the scope, operation and experience of the MMJUA.

K.Examinations

1.It is the duty of the Department, at least every five (5) years, to make an examination of the financial condition and methods of doing business of the MMJUA. The examination shall be performed, and the associated costs shall be borne by the MMJUA, in accordance with R.I. Gen. Laws § 27-13.1-1 et seq.

L.Privileged Communications

1.There shall be no liability on the part of, and no cause of action of any nature shall arise against the MMJUA, the Director or his or her authorized representatives or any other person or organization, for any statements made in good faith by them during any proceedings or concerning any matters within the scope of this Part.

M.Public Officers or Employees

1.No member of the board of directors of the Stabilization Reserve Fund who is otherwise a public officer or employee shall suffer a forfeiture of his or her office or employment or any loss or diminution in the rights and privileges appertaining thereto, by reason of membership on the board of directors of the Stabilization Reserve Fund.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-11-28 to 01/04/2022
Amendment — effective from 2016-03-17 to 11/28/2017
Amendment — effective from 2013-11-24 to 03/17/2016
Amendment — effective from 2007-08-15 to 11/24/2013
Amendment — effective from 2001-12-26 to 08/15/2007

230-RICR-20-10-1 § 1.5 Medical Malpractice Insurance Minimum Limits

A.All healthcare facilities and active medical or dental professionals shall carry medical malpractice insurance coverage with minimum limits of one million dollars ($1,000,000) for claims arising out of the same professional service and three million dollars ($3,000,000) in the aggregate. Medical or dental professionals may also satisfy this requirement by securing indemnification coverage under a program established in compliance with R.I. Gen. Laws § 27-16-2.6 or from a self-insured entity approved by the Department pursuant to § 1.7 of this Part.

B.To qualify under this section the insurance policy must be issued by an insurer licensed to write medical malpractice insurance in Rhode Island or by a surplus lines insurer or by a self-insurer authorized by the Department pursuant to § 1.7 of this Part or the coverage may be provided by an indemnification agreement under a program established in compliance with R.I. Gen. Laws § 27-16-2.6.

C.Any licensed medical or dental professional may comply with this Part by inclusion under a policy of insurance issued to such medical or dental professional’s employer or affiliate. In addition, any licensed medical or dental professional employed by a physician’s practice affiliated with a teaching hospital may comply with this Part by inclusion under an indemnification agreement issued by such teaching hospital under a program established in compliance with R.I. Gen. Laws § 27-16-2.6.

D.All medical malpractice insurance policies shall cover the legal liability of the insured for loss, damage, or expense incident to claims of bodily injury or death arising out of malpractice, professional error, or mistake.

E.Rates for all medical malpractice insurance shall not be excessive, inadequate or unfairly discriminatory and shall be actuarially justified.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-11-28 to 01/04/2022
Amendment — effective from 2016-03-17 to 11/28/2017
Amendment — effective from 2013-11-24 to 03/17/2016
Amendment — effective from 2007-08-15 to 11/24/2013
Amendment — effective from 2001-12-26 to 08/15/2007

230-RICR-20-10-1 § 1.6 Requirements of Medical Malpractice Insurance Policies

A.Insurers issuing medical malpractice insurance policies covering risks which are required to carry medical malpractice insurance by the provisions of R.I. Gen. Laws § 42-14.1-2 shall issue policies that comply with the following minimum requirements. This section does not apply to policies issued excess to a primary policy

1.Policy limits shall be in a minimum of one million dollars ($1,000,000) for claims arising out of the same professional service and three million dollars ($3,000,000) in the aggregate

2.Policies shall not include any deductible in excess of ten thousand ($10,000) per claim.

3.All medical malpractice insurance policies shall cover the legal liability of the insured for loss, damage, or expense incident to claims of bodily injury or death arising out of malpractice, professional error, or mistake.

4.Rates for all medical malpractice insurance shall not be excessive, inadequate or unfairly discriminatory and shall be actuarially justified.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-11-28 to 01/04/2022
Amendment — effective from 2016-03-17 to 11/28/2017
Amendment — effective from 2013-11-24 to 03/17/2016
Amendment — effective from 2007-08-15 to 11/24/2013
Amendment — effective from 2001-12-26 to 08/15/2007

230-RICR-20-10-1 § 1.7 Requirements for Medical Malpractice Self-Insurance

A.In order to qualify to self-insure an entity must either:

1.Qualify as a hospital affiliated with an accredited medical school that satisfies the requirements of R.I. Gen. Laws § 27-16-2.6; or

2.Obtain permission of the Department of Business to self-insure. The following requirements apply to entities seeking permission to self-insure:

a.The entity shall make a filing with the Department fully describing the self-insurance program.

b.The self-insurance program must be provided through a captive insurer or other approved self-insurance vehicle fully licensed and subject to the authority of the Department or other acceptable domiciliary jurisdiction.

c.The coverage provided by the self-insurance vehicle must meet the requirements of § 1.6 of this Part.

d.The entity must agree to file, on an annual basis on or before June 1 of each year, an audited certified financial statement and actuarial projections as to the soundness of its reserving as well as any other financial information requested by the Department.

e.The entity shall notify the Department of its intent to discontinue its self-insurance program ninety (90) days prior to its termination.

f.The entity shall provide whatever further information is requested by the Department.

B.Nothing in this Part shall prevent the self-insurance vehicles from obtaining reinsurance in whole or in part.

C.Employees and Affiliates

1.An entity that obtains permission pursuant to this section may include within that self-insurance program

a.health care facilities which are under common control with the entity, or

b.medical or dental professionals which provide health care services within the scope of their employment by that entity or who have entered into an agreement with the entity to participate in a common indemnity program.

2.An entity that satisfies the requirements of R.I. Gen. Laws § 27-16-2.6 may indemnify employees and affiliates within that program.

D.Nothing in this Part shall prevent the entity from partially insuring a portion of the risk.

1.If a hospital chooses to partially insure and partially self-insure, that fact should be set forth in the annual filing to the Department specifying the portions insured and self-insured.

2.All of the requirements listed in this section must be met for the self-insured portion of the risk.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-11-28 to 01/04/2022
Amendment — effective from 2016-03-17 to 11/28/2017
Amendment — effective from 2013-11-24 to 03/17/2016
Amendment — effective from 2007-08-15 to 11/24/2013
Amendment — effective from 2001-12-26 to 08/15/2007

230-RICR-20-10-1 § 1.8 Severability

If any Section, term, or provision of this Part should be adjudged invalid for any reason, that judgment should not effect, impair, or invalidate any remaining Section, term, or provision, which shall remain in full force and effect.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-11-28 to 01/04/2022
Amendment — effective from 2016-03-17 to 11/28/2017
Amendment — effective from 2013-11-24 to 03/17/2016
Amendment — effective from 2007-08-15 to 11/24/2013
Amendment — effective from 2001-12-26 to 08/15/2007

Subchapter 15 Workers Compensation Insurance

230-RICR-20-15-1 Workers Compensation Group Self Insurance (formerly Insurance Regulation 33)

230-RICR-20-15-1 § 1.1 Authority

This Part is promulgated in accordance with R.I. Gen. Laws Chapter 28-47.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.2 Purpose

The purpose of this Part is to establish procedures to be followed for groups that want to self-insure workers’ compensation risk.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.3 Application Procedure

A.Employers seeking approval to become a group self-insurer pursuant to R.I. Gen. Laws §§ 28-47-1 et seq. shall apply to the Department of Business Regulation (“Department”). The application shall be on a form prescribed by the Department and shall contain answers to all questions. The application shall be filed with the Department not less than thirty (30) days prior to the proposed inception date of the group self-insurance plan.

B.After considering the application and all supporting data, the Department will either grant approval or advise the applicants of the requirements to be met before approval is granted. The applicants shall be given thirty (30) days from the receipt of notice in which to comply with such requirements. Authority to operate the group self-insurer will not become effective until there is proof that all requirements for approval have been met.

C.The applicants may, at the discretion of the Department, be granted additional time to meet the requirements for approval of the application. A request for extension of time shall be made in writing by the applicants to the Department within the initial thirty (30) day compliance period.

D.Upon meeting the requirements for approval, the applicants shall receive a formal certificate approving the group self-insurer. The certificate shall expire one (1) year from the effective date of issuance.

E.The group self-insurer shall submit a renewal application annually, on a form prescribed by the Department, thirty (30) days before expiration of the certificate. Upon receipt of a renewal application, the existing certificate shall be extended until the application is either approved or denied.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.4 Application Requirements

A.The application to the Department shall be accompanied by all of the following:

1.a copy of the by-laws of the group self-insurer which shall include the group self-insurer's assessment and dividend policies.

2.an individual application for membership in the group self-insurer, each member of the group self-insurer applying for coverage as of its inception date;

3.proof that the current financial statements of each member of the group self-insurer at its inception, when taken collectively, show all of the following:

a.that the combined net assets of the members applying for coverage on the inception date are not less than five hundred thousand dollars ($500,000);

b.that they have working capital in an amount establishing the financial strength and liquidity of their businesses when considered collectively;

4.evidence of the financial ability of the group self-insurer to meet its obligations under the Workers' Compensation Act;

5.a listing of the estimated annual premium to be developed by each member of the group self-insurer at its inception date;

6.proof of payment by each member of the group self-insurer at its inception date of not less than twenty five percent (25%) of its estimated annual premium into a designated depository;

7.confirmation of excess insurance in amounts designated by the Department;

8.names, addresses, and current business affiliations of the initial board of trustees and the administrator;

9.proof of all fidelity bonds required by the Department in amounts and form acceptable to him;

10.proof of a surety bond or other acceptable security in an amount and form acceptable to the Department;

11.an indemnity agreement in a form acceptable to the Department jointly and severally binding the group self-insurer and each member thereof for all of the obligations of the group incurred during the period of membership;

12.a breakdown of all projected administrative expenses for the year, both in dollar amounts and as percentages of premium;

13.proof, satisfactory to the Department, that the annual gross premiums of the group self-insurer will be not less than two hundred fifty thousand dollars ($250,000);

14.proof that the group self-insurer has within its own organization ample facilities and competent personnel to service its program with respect to underwriting, industrial safety engineering, claims adjusting, and reporting of loss data or has contracted for the provision of any or all such services.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.5 Security Deposits

A.Each group self-insurer shall be required to post a security deposit with the Department in an amount not less than one hundred thousand dollars ($100,000). The Department may require a greater deposit to secure any potential liability of the group not otherwise funded by a security deposit, premium collections, or excess insurance.

B.The securities acceptable to the Department as a security deposit shall be:

1.savings accounts or certificates of deposit in a duly chartered commercial bank located within the State of Rhode Island and insured through the Federal Deposit Insurance Corporation;

2.share accounts or savings certificates in a duly chartered savings and loan association located within the State of Rhode Island and insured through the Federal Savings and Loan Insurance Incorporation;

3.direct obligations of the United States Treasury such as notes, bonds, or bills which are backed by the full faith and credit of the United States Government;

4.any bond or security issued by the State of Rhode Island and backed by the full faith and credit of the State;

5.surety bonds in a form approved by the Department issued by a corporate surety admitted in the State of Rhode Island or authorized by the Department to transact such business in the State;

6.a financial guarantee endorsement in a form acceptable to the Department issued as part of an acceptable excess issuance contract.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.6 Excess Insurance

A.Each group self-insurer shall maintain excess insurance as follows:

1.specific excess insurance with limits of not less than one million dollars ($1,000,000) per occurrence. Group self-insurers containing businesses with a high risk of multiple injury from a single accident may be required to maintain higher limits. The retention of the required specific excess coverage shall be the retention generally available for group self-insurers with similar exposures and annual premiums;

2.aggregate excess insurance with limits above the aggregate retention level of not less than one million dollars ($1,000,000) or twenty five percent (25%) of the annual premiums of the group self-insurer for the term of the policy, whichever is greater.

B.No contract or policy of excess insurance shall be considered in fulfillment of the group self-insurer's obligations unless such contract or policy complies with all of the following:

1.it is issued by a casualty insurance company admitted in the State of Rhode Island or authorized to write such business within the State;

2.is not cancellable unless written notice by registered or certified mail is given to the other party to the policy and to the Department not less than sixty (60) days before cancellation, by the party desiring to cancel the policy;

3.is automatically renewable at the expiration of the policy period unless written notice by registered or certified mail is given to the other party to the policy and to the Department not less than sixty (60) days before expiration, by the party desiring to not renew the policy;

4.provides that any commutation effected under a commutation clause contained in the contract or policy shall not relieve the underwriter of further liability in respect to claims and expenses unknown at the time of such commutation or in regard to claims apparently closed which may subsequently be revived by and through a competent authority and that in the event the underwriter proposes to redeem any future payment payable as compensation for accidents occurring during the term of the policy by the payment of a lump sum to be fixed as provided in the commutation clause of the policy, not less than sixty (60) days prior notice of such commutation shall be given to the Department by certified mail by the underwriter or its agent. In the event any commutation is effected, the Department shall have the right to require that such sum either be placed in trust for the benefit of the injured employee or employees entitled to such future payment of compensation or be invested in an approved security and deposited with the Department to insure such future payment of compensation to the employee or employees entitled thereto;

5.contains the provision that the Department may order that the monies due under the terms of an excess contract or policy be paid directly to the injured employee or such other parties as the Department determines that it is necessary to insure continued benefit to the injured employee.

C.Copies of the complete policies of excess insurance shall be filed with the Department together with certification that such policies fully comply with these rules and with the Workers' Compensation Law.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.7 Members - Admission and Termination

A.After the inception date of the group self-insurer, prospective new members shall submit an application for membership to the board of trustees or its administrator. The trustees or administrator shall approve or deny the application for membership pursuant to the by-laws of the group self-insurer. Membership shall take effect upon approval, and the approved application shall be filed with the Department not more than ten (10) days after approval.

B.Individual members of the group self-insurer shall be subject to cancellation by the trustees pursuant to the by-laws. Cancellation shall not be effective until at least ten (10) days after notice of such cancellation, on prescribed form, has either been filed in the office of the Department or sent by certified or registered letter, return receipt requested, and also served in the same manner upon the member. A member cancelled for reasons other than nonpayment of premium shall be entitled to a hearing before the trustees prior to cancellation.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.8 Premiums

A.The premium collected from each member shall be computed by applying the appropriate manual rates and rules per payroll code classification by an experience modification factor, such rates and modification factor to be those filed by the National Council on Compensation Insurance, Northeast Region and approved by the Department.

B.In addition to any stock discounts, the trustees of a group self-insurer may offer advance premium discounts to members, subject to the following limitations:

1.For all premium discounts the Department shall be notified in writing of a group self-insurer's intention to offer any premium discounts. Such notice shall be submitted with actuarial and other appropriate supporting documentation.

2.All premium discounts must have the approval of the excess underwriter.

3.For discounts up to fifteen percent (15%); within ten (10) days after the group self-insurer has made or issued a contract or policy at the discounted premium, the group shall notify the Department in writing of this action. Unless this discount is disapproved or additional information is requested by the Department within thirty (30) days after receipt of this notice from the group, the premium discount shall be deemed to be approved.

4.For discounts in excess of fifteen percent (15%); there shall be a waiting period of thirty (30) days from the date that notification is received by the Department before the premium discount becomes effective. This waiting period may be extended for an additional period not to exceed thirty (30) days, if the Department gives written notice to the group within the initial thirty (30) day waiting period. Unless the discount is disapproved or additional information is requested within the waiting period, the premium discount shall be deemed to be approved.

C.Each member shall pay a deposit premium equal to not less than twenty five percent (25%) of its estimated annual premium and for each and every succeeding month thereafter, shall pay premiums based upon estimated payroll for that month.

D.Subject to the approval of the Department, the trustees may adopt a premium payment plan or plans other than that set forth above in § 1.8(C) of this Part, but in no event shall the time for payment be greater than as set forth in § 1.8(C) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.9 Trustees - Trustees Responsibilities and Administration Fiscal Agent

A.To insure stability of the operations of each group self-insurers plan, a board of trustees, elected by the members of the group self-insurer shall be responsible for all operations of the group self-insurer. A trustee shall not be an owner, officer or employee of a business furnishing services to the group self-insurer.

B.The board of trustees of each group shall take all necessary precautions to safeguard the assets of the group including but not limited to all of the following:

1.designation of an administrator or fiscal agent or both to administer the day-to-day affairs of the group self-insurer. The board of trustees may delegate authority for specific functions to the administrator or fiscal agent including but not limited to such matters as: contracting for services, determining the premium charge to and refunds payable to members, investing surplus monies, and approving applications for membership. All delegated authority shall be specifically defined in the by-laws and/or the written minutes of the trustees' meetings and shall be subject to disapproval by the Department. The Department shall require the administrator or fiscal agent or both, to furnish a fidelity bond with the trustees as obligees in an amount sufficient to protect the plan against the misappropriation or misuse of any monies or securities.

2.the trustees shall retain control of all monies collected or disbursed and shall segregate such monies into a loss fund and a trustees' fund. The amount allocated to the loss fund shall be sufficient to cover payment of the entire aggregate loss fund as defined in the aggregate excess insurance policy. Only disbursements that are credited toward the loss fund, as defined in the aggregate excess insurance policy, will be made from the loss fund. All administrative costs and other disbursements will be made from the trustees' fund. If the trustees contract for the provision of claims services, they shall establish a revolving fund for use by the claims service company, which will be replenished from time to time from the loss fund. The claim service company and its employees shall be covered by a fidelity bond with the trustees as obligees in an amount sufficient to protect all monies placed in such revolving fund;

3.the board of trustees or its fiscal agent or administrator shall not utilize any of the monies collected as premiums for any purpose unrelated to workers' compensation. Further, it shall not borrow any monies from the fund or in the name of the fund without advising of the nature and purpose of the loan and obtaining approval from the Department, nor shall they have the authority to extend credit to individual members for payment of premium. Trustees' funds and claims funds shall be invested in the following types of investments only:

a.savings accounts or certificates of deposit in a duly chartered commercial bank located within the State of Rhode Island and insured through the Federal Deposit Insurance Corporation;

b.share accounts or savings certificates in a duly chartered savings and loan association located within the State of Rhode Island and insured through the Federal Savings and Loan Insurance Corporation;

c.direct obligations of the United States Treasury, such as notes, bonds and bills which are backed by the full faith and credit of the United States;

d.any bonds or security issued by the State of Rhode Island and backed by the full faith and credit of the State.

C.The trustees shall cause to be adopted a set of by-laws to govern the operation of the group self-insurer. Copies of the current by-laws and written policies of the group self-insurer shall be maintained on file with the Department. Any changes in the by-laws or written policies shall be filed with the Department no later than ten (10) days after their taking effect. The Department shall have the right to order the trustees to rescind or revoke any by-law or policy in violation of these rules or the Workers' Compensation Law.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.10 Reports

A.Each group self-insurer shall be required to submit the following documents and reports on a continuing basis:

1.quarterly status reports which accurately reflect the financial condition of each open fiscal year shall be filed with the Department within thirty (30) days after the close of each fiscal year quarter and signed by the chairman of the board of trustees or the administrator. A fiscal year is considered open as long as one claim from that year remains unsettled. A listing of any and all delinquent accounts and the amount owed shall be furnished to the Department as part of this report;

2.properly classified and audited payrolls for each member shall be submitted to the Department within ninety (90) days after the close of the fiscal year;

3.a verified copy of the minutes of all trustees' meetings shall be submitted to the Department within thirty (30) days of the meeting date;

4.an audited statement of financial condition shall be submitted annually, within ninety (90) days after the close of the group self-insurer fiscal year;

5.summary loss data for the group self-insurer and individual members shall be furnished to the Department upon request.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.11 Surplus Distributions and Deficits

A.Any monies for a coverage year in excess of the amount necessary to fulfill all of the group self-insurer's obligations for that year shall be considered surplus that may be declared refundable to members by the trustees at any time. The amount of such declaration shall be a liability of the group self-insurer at the time of the declaration. A distribution of such surplus monies may not be made by the group self-insurer until the date of payment has been agreed to by the trustees, proper notification has been provided to the Department in accordance with § 1.11(C) of this Part, and the requirements of this Section are otherwise complied with.

B.A group self-insurer may notify the Department of its intention to make a distribution when surplus exists for a given coverage year. However, in no event shall a distribution take place less than twenty-four (24) months after the end of the coverage year, or if a deficit exists for any coverage year that has not been adequately addressed in accordance with § 1.11(D) of this Part. The amount of the distribution must be within the following guidelines:

1.The amount of the initial distribution may not exceed forty percent (40%) of the recalculated surplus for the coverage year from which the distribution is to be made.

2.Additional distributions may be made annually thereafter in accordance with the following schedule:

a.Second year (36 months after the end of the coverage year); up to thirty-three percent (33%) of the remaining recalculated surplus amount.

b.Third year (48 months after the end of the coverage year); up to fifty percent (50%) of the remaining recalculated surplus amount.

c.Fourth year and ensuing years (60 months after the end of the coverage year); up to one hundred percent (100%) of the remaining recalculated surplus amount, but only if all claims for that coverage year are closed.

C.A notification by a group self-insurer to the Department of its intent to distribute any surplus shall be made in writing at least sixty (60) days prior to each desired distribution date. Such notice shall be supported by the following:

1.A supplemental schedule detailing by each coverage year the total surplus position of the group self-insurer, as of the most recent fiscal year-end, both before and after the desired distribution in substantially the same form as included in a bulletin issued for that purpose and available on the Department’s website;

2.An attestation by the group self-insurer's Certified Public Accountant of the information in the schedule and an opinion that the pre-distribution surplus for each coverage year is fairly stated;

3.A current year-ending balance sheet for the group self-insurer;

4.A case incurred loss report by coverage year as of the most recent month-end;

5.A copy of the board of trustees' resolution authorizing the amount and payment date of the distribution; and

6.A letter from the group self-insurer stating that such distribution will not impair the financial condition of the group self-insurer.

D.In the event of a surplus deficit for a group self-insurer in any coverage year, the surplus deficit shall be immediately made up from any of the following:

1.unencumbered surplus from any coverage year other than the current year;

2.assessment of the membership for the coverage year in which the deficit exists, if ordered by the trustees or the Department; or

3by such alternative method as the Department may order or approve.

E.The Department shall be notified in writing of any surplus deficit within fifteen (15) days after it becomes known by the board of trustees or the group self-insurer's administrator, and this notification shall include a plan to resolve the deficit.

F.Distributions other than those made under the guidelines of this Section will be considered extraordinary, and may only be permitted after a written request, submitted with actuarial support, is approved by the Department. Prior to approving the payment of any extraordinary distribution, the Department shall request and review any information deemed appropriate, and shall determine that such distribution will not impair the group self-insurer's ability to meet all obligations.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.12 Contract Services

A.Any individual, co-partnership or corporation contracting to provide underwriting, industrial safety engineering, claims adjusting and/or data reporting services to a group self-insurer shall register with the Department, on a form prescribed by the Department, not less than ten (10) days prior to the effective date of its contract.

B.All claims adjusting services provided by or on behalf of a group self-insurer shall be performed by individuals having at least three (3) years experience in workers' compensation claims or subject to the direct supervision of an individual having such experience.

C.All persons performing industrial safety engineering services for a group self-insurer shall have not less than three (3) years experience in safety engineering.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.13 Revocation or Termination of Authority

A.Any of the following shall be considered good cause for revocation or termination of the authority to operate a group self-insurer;

1.failure to comply with any of the rules herein;

2.failure to comply with any order of the Department;

3.failure to comply with any of the provisions of the workers' compensation law with particular reference to those relating to time and method of compensation payments, the furnishing of medical treatment and the filing of accident and compensation reports;

4.failure to pay any assessment or penalty;

5.failure to maintain required reserves, security deposits and excess insurance coverage;

6.failure to maintain proper fiscal control over the plan's assets;

7.failure to provide proper claims adjusting, underwriting, and safety engineering services.

B.The Department shall give written notice of such revocation or termination to the trustees or administrator. The group self-insurer shall have fifteen (15) days from the date of mailing of the notice to request a hearing on revocation or termination. Failure to mail a request for hearing within the time prescribed shall result in the revocation or termination becoming effective thirty (30) days after the date of mailing of the original notice. In no event shall revocation or termination become effective prior to the date that a hearing on the question is scheduled.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.14 Indemnity Agreements

A.Each group self-insurer member shall enter into an indemnity agreement jointly and severally binding the self-insurer and each member thereof to comply with the provisions of the Rhode Island Workers' Compensation Law.

B.The indemnity agreement shall conform to the form of the indemnity agreement set forth in a bulletin issued for that purpose and shall contain all its provisions but may also contain other provisions not inconsistent with these rules.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-1 § 1.15 Severability

If any provision of these rules is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be affected.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 01/28/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-15-2 Present Value of Permanent Total Disability Workers' Compensation Reserves

230-RICR-20-15-2 § 2.1 Authority

This Regulation is promulgated pursuant to the authority granted by R.I. Gen. Laws Chapters 27-1, 27-2, 27-7.1 and 42-14.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-02-07 to 01/04/2022
Technical Revision — effective from 2002-02-07 to 02/07/2002
Periodic Refile — effective from 2002-02-07 to 02/07/2002

230-RICR-20-15-2 § 2.2 Purpose

The purpose of this Regulation is to establish procedures for insurance carriers domiciled in Rhode Island to present value certain reserves relating to permanent total disability and survivor death benefits for statutory financial reporting.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-02-07 to 01/04/2022
Technical Revision — effective from 2002-02-07 to 02/07/2002
Periodic Refile — effective from 2002-02-07 to 02/07/2002

230-RICR-20-15-2 § 2.3 Definitions

A.For purposes of this Regulation:

1."Department" means the Department of Business Regulation.

2."Director" means the Director of the Department of Business Regulation.

3."Division" means the Division of Insurance of the Department of Business Regulation.

4."Insurer" means any insurance company domiciled in Rhode Island authorized and licensed to write workers' compensation insurance in the State of Rhode Island.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-02-07 to 01/04/2022
Technical Revision — effective from 2002-02-07 to 02/07/2002
Periodic Refile — effective from 2002-02-07 to 02/07/2002

230-RICR-20-15-2 § 2.4 Present Value of Loss Reserves

A.Insurers shall be allowed to compute the present value of permanent total disability and survivor (death) benefits for reported claims and for incurred but not reported claims which represent total and permanent disability cases, exclusive of loss adjustment expenses, and shall assume a rate of interest not greater than three and one half percent (3.5%).

B.Insurers electing to compute the present value of incurred but not reported claims which represent expected permanent total disability and survivor (death) benefit cases must maintain adequate records which clearly show that portion of the permanent total disability and survivor (death) benefit incurred but not reported claims as distinct from the total estimate of incurred but not reported claims. This present value calculation must be calculated in a consistent manner for all workers' compensation claim reserves as reported in the insurers' statutory filings regardless of claim jurisdiction.

C.This present value shall be allowed for statutory financial reporting purposes beginning in reporting year 1993. Those companies that have reported present value levels which exceed the levels established under this Regulation shall be allowed a phase-in period ending December 31, 1994. The phase-in period shall require present value levels to be amortized rateably beginning with the nearest quarter ending which follows the effective date of this Regulation in order for the insurer to be in full compliance for the 1994 annual statement.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2002-02-07 to 01/04/2022
Technical Revision — effective from 2002-02-07 to 02/07/2002
Periodic Refile — effective from 2002-02-07 to 02/07/2002

Subchapter 20 Commercial Insurance

230-RICR-20-20-1 Commercial Insurance Cancellation, Non-Renewal and Premium or Coverage Changes

230-RICR-20-20-1 § 1.1 Authority

This Regulation is promulgated in accordance with R.I. Gen. Laws §§ 27-29-17 through 17.4, 27-3-40, 27-65-1 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2009-12-03 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/03/2009

230-RICR-20-20-1 § 1.2 Purpose and Applicability

A.The purpose of this Regulation is to govern cancellation, nonrenewal and notice of premium or coverage changes of commercial insurance policies

B.This regulation shall apply to:

1.commercial property insurance policies;

2.commercial liability insurance policies;

3.commercial package policies;

4.commercial excess or umbrella policies, and

5.commercial auto policies.

C.This regulation shall not apply to:

1.reinsurance, aviation, workers' compensation and employer liability insurance, multi-state location risks or policies subject to retrospective rating plans. Nothing in this regulation is intended to abrogate or supersede statutory requirements relative to the policies delineated above.

2.insurance policies issued pursuant to R.I. Gen. Laws § 27-3-40 by approved surplus lines insurers.

3.insurance policies issued as commercial special risks pursuant to R.I. Gen. Laws § 27-65-1 unless specifically provided for R.I. Gen Laws § 27-29-17 and § 1.2(B)(4) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2009-12-03 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/03/2009

230-RICR-20-20-1 § 1.3 Definitions

A.For the purpose of this regulation:

1."Cancellation" means termination of a policy at a date other than its expiration date.

2.“Commissioner” means the Director of the Department of Business Regulation or his or her designee.

3."Expiration date" means the date upon which coverage under a policy ends. It shall also mean, for a policy written for a term longer than one year or with no fixed expiration date, each annual anniversary date of such policy.

4.“Insurance producer of record” for purposes of notice under §§ 1.4, 1.5 and 1.6 of this Part shall not include a producer who

a. is an employee of the insurer or

b. is a non-employee exclusive producer of the insurer.

5."Nonpayment of premium" means the failure or inability of a named insured to discharge any obligation in connection with the payment of premiums on a policy of insurance subject to this regulation, whether such payments are payable directly to an insurer or its agent or indirectly payable under a premium finance plan or extension of credit.

6."Nonrenewal" means termination of a policy at its expiration date.

7."Renewal" or "to renew" means the issuance of, or the offer by an insurer to issue a policy succeeding a policy previously issued and delivered by the same insurer or an insurer within the same group of insurers, or the issuance of a certificate or notice extending the term of an existing policy for a specified period beyond its expiration date.

8.“Writing” shall include electronic writings if the parties have agreed to conduct the transaction by electronic means in accordance with R.I. Gen. Laws § 42-127.1-7.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2009-12-03 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/03/2009

230-RICR-20-20-1 § 1.4 Cancellation

A.Permissible Cancellations. If coverage has not been in effect for sixty (60) days and the policy is not a renewal, cancellation shall be effected by giving, mailing or delivering a written notice to the first-named insured at the mailing address shown on the policy and, if applicable, to the insurance producer of record, at least thirty (30) days before the cancellation's effective date. After coverage has been in effect for more than sixty (60) days or after the effective date of a renewal policy, no insurer shall cancel a policy unless the cancellation is based on at least one of the following reasons:

1.Nonpayment of premium;

2.Fraud or material misrepresentation made by or with the knowledge of the named insured in obtaining the policy, continuing the policy, or in presenting a claim under the policy;

3.Activities or omissions on the part of the named insured which increase any hazard insured against, including a failure to comply with loss control recommendations;

4.Change in the risk which increases the risk of loss after insurance coverage has been issued or renewed, including but not limited to an increase in exposure due to regulation, legislation, or court decision;

5.Loss or decrease of the insurer's reinsurance covering all or part of the risk or exposure covered by the policy;

6.Determination by the Commissioner of Insurance that the continuation of the policy would jeopardize a company's solvency or would place the insurer in violation of the insurance laws of this state;

7.Owner or occupant incendiarism;

8.Violation or breach by the named insured of any policy terms or conditions;

9.Constructive or actual total loss of the insured property;

10.Such other reasons as may be approved by the Commissioner of Insurance.

B.Notification of Cancellation

1.Notice of cancellation of insurance coverage by an insurer shall be in writing and shall be given, mailed or delivered to the first-named insured at the mailing address as shown on the policy and, if applicable, to the insurance producer of record. Notices of cancellation based on §§ 1.4(A)(2) through (10) of this Part shall be given, mailed or delivered at least thirty (30) days prior to the effective date of the cancellation. Notices of cancellation based upon § 1.4(A)(1) of this Part shall be given, mailed or delivered at least ten (10) days prior to the effective date of cancellation. The notice shall state the effective date of cancellation.

2The insurer shall provide the first-named insured with a written statement setting forth the reason(s) for the cancellation where;

a.the named insured requests such a statement in writing; and

b.the named insured agrees in writing to hold the insurer harmless from liability for any communication giving notice of or specifying the reasons for a cancellation or for any statement made in connection with an attempt to discover or verify the existence of conditions which would be a reason for cancellation under this regulation.

C.Nothing in this section shall require an insurer to provide a notice of cancellation or a statement of reasons for cancellation where cancellation for non-payment of premium is effected by a premium finance agency or other entity pursuant to a power of attorney or other agreement executed by or on behalf of the insured.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2009-12-03 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/03/2009

230-RICR-20-20-1 § 1.5 Notice of Nonrenewal

A.An insurer may nonrenew a policy if it gives, mails or delivers to the first-named insured at the address shown on the policy and, if applicable, to the insurance producer of record, written notice it will not renew the policy. Such notice shall be given, mailed or delivered at least sixty (60) days before the expiration date. If the notice is given, mailed or delivered less than sixty (60) days before expiration coverage shall remain in effect until sixty (60) days after notice is given, mailed or delivered. Earned premium for any period of coverage that extends beyond the expiration date shall be considered pro-rata based upon the previous year's rate. For purposes of this regulation, the transfer of a policyholder between companies within the same insurance group is not a refusal to renew. In addition, changing deductibles, changes in premium, changes in the amount of insurance or reductions in policy limits or coverage shall not be deemed to be refusals to renew.

B.Notice of nonrenewal shall not be required where:

1.the insurer or a company within the same insurance group has offered to issue a renewal policy; or

2.the named insured has obtained replacement coverage or has agreed in writing to obtain replacement coverage.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2009-12-03 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/03/2009

230-RICR-20-20-1 § 1.6 Notice of Premium or Coverage Changes

A.An insurer shall provide to the first-named insured at the mailing address shown on the policy, and, if applicable, to the insurance producer of record, written notice of any premium increase in excess of ten percent (10%) and shall also provide the exact renewal premium (or if the exact renewal premium is not available a reasonable estimate of the renewal premium) at least sixty (60) days prior to the expiration date of the policy. Notice does not have to be provided if the increase is a result of an audit or an increase in exposure requested by the insured.

B.Written notice of any coverage elimination, reduction, diminution or increased deductible must be given at least sixty (60) days prior to the expiration date of the policy. The notice must itemize and describe the coverage changes and shall be separate from the renewal policy. Notice does not have to be provided if the coverage change is at the request of the insured.

C.If the insurer fails to provide the notice required by §§ 1.6(A) or (B) of this Part above, the coverage provided to the named insured shall remain in effect until notice is provided or until the effective date of replacement coverage obtained by the named insured, whichever first occurs. For the purposes of this regulation, notice is considered given sixty (60) days following date of giving of the notice. If the named insured elects not to renew, any earned premium for the period of extension of the terminated policy shall be calculated pro rata at the lower of the current or previous year's rate. If the insured accepts the renewal, the premium increase, if any, and other changes shall be effective the day following the prior policy's expiration or anniversary date.

D.The requirement of this section shall not apply to changes based upon the altered nature or extent of the risk insured.

E.Notice under this section is not requested to be provided to an insurance producer of record that

a.is an employee of the insurer; or

b.is a non-employer exclusive agent of the insurer.

F.Notice must be provided to the named insured in all applicable cases even if notice to the insurance producer is not required.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2009-12-03 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/03/2009

230-RICR-20-20-1 § 1.7 Proof of Notice

A.Notice required under §§ 1.5 and 1.6 of this Part shall be effective by serving the notice of it as provided by the policy. The notice shall be delivered in hand to the named insured, or be left at his or her last address as shown by the company's records, or, if its records contain no last address, at his or her last business, residence, or other address known to the company. A company may alternatively forward notice to that address by first class mail and maintain proof of mailing of the notice to the insured by the United States Postal Service certificate of mailing in the ordinary course of the insurer's business, and this proof of mailing shall be sufficient proof of notice. Notice may alternatively be given electronically if the insured consents and if the insurer has complied with the Electronic Transaction Act R.I. Gen. Laws § 42-127.1-1 et seq.

B.If a policy is made payable to a mortgagee or any person other than the named insured, notice shall be given as provided in § 1.7(A) of this Part to the payee and to the named insured.

C.The insurance producer of record who placed the policy shall also be given notice of any nonrenewal or any premium increase, a change in deductible, or a change in coverage, in the same manner as provided in § 1.7(A) of this Part unless exempted by R.I. Gen. Laws § 27-29-17.3(c) or § 1.6(E) of this Part. Notice may alternatively be given electronically if the insured consents and if the insurer has complied with the Electronic Transaction Act R.I. Gen. Laws § 42-127.1-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2009-12-03 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/03/2009

230-RICR-20-20-1 § 1.8 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-08-22 to 01/04/2022
Amendment — effective from 2013-08-22 to 08/22/2013
Amendment — effective from 2009-12-03 to 08/22/2013
Periodic Refile — effective from 2001-12-19 to 12/03/2009

Subchapter 25 Life and Annuities

230-RICR-20-25-2 Recognition of Preferred Mortality Tables for use in Determining Minimum Reserve Liabilities

230-RICR-20-25-2 § 2.1 Authority

This Part is promulgated in accordance with R.I. Gen. Laws §§ 27-4-17(d)(3), 27-4.5-11 and in accordance with Part 8 of this Subchapter.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-02-22 to 01/04/2022
Technical Revision — effective from 2007-02-22 to 08/08/2018
Technical Revision — effective from 2007-02-22 to 02/22/2007 Click here to view previous versions of this Part.

230-RICR-20-25-2 § 2.2 Purpose

The purpose of this Part is to recognize, permit and prescribe the use of mortality tables that reflect differences in mortality between Preferred and Standard lives in determining minimum reserve liabilities pursuant to R.I. Gen. Laws § 27-4-17(d) and Part 8 of this Subchapter.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-02-22 to 01/04/2022
Technical Revision — effective from 2007-02-22 to 08/08/2018
Technical Revision — effective from 2007-02-22 to 02/22/2007 Click here to view previous versions of this Part.

230-RICR-20-25-2 § 2.3 Definitions

A.As used in this Part:

1.“2001 CSO mortality table” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO Preferred Class Structure Mortality Table defined below in § 2.3(B) of this Part. Unless the context indicates otherwise, the “2001 CSO Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables in the 2001 CSO Mortality Table include the following:

a.“2001 CSO mortality table (F)” means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.

b.“2001 CSO mortality table (M)” means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.

c.“Composite mortality tables” means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.

d.“Smoker and nonsmoker mortality tables” means mortality tables with separate rates of mortality for smokers and nonsmokers.

B.“2001 CSO preferred class structure mortality table” means mortality tables with separate rates of mortality for Super Preferred Nonsmokers, Preferred Nonsmokers, Residual Standard Nonsmokers, Preferred Smokers, and Residual Standard Smoker splits of the 2001 CSO Nonsmoker and Smoker tables as adopted by the NAIC at the September 2006 national meeting and published in the NAIC Proceedings {3rd Quarter 2006}. Unless the context indicates otherwise, the “2001 CSO Preferred Class Structure Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table. It includes both the smoker and nonsmoker mortality tables. It includes both the male and female mortality tables and the gender composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality table.

C.“Statistical agent” means an entity with proven systems for protecting the confidentiality of individual insured and insurer information; demonstrated resources for and history of ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers; and a history of and means for aggregation of data and accurate promulgation of the experience modifications in a timely manner.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-02-22 to 01/04/2022
Technical Revision — effective from 2007-02-22 to 08/08/2018
Technical Revision — effective from 2007-02-22 to 02/22/2007 Click here to view previous versions of this Part.

230-RICR-20-25-2 § 2.4 2001 CSO Preferred Class Structure Table

At the election of the company, for each calendar year of issue, for any one or more specified plans of insurance and subject to satisfying the conditions stated in this Part, the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker Mortality Table as the minimum valuation standard for policies issued on or after January 1, 2007. No such election shall be made until the company demonstrates at least 20% of the business to be valued on this table is in one or more of the preferred classes. A table from the 2001 CSO Preferred Class Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements of this rule, will be treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to the requirements of Part 10 of this Subchapter, “Recognition of the 2001 CSO Mortality Table for Use In Determining Minimum Reserve Liabilities And Nonforfeiture Benefits Model.”

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-02-22 to 01/04/2022
Technical Revision — effective from 2007-02-22 to 08/08/2018
Technical Revision — effective from 2007-02-22 to 02/22/2007 Click here to view previous versions of this Part.

230-RICR-20-25-2 § 2.5 Conditions

A.For each plan of insurance with separate rates for Preferred and Standard Nonsmoker lives, an insurer may use the Super Preferred Nonsmoker, Preferred Nonsmoker, and Residual Standard Nonsmoker tables to substitute for the Nonsmoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, except for business valued under the Residual Standard Nonsmoker Table, the appointed actuary shall certify that:

1.The present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class.

2.The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class.

B.For each plan of insurance with separate rates for Preferred and Standard Smoker lives, an insurer may use the Preferred Smoker and Residual Standard Smoker tables to substitute for the Smoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, for business valued under the Preferred Smoker Table, the appointed actuary shall certify that:

1.The present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the Preferred Smoker valuation basis table corresponding to the valuation table being used for that class.

C.Unless exempted by the Commissioner, every authorized insurer using the 2001 CSO Preferred Class Structure Table shall annually file with the commissioner, with the NAIC, or with a statistical agent designated by the NAIC and acceptable to the commissioner, statistical reports showing mortality and such other information as the commissioner may deem necessary or expedient for the administration of the provisions of this Part. The form of the reports shall be established by the commissioner or the commissioner may require the use of a form established by the NAIC or by a statistical agent designated by the NAIC and acceptable to the commissioner.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-02-22 to 01/04/2022
Technical Revision — effective from 2007-02-22 to 08/08/2018
Technical Revision — effective from 2007-02-22 to 02/22/2007 Click here to view previous versions of this Part.

230-RICR-20-25-2 § 2.6 Separability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-02-22 to 01/04/2022
Technical Revision — effective from 2007-02-22 to 08/08/2018
Technical Revision — effective from 2007-02-22 to 02/22/2007 Click here to view previous versions of this Part.

230-RICR-20-25-2 Recognition of Preferred Mortality Tables for use in Determining Minimum Reserve Liabilities

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2007-02-22 to 01/04/2022
Technical Revision — effective from 2007-02-22 to 08/08/2018
Technical Revision — effective from 2007-02-22 to 02/22/2007 Click here to view previous versions of this Part.

230-RICR-20-25-3 Life Insurance Disclosure (formerly Insurance Regulation 27)

230-RICR-20-25-3 § 3.1 Authority

This Part is adopted and promulgated pursuant to R.I. Gen. Laws §§ 27-29-4(1) and 27-4-23.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2006-02-20 to 01/28/2018
Amendment — effective from 2006-02-20 to 02/20/2006
Periodic Refile — effective from 2001-12-19 to 02/20/2006

230-RICR-20-25-3 § 3.2 Purpose

A.The purpose of this Part is to require insurers to deliver to purchasers of life insurance, information which will improve the buyer's ability to select the most appropriate plan of life insurance for his needs and improve the buyer's understanding of the basic features of the policy which has been purchased or which is under consideration.

B.This Part does not prohibit the use of additional material which is not in violation of this Part or any other Rhode Island statute or regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2006-02-20 to 01/28/2018
Amendment — effective from 2006-02-20 to 02/20/2006
Periodic Refile — effective from 2001-12-19 to 02/20/2006

230-RICR-20-25-3 § 3.3 Scope

A.Except for the exemptions specified in § 3.3(B) of this Part, this Part shall apply to any solicitation, negotiation or procurement of life insurance occurring within this state. This Part shall apply to any issuer of life insurance contracts including fraternal benefit societies.

B. This Part shall not apply to:

1.Individual and group annuity contracts;

2.Credit life insurance;

3.Group life insurance;

4.Life insurance policies issued in connection with pension and welfare plans as defined by and which are subject to the federal Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. as amended; or

5.Variable life insurance under which the amount or duration of the life insurance varies according to the investment experience of a separate account.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2006-02-20 to 01/28/2018
Amendment — effective from 2006-02-20 to 02/20/2006
Periodic Refile — effective from 2001-12-19 to 02/20/2006

230-RICR-20-25-3 § 3.4 Definitions

A.For the purposes of this Part, the following definitions shall apply:

1.“Buyer's guide” means the current Life Insurance Buyer’s Guide adopted by the National Association of Insurance Commissioners (NAIC) or language approved by Insurance Commissioner.

2.“Current scale of nonguaranteed elements” means a formula or other mechanism that produces values for an illustration as if there is no change in the basis of those values after the time of illustration.

3.“Generic name” means a short title which is descriptive of the premium and benefit patterns of a policy or a rider.

4.“Policy data” means a display or schedule of numerical values, both guaranteed and nonguaranteed for each policy year or a series of designated policy years of the following information: illustrated annual, other periodic, and terminal dividends; premiums; death benefits; cash surrender values and endowment benefits.

5.“Policy summary” means a written statement describing the elements of the policy including but not limited to:

a.A prominently placed title as follows: STATEMENT OF POLICY COST AND BENEFIT INFORMATION.

b.The name and address of the insurance agent, or, if no agent is involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the Policy Summary.

c.The full name and home office or administrative office address of the company in which the life insurance policy is to be or has been written.

d.The Generic Name of the basic policy and each rider.

e.The following amounts, where applicable, for the first five (5) policy years and representative policy years thereafter sufficient to clearly illustrate the premium and benefit patterns, including at least one (1) age from sixty (60) through sixty-five (65) and policy maturity:

(1)The annual premium for the basic policy;

(2)The annual premium for each optional rider;

(3)The amount payable upon death at the beginning of the policy year regardless of the cause of death, other than suicide or other specifically enumerated exclusions, which is provided by the basic policy and each optional rider, with benefits provided under the basic policy and each rider shown separately;

(4)The total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider, and

(5)Any endowment amounts payable under the policy that are not included under guaranteed cash surrender values above.

f.The effective policy loan annual percentage interest rate, if the policy contains this provision, specifying whether this rate is applied in advance or in arrears. If the policy loan interest rate is adjustable, the Policy Summary shall also indicate that the annual percentage rate will be determined by the company in accordance with the provisions of the policy and the applicable law; and

g.The date on which the Policy Summary is prepared.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2006-02-20 to 01/28/2018
Amendment — effective from 2006-02-20 to 02/20/2006
Periodic Refile — effective from 2001-12-19 to 02/20/2006

230-RICR-20-25-3 § 3.5 Duties of Insurers

A.Requirements Applicable Generally

1.The insurer shall provide, to all prospective purchasers, a Buyer's Guide and prior to accepting the applicant's initial premium or premium deposit. However, if the policy for which application is made contains an unconditional refund provision of at least ten (10) days, the Buyer's Guide must be delivered with the policy or prior to delivery of the policy.

2.The insurer shall provide a policy summary to prospective purchasers where the insurer has identified the policy form as one that will not be marketed with an illustration. The policy summary shall show guarantees only. It shall consist of a separate document with all required information set out in a manner that does not minimize or render any portion of the summary obscure. Any amounts that remain level for two (2) or more years of the policy may be represented by a single number if it is clearly indicated what amounts are applicable for each policy year. Amounts in § 3.4(A)(5)(e) of this Part shall be listed in total, not on a per thousand or per unit basis. If more than one insured is covered under one policy or rider, death benefits shall be displayed separately for each insured or for each class of insureds if death benefits do not differ within the class. Zero amounts shall be displayed as a blank space. Delivery of the policy summary shall be consistent with the time for delivery of the Buyer’s Guide as specified in § 3.5(A)(1) of this Part.

B.Requirements Applicable to Existing Policies.

1.Upon request by the policyowner, the insurer shall furnish either policy data or an in-force illustration as follows:

a.For policies issued prior to the effective date of R.I. Gen. Laws Chapter 27-62, the insurer shall furnish policy data, or, at its option, an in-force illustration meeting the requirements of R.I. Gen. Laws Chapter 27-62.

b.For policies issued on or after the effective date of R.I. Gen. Laws Chapter 27-62, that were declared not to be used with an illustration, the insurer shall furnish policy data, limited to guaranteed values, if it has chosen not to furnish an in-force illustration meeting the above requirements.

c.If the policy was issued on or after the effective date of R.I. Gen. Laws Chapter 27-62, and declared to be used with an illustration, an in-force illustration shall be provided.

d.Unless otherwise requested, the policy data shall be provided for twenty (20) consecutive years beginning with the previous policy anniversary. The statement of policy data shall include nonguaranteed elements according to the current scale, the amount of outstanding policy loans, and the current policy loan interest rate. Policy values shown shall be based on the current application of nonguaranteed elements in effect at the time of the request. The insurer may not charge a fee for the preparation of the statement.

2.If a life insurance company changes its method of determining scales of nonguaranteed elements on existing policies; it shall, no later than when the first payment is made on the new basis, advise each affected policy owner residing in this state of this change and of its implication on affected policies. This requirement shall not apply to policies for which the amount payable upon death under the basic policy as of the date when advice would otherwise be required does not exceed $5,000.

3.If the insurer makes a material revision in the terms and conditions under which it will limit its right to change any nonguaranteed factor; it shall, no later than the first policy anniversary following the revision, advise each affected policy owner residing in this state.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2006-02-20 to 01/28/2018
Amendment — effective from 2006-02-20 to 02/20/2006
Periodic Refile — effective from 2001-12-19 to 02/20/2006

230-RICR-20-25-3 § 3.6 General Rules

A.Each insurer shall maintain at its home office or principal office, a complete file containing one (1) copy of each document authorized and used by the insurer pursuant to this part. Such file shall contain one (1) copy of each authorized form for a period of three (3) years following the date of its last authorized use unless otherwise provided by this part.

B.An agent shall inform the prospective purchaser, prior to commencing a life insurance sales presentation, that he is acting as a life insurance agent and inform the prospective purchaser of the full name of the insurance company which he is representing to the buyer. In sales situations in which an agent is not involved, the insurer shall identify its full name.

C.An insurance producer shall not use terms such as “financial planner,” “investment advisor,” “financial consultant,” or “financial counseling” in such a way as to imply that the insurance agent is primarily engaged in an advisory business in which compensation is unrelated to sales unless such is actually the case. This provision is not intended to preclude persons who hold some form of formal recognized financial planning or consultant designation from using this designation even when they are only selling insurance. This provision also is not intended to preclude persons who are members of a recognized trade or professional association having such terms as part of its name from citing membership, providing that a person citing membership, if authorized only to sell insurance products, shall disclose that fact. This provision does not permit persons to charge an additional fee for services that are customarily associated with the solicitation, negotiation or servicing of policies.

D.Any reference to nonguaranteed elements must include a statement that the item is not guaranteed and is based on the company’s current scale of nonguaranteed elements (use appropriate special term such as “current dividend” or “current rate” scale.) If a nonguaranteed element would be reduced by the existence of a policy loan, a statement to that effect shall be included in any reference to nonguaranteed elements. A presentation or depiction of a policy issued after the effective date of R.I. Gen. Laws Chapter 27-62, that includes nonguaranteed elements over a period of years shall be governed by R.I. Gen. Laws Chapter 27-62.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2006-02-20 to 01/28/2018
Amendment — effective from 2006-02-20 to 02/20/2006
Periodic Refile — effective from 2001-12-19 to 02/20/2006

230-RICR-20-25-3 § 3.7 Failure to Comply

Failure of an insurer to provide or deliver a Buyer's Guide, an in-force illustration, a Policy Summary or policy data as provided in § 3.5 of this Part shall constitute an omission which misrepresents the benefits, advantages, conditions or terms of an insurance policy.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-01-28 to 01/04/2022
Technical Revision — effective from 2006-02-20 to 01/28/2018
Amendment — effective from 2006-02-20 to 02/20/2006
Periodic Refile — effective from 2001-12-19 to 02/20/2006

230-RICR-20-25-4 Life Insurance and Annuities Replacement (formerly Insurance Regulation 29)

230-RICR-20-25-4 § 4.1 Authority

This Part is adopted pursuant to R.I. Gen. Laws §§ 27-4-23, 27-29-4.7 and 27-29-12.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.2 Purpose

A.The purpose of this Part is:

1.To regulate the activities of insurers and producers with respect to the replacement of existing life insurance and annuities;

2.To protect the interests of life insurance policyholders and annuity purchasers by establishing minimum standards of conduct to be observed in the replacement or financed purchase transactions. It will:

a.Assure that purchasers receive information with which a decision can be made in his or her own best interest;

b.Reduce the opportunity for misrepresentation and incomplete disclosure; and

c.Establish penalties for failure to comply with the requirements of this Part.

B.Unless otherwise specifically included, this Part shall not apply to transactions involving:

1.Credit life insurance;

2.Group life insurance or group annuities where there is no direct solicitation of individuals by an insurance producer. Direct solicitation shall not include any group meeting held by an insurance producer solely for the purpose of educating or enrolling individuals or, when initiated by an individual member of the group, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual. Group life insurance or group annuity certificates marketed through direct response solicitation shall be subject to the provisions of § 4.8 of this Part;

3.Group life insurance and annuities used to fund prearranged funeral contracts;

4.An application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the Director or when a term conversion privilege is exercised among corporate affiliates;

5.Proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same company;

6.Policies or contracts used to fund

a.an employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

b.a plan described by Sections 401(a), 401(k) or 403(b) of the Internal Revenue Code, where the plan, for purposes of ERISA, is established or maintained by an employer;

c.a governmental or church plan defined in Section 414, a governmental or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax-exempt organization under Section 457 of the Internal Revenue Code, 26 U.S.C.; or

d.a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor.

7.Notwithstanding § 4.2(B)(6) of this Part above, this Part shall apply to policies or contracts used to fund any plan or arrangement that is funded solely by contributions an employee elects to make, whether on a pre-tax or after-tax basis, and where the insurer has been notified that plan participants may choose from among two (2) or more insurers and there is a direct solicitation of an individual employee by an insurance producer for the purchase of a contract or policy. As used in this subsection, direct solicitation shall not include any group meeting held by an insurance producer solely for the purpose of educating individuals about the plan or arrangement or enrolling individuals in the plan or arrangement or, when initiated by an individual employee, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual employee;

8.Where new coverage is provided under a life insurance policy or contract and the cost is borne wholly by the insured’s employer or by an association of which the insured is a member;

9.Existing life insurance that is a non-convertible term life insurance policy that will expire in five (5) years or less and cannot be renewed;

10.Immediate annuities that are purchased with proceeds from an existing contract. Immediate annuities purchased with proceeds from an existing policy are not exempted from the requirements of this Part; or

11.Structured settlements.

C.Registered contracts shall be exempt from the requirements of §§ 4.6(A)(2) and 4.7(A)(2) with respect to the provision of illustrations or policy summaries; however, premium or contract contribution amounts and identification of the appropriate prospectus or offering circular shall be required instead.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.3 Definitions

A."Direct-Response solicitation" means a solicitation through a sponsoring or endorsing entity or individually solely through mails, telephone, the Internet or other mass communication media.

B."Existing insurer" means the insurance company whose policy is or will be changed or affected in a manner described within the definition of "replacement."

C."Existing policy or contract" means an individual life insurance policy (policy) or annuity contract (contract) in force, including a policy under a binding or conditional receipt or a policy or contract that is within an unconditional refund period.

D.“Financed purchase” means the purchase of a new policy involving the actual or intended use of funds obtained by the withdrawal or surrender of, or by borrowing from values of an existing policy to pay all or part of any premium due on the new policy. For purposes of a regulatory review of an individual transaction only, if a withdrawal, surrender or borrowing involving the policy values of an existing policy is used to pay premiums on a new policy owned by the same policyholder and issued by the same company within four (4) months before or thirteen (13) months after the effective date of the new policy, it will be deemed prima facie evidence of the policyholder’s intent to finance the purchase of the new policy with existing policy values. This prima facie standard is not intended to increase or decrease the monitoring obligations contained in § 4.5(A)(1)(e) of this Part.

E.“Illustration” means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years as defined in R.I. Gen. Laws Chapter 27-62.

F.“Policy summary,” for the purposes of this Part;

1.For policies or contracts other than universal life policies, means a written statement regarding a policy or contract which shall contain to the extent applicable, but need not be limited to, the following information: current death benefit; annual contract premium; current cash surrender value; current dividend; application of current dividend; and amount of outstanding loan.

2.For universal life policies, means a written statement that shall contain at least the following information: the beginning and end date of the current report period; the policy value at the end of the previous report period and at the end of the current report period; the total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders); the current death benefit at the end of the current report period on each life covered by the policy; the net cash surrender value of the policy as of the end of the current report period; and the amount of outstanding loans, if any, as of the end of the current report period.

G.“Producer,” for the purpose of this Part, shall be as defined in R.I. Gen. Laws § 27-2.4-2.

H."Replacing insurer" means the insurance company that issues a new policy or contract that replaces an existing policy or contract or is a financed purchase.

I.“Registered contract” means an annuity contract or life insurance policy subject to the prospectus delivery requirements of the Securities Act of 1933.

J."Replacement" means a transaction in which a new policy or contract is to be purchased, and it is known or should be known to the proposing producer or to the proposing insurer if there is no producer that by reason of the transaction, an existing policy or contract has been or is to be:

1.Lapsed, forfeited, surrendered, or partially surrendered, assigned to the replacing insurers or otherwise terminated;

2.Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;

3.Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;

4.Reissued with any reduction in cash value; or

5.Used in a financed purchase.

K.“Sales material” means a sales illustration and any other written, printed or electronically presented information created, or completed or provided by the company or producer and used in the presentation to the policy or contract owner related to the policy or contract purchased.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.4 Duties of Producers

A.Each producer who initiates an application shall submit to the insurer, with or as part of each application, a statement signed by both the applicant and the producer as to whether the applicant has existing policies or contracts. If the answer is “no,” the producer’s duties with respect to replacement are complete.

B.If the applicant answered “yes” to the question regarding existing coverage referred to in § 4.4(A) of this Part, the producer shall present and read to the applicant, not later than at the time of taking the application, a notice regarding replacements in the form as described in Appendix A which has been included in a bulletin issued for that purpose and available on the Department’s website, or other substantially similar form approved by the Director. However, no approval shall be required when amendments to the notice are limited to the omission of references not applicable to the product being sold or replaced. The notice shall be signed by both the applicant and the producer attesting that the notice has been read aloud by the producer or that the applicant did not wish the notice to be read aloud (in which case the producer need not have read the notice aloud) and left with the applicant. If the notice is presented electronically, the replacing insurer shall mail the applicant a copy of the notice within five (5) business days after the application is submitted to the replacing insurer.

C.The notice shall list all life insurance policies or annuities proposed to be replaced, properly identified by name of insurer, the insured or annuitant, and policy or contract number if available; and shall include a statement as to whether each policy or contract will be replaced or whether a policy will be used as a source of financing for the new policy or contract. If a policy or contract number has not been issued by the existing insurer, alternative identification, such as an application or receipt number, shall be listed.

D.In connection with a replacement transaction the producer shall leave with the applicant at the time an application for a new policy or contract is completed the original or a copy of all sales material. With respect to electronically presented sales material, it shall be provided to the policy or contract owner in printed form no later than at the time of policy or contract delivery.

E.Except as provided in § 4.6(C) of this Part, in connection with a replacement transaction the producer shall submit to the insurer to which an application for a policy or contract is presented, a copy of each document required by this section, a statement identifying any preprinted or electronically presented company approved sales materials used, and copies of any individualized sales materials, including any illustrations related to the specific policy or contract purchased.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.5 Duties of Insurers that Use Producers

A.Each insurer shall:

1.Maintain a system of supervision and control to ensure compliance with the requirements of this Part that shall include at least the following:

a.Inform its producers of the requirements of this Part and incorporate the requirements of this Part into all relevant producer training manuals prepared by the insurer;

b.Provide to each producer a written statement of the company’s position with respect to the acceptability of replacements providing guidance to its producer as to the appropriateness of these transactions;

c.A system to review the appropriateness of each replacement transaction that the producer does not indicate is in accord with § 4.5(A)(1)(b) of this Part above;

d.Procedures to confirm that the requirements of this Part have been met; and

e.Procedures to detect transactions that are replacements of existing policies or contracts by the existing insurer, but that have not been reported as such by the applicant or producer. Compliance with this Part may include, but shall not be limited to, systematic customer surveys, interviews, confirmation letters, or programs of internal monitoring;

B.Have the capacity to monitor each producer’s life insurance policy and annuity contract replacements for that insurer, and shall produce, upon request, and make such records available to the Director. The capacity to monitor shall include the ability to produce records for each producer’s:

1.Life replacements, including financed purchases, as a percentage of the producer’s total annual sales for life insurance;

2.Number of lapses of policies by the producer as a percentage of the producer’s total annual sales for life insurance;

3.Annuity contract replacements as a percentage of the producer’s total annual annuity contract sales;

4.Number of transactions that are unreported replacements of existing policies or contracts by the existing insurer detected by the company’s monitoring system as required by § 4.5(A)(1)(e) of this Part; and

5.Replacements, indexed by replacing producer and existing insurer;

C.Require with or as a part of each application for life insurance or an annuity a signed statement by both the applicant and the producer as to whether the applicant has existing policies or contracts;

D.Require with each application for life insurance or an annuity that indicates an existing policy or contract a completed notice regarding replacements as contained in Appendix A which has been included in a bulletin issued for that purpose and available on the Department’s website;

E.When the applicant has existing policies or contracts, each insurer shall be able to produce copies of any sales material required by § 4.4(E) of this Part, the basic illustration and any supplemental illustrations related to the specific policy or contract that is purchased, and the producer’s and applicant’s signed statements with respect to financing and replacement for at least five (5) years after the termination or expiration of the proposed policy or contract;

F.Ascertain that the sales material and illustrations required by § 4.4(E) of this Part meet the requirements of this Part and are complete and accurate for the proposed policy or contract;

G.If an application does not meet the requirements of this Part, notify the producer and applicant and fulfill the outstanding requirements; and

H.Maintains records in paper, photograph, microprocess, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.6 Duties of Replacing Insurers that Use Producers

A.Where a replacement is involved in the transaction, the replacing insurer shall:

1.Verify that the required forms are received and are in compliance with this Part;

2.Notify any other existing insurer that may be affected by the proposed replacement within five (5) business days of receipt of a completed application indicating replacement or when the replacement is identified if not indicated on the application, and mail a copy of the available illustration or policy summary for the proposed policy or available disclosure document for the proposed contract within five (5) business days of a request from an existing insurer;

3.Be able to produce copies of the notification regarding replacement required in § 4.4(B) of this Part, indexed by producer, for at least five (5) years or until the next regular examination by the insurance department of a company’s state of domicile, whichever is later; and

4.Provide to the policy or contract owner notice of the right to return the policy or contract within thirty (30) days of the delivery of the contract and receive an unconditional full refund of all premiums or considerations paid on it, including any policy fees or charges or, in the case of a variable or market value adjustment policy or contract, a payment of the cash surrender value provided under the policy or contract plus the fees and other charges deducted from the gross premiums or considerations or imposed under such policy or contract; such notice may be included in Appendix A or C which have been included in a bulletin issued for that purpose and available on the Department’s website.

B.In transactions where the replacing insurer and the existing insurer are the same or subsidiaries or affiliates under common ownership or control allow credit for the period of time that has elapsed under the replaced policy’s or contract’s incontestability and suicide period up to the face amount of the existing policy or contract. With regard to financed purchases the credit may be limited to the amount the face amount of the existing policy is reduced by the use of existing policy values to fund the new policy or contract.

C.If an insurer prohibits the use of sales material other than that approved by the company, as an alternative to the requirements made of an insurer pursuant to § 4.4(E) of this Part, the insurer may:

1.Require with each application a statement signed by the producer that:

a.Represents that the producer used only company-approved sales material; and

b.States that copies of all sales material were left with the applicant in accordance with § 4.4(D) of this Part; and

2.Within ten (10) days of the issuance of the policy or contract:

a.Notify the applicant by sending a letter or by verbal communication with the applicant by a person whose duties are separate from the marketing area of the insurer, that the producer has represented that copies of all sales material have been left with the applicant in accordance with § 4.4(D) of this Part;

b.Provide the applicant with a toll-free number to contact company personnel involved in the compliance function if such is not the case; and

c.Stress the importance of retaining copies of the sales material for future reference; and

3.Be able to produce a copy of the letter or other verification in the policy file for at least five (5) years after the termination or expiration of the policy or contract.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.7 Duties of the Existing Insurer

A.Where a replacement is involved in the transaction, the existing insurer shall:

1.Retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least five (5) years or until the conclusion of the next regular examination conducted by the Insurance Department of its state of domicile, whichever is later.

2.Send a letter to the policy or contract owner of the right to receive information regarding the existing policy or contract values including, if available, an in-force illustration or policy summary if an in-force illustration cannot be produced within five (5) business days of receipt of a notice that an existing policy or contract is being replaced. The information shall be provided within five (5) business days of receipt of the request from the policy or contract owner.

3.Upon receipt of a request to borrow, surrender or withdraw any policy values, send a notice, advising the policy owner that the release of policy values may affect the guaranteed elements, non-guaranteed elements, face amount or surrender value of the policy from which the values are released. The notice shall be sent separate from the check if the check is sent to anyone other than the policy owner. In the case of consecutive automatic premium loans, the insurer is only required to send the notice at the time of the first loan.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.8 Duties of Insurer with Respect to Direct Response Solicitations

A.In the case of an application that is initiated as a result of a direct response solicitation, the insurer shall require, with or as part of each completed application for a policy or contract, a statement asking whether the applicant, by applying for the proposed policy or contract, intends to replace, discontinue or change an existing policy or contract. If the applicant indicates a replacement or change is not intended or if the applicant fails to respond to the statement, the insurer shall send the applicant, with the policy or contract, a notice regarding replacement in Appendix B which has been included in a bulletin issued for that purpose and available on the Department’s website, or other substantially similar form approved by the Director.

B.If the insurer has proposed the replacement or if the applicant indicates a replacement is intended and the insurer continues with the replacement, the insurer shall:

1.Provide to applicants or prospective applicants with the policy or contract a notice, as described in Appendix C which has been included in a bulletin issued for that purpose and available on the Department’s website, or other substantially similar form approved by the commissioner. In these instances the insurer may delete the references to the producer, including the producer’s signature, and references not applicable to the product being sold or replaced, without having to obtain approval of the form from the Director. The insurer’s obligation to obtain the applicant’s signature shall be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the notice referred to in this paragraph. The requirement to make a diligent effort shall be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed notice referred to in this section; and

2.Comply with the requirements of § 4.6(A)(2), if the applicant furnishes the names of the existing insurers, and the requirements of §§ 4.6(A)(3), 4.6(A)(4) and 4.6(B).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.9 Twisting and Churning Practices

A.Any replacement of a life insurance policy that involves fraud, deception or misrepresentation is prohibited regardless of whether the transaction falls within the provisions of R.I. Gen. Laws § 27-29-4.7. In addition, the following applies to transactions in which R.I. Gen. Laws § 27-29-4.7 is applicable:

1.Replacements of policies that constitute twisting or churning are in violation of R.I. Gen. Laws § 27-29-4.7.

2.Insurers to which the Part applies must adopt written procedures consistent with R.I. Gen. Laws § 27-29-4.7 no later than July 1, 2013.

3.The fact that written procedures have not been finalized or adopted does not alter the requirement that replacement sales must not constitute twisting or churning.

B.The following are clarifications of the intent of terms used in R.I. Gen. Laws § 27-29-4.7.

1.The reference to “paid-up policy” in R.I. Gen. Laws § 27-29-4.7(a)(2)(iv) means an immediately paid up life insurance policy not a life insurance policy that might become paid up some time in the future after additional premium payments have been made.

2.The provision of R.I. Gen. Laws § 27-29-4.7(b) regarding the timing of the disclosure requires that disclosure be made prior to or contemporaneous with the time the applicant signs the application.

3.The requirement in R.I. Gen. Laws § 27-29-4.7(b) of disclosure of the date on which the policy value will be insufficient to pay the premium of the replacing or additional policies means a reasonable estimate of such date when the existing life insurance policy value, if transferred into the replacing or additional policy, will be insufficient to pay the premium to continue coverage of the replacing or additional life insurance policy. This disclosure should include the assumptions made in order to make the estimate along with a description of how variables will affect the estimated date. With respect to annuity transactions, the requirement to disclose the date on which policy values of the existing policy or contract will be insufficient to pay the premiums of the replacing or additional coverage shall only apply to transactions involving an annuity with a schedule of required payments.

C.This Part and the provisions of R.I. Gen. Laws § 27-29-4.7(a)(2)(iii) and (iv), (b) and (c) do not apply to:

1.Conversions of group or individual term policies; or

2.Group permanent life, group variable life, group fixed annuities and group variable annuities wherein the group master policyholder retains ownership of the contract; or

3.Any of the following for a purpose other than as a funding source for the purchase of additional insurance contracts:

a.Reduced paid-up or extended term insurance options in group life, group variable life, individual life or variable life policies;

b.Early annuity options of group fixed, group variable, individual fixed or individual variable annuity products; or

c.A living benefit settlement option of a group permanent life, group variable life, individual life or individual variable life insurance policy.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.10 Violations and Penalties

A.Any failure to comply with this Part shall be considered a violation of R.I. Gen. Laws Chapter 27-29. Examples of violations include:

1.Any deceptive or misleading information set forth in sales material;

2.Failing to ask the applicant in completing the application the pertinent questions regarding the possibility of financing or replacement;

3.The intentional incorrect recording of an answer;

4.Advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer; or

5.Advising a policy or contract owner to write directly to the company in such a way as to attempt to obscure the identity of the replacing producer or company.

B.Policy and contract owners have the right to replace existing life insurance policies or annuity contracts after indicating in or as a part of applications for new coverage that replacement is not their intention; however, patterns of such action by policy or contract owners of the same producer shall be deemed prima facie evidence of the producer’s knowledge that replacement was intended in connection with the identified transactions, and these patterns of action shall be deemed prima facie evidence of the producer’s intent to violate this Part.

C.Where it is determined that the requirements of this Part have not been met the replacing insurer shall provide to the policy owner an in-force illustration if available or policy summary for the replacement policy or available disclosure document for the replacement contract and the appropriate notice regarding replacements in Appendix A or C which have been included in a bulletin issued for that purpose and available on the Department’s website.

D.Violations of this Part shall subject the violators to penalties that may include the revocation or suspension of a producer’s or company’s license, monetary fines and the forfeiture of any commissions or compensation paid to a producer as a result of the transaction in connection with which the violations occurred. In addition, where the Director has determined that the violations were material to the sale, the insurer may be required to make restitution, restore policy or contract values and pay interest at the rate defined in R.I. Gen. Laws § 27-4.5-4.1(d) on the amount refunded in cash.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-4 § 4.11 Severability

If any section or provision of a section of this Part, or its applicability to any person or circumstances, is held invalid by a court, the remainder of this Part, or the applicability of its provisions to other persons, shall not be affected.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-01-28 to 01/04/2022
Amendment — effective from 2018-01-28 to 01/28/2018
Amendment — effective from 2013-03-21 to 01/28/2018
Amendment — effective from 2007-07-16 to 03/21/2013
Amendment — effective from 2006-02-20 to 07/16/2007
Periodic Refile — effective from 2002-02-07 to 02/20/2006

230-RICR-20-25-5 Advertisements of Life Insurance and Annuities

230-RICR-20-25-5 § 5.1 Authority

This regulation is promulgated in accordance with R.I. Gen. Laws § 27-29-1 et seq. and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.2 Purpose

The purpose of this regulation is to set forth minimum standards and guidelines to assure a full and truthful disclosure to the public of all material and relevant information in the advertising of life insurance policies and annuity contracts.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.3 Definitions

A.As used in this Regulation:

1.“Advertisement” shall mean material designed to create public interest in life insurance or annuities or in an insurer, or in an insurance producer; or to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy including:

a.Printed and published material, audiovisual material and descriptive literature of an insurer or insurance producer used in direct mail, newspapers, magazines, radio and television scripts, telemarketing scripts, billboards and similar displays, and the Internet or any other mass communication media.

b.Descriptive literature and sales aids of all kinds, authored by the insurer, its insurance producers, or third parties, issued, distributed or used by the insurer or insurance producer; including but not limited to circulars, leaflets, booklets, web pages, depictions, illustrations and form letters;

c.Material used for the recruitment, training and education of an insurer’s insurance producers which is designed to be used or is used to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy;

d.Prepared sales talks, presentations and materials for use by insurance producers.

e.“Advertisement” for the purpose of this regulation shall not include:

f.Communications or materials used within an insurer’s own organization and not intended for dissemination to the public;

g.Communications with policyholders other than material urging policyholders to purchase, increase, modify, reinstate or retain a policy; and

h.A general announcement from a group or blanket policyholder to eligible individuals on an employment or membership list that a policy or program has been written or arranged; provided the announcement clearly indicates that it is preliminary to the issuance of a booklet explaining the proposed coverage.

2.“Commissioner” means the Director of the Department of Business Regulation or his or her designee.

3.“Determinable policy elements” shall mean elements that are derived from processes or methods that are guaranteed at issue and not subject to company discretion, but where the values or amounts cannot be determined until some point after issue. These elements include the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if it was calculated from underlying determinable policy elements only, or from both determinable and guaranteed policy elements.

4.“Guaranteed policy elements” shall mean the premiums, benefits, values, credits or charges under a policy, or elements of formulas used to determine any of these that are guaranteed and determined at issue.

5.“Insurance producer” shall mean a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.

6.“Insurer” means any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyd’s, fraternal benefit society, and any other legal entity which issues life insurance or annuities in this state and is engaged in the advertisement of a policy.

7.“Nonguaranteed elements” means the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.

8.“Policy” means any policy, plan, certificate, including a fraternal benefit certificate, contract, agreement, statement of coverage, rider or endorsement which provides for life insurance or annuity benefits.

9.“Preneed funeral contract or prearrangement” means an arrangement by or for an individual before the individual’s death relating to the purchase or provision of specific funeral or cemetery merchandise or services except for those contracts specified in R.I. Gen. Laws § 5-33.1-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.4 Applicability

A.This regulation shall apply to any life insurance or annuity advertisement intended for dissemination in this state. In variable contracts where disclosure requirements are established pursuant to federal regulation, this regulation shall be interpreted so as to eliminate conflict with federal regulation.

B.All advertisements, regardless of by whom written, created, designed or presented, shall be the responsibility of the insurer, as well as the producer who created or presented the advertisement. Insurers shall establish and at all times maintain a system of control over the content, form and method of dissemination of all advertisements of its policies. A system of control shall include regular and routine notification, at least once a year, to agents, brokers and others authorized by the insurer to disseminate advertisements of the requirement and procedures for company approval prior to the use of any advertisements that is not furnished by the insurer and that clearly sets forth within the notice the most serious consequence of not obtaining the required prior approval.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.5 Form and Content of Advertisements

A.Advertisements shall be truthful and not misleading in fact or by implication. The form and content of an advertisement of a policy shall be sufficiently complete and clear so as to avoid deception. It shall not have the capacity or tendency to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead or deceive shall be determined by the Commissioner of Insurance from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.

B.No advertisement shall use the terms “investment,” “investment plan,” “founder’s plan,” “charter plan,” “deposit,” “expansion plan,” “profit,” “profits,” “profit sharing,” “interest plan,” “savings,” “savings plan,” “private pension plan,” “retirement plan” or other similar terms in connection with a policy in a context or under such circumstances or conditions as to have the capacity or tendency to mislead a purchaser or prospective purchaser of such policy to believe that he will receive, or that it is possible that he will receive, something other than a policy or some benefit not available to other persons of the same class and equal expectation of life.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.6 Disclosure Requirements

A.The information required to be disclosed by this regulation shall not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the text of the advertisement so as to be confusing or misleading.

B.An advertisement shall not omit material information or use words, phrases, statements, references or illustrations if the omission or use has the capacity, tendency or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered, premium payable, Life Insurance Advertising or state or federal tax consequences. The fact that the policy offered is made available to a prospective insured for inspection prior to consummation of the sale, or an offer is made to refund the premium if the purchaser is not satisfied or that the policy or contract includes a “free look” period that satisfies or exceeds regulatory requirements, does not remedy misleading statements.

C.In the event an advertisement uses “non-medical,” “no medical examination required,” or similar terms where issue is not guaranteed, terms shall be accompanied by a further disclosure of equal prominence and in juxtaposition thereto to the effect that issuance of the policy may depend upon the answers to the health questions set forth in the application.

D.An advertisement shall not use as the name or title of a life insurance policy any phrase that does not include the words “life insurance” unless accompanied by other language clearly indicating it is life insurance. An advertisement shall not use as the name or title of an annuity contract any phrase that does not include the word “annuity” unless accompanied by other language clearly indicating it is an annuity. An annuity advertisement shall not refer to an annuity as a CD annuity, or deceptively compare an annuity to a certificate of deposit.

E.An advertisement shall prominently describe the type of policy advertised.

F.An advertisement of an insurance policy marketed by direct response techniques shall not state or imply that because there is no insurance producer or commission involved there will be a cost saving to prospective purchasers unless that is the fact. No cost savings may be stated or implied without justification satisfactory to the commissioner prior to use.

G.An advertisement for a life insurance policy containing graded or modified benefits shall prominently display any limitation of benefits. If the premium is level and coverage decreases or increases with age or duration, that fact shall be commonly disclosed. An advertisement of or for a life insurance policy under which the death benefit varies with the length of time the policy has been in force shall accurately describe and clearly call attention to the amount of minimum death benefit under the policy.

H.An advertisement for the types of policies described in Subsections F and G of this section shall not use the words “inexpensive,” “low cost,” or other phrase or words of similar import when the policies being marketed are guaranteed issue.

I.Premiums

1.An advertisement for a policy with non-level premiums shall prominently describe the premium changes.

2.An advertisement in which the insurer describes a policy where it reserves the right to change the amount of the premium during the policy term, but which does not prominently describe this feature, is deemed to be deceptive and misleading and is prohibited.

3.An advertisement shall not contain a statement or representation that premiums paid for a life insurance policy can be withdrawn under the terms of the policy. Reference may be made to amounts paid into an advance premium fund, which are intended to pay premiums at a future time, to the effect that they may be withdrawn under the conditions of the prepayment agreement. Reference may also be made to withdrawal rights under any unconditional premium refund offer.

4.An advertisement that represents that a pure endowment benefit has a “profit” or “return” on the premium paid, rather than a policy benefit for which a specified premium is paid is deemed to be deceptive and misleading and is prohibited.

5.An advertisement shall not represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact.

6.An advertisement shall not use the term “vanish” or “vanishing premium,” or a similar term that implies the policy becomes paid up, to describe a plan using nonguaranteed elements to pay a portion of future premiums.

J.Analogies between a life insurance policy or annuity contract’s cash values and savings accounts or other investments and between premium payments and contributions to savings accounts or other investments shall be complete and accurate. An advertisement shall not emphasize the investment or tax features of a life insurance policy to such a degree that the advertisement would mislead the purchaser to believe the policy is anything other than life insurance.

K.An advertisement shall not state or imply in any way that interest charged on a policy loan or the reduction of death benefits by the amount of outstanding policy loans is unfair, inequitable or in any manner an incorrect or improper practice.

L.If nonforfeiture values are shown in any advertisement, the values must be shown either for the entire amount of the basic life policy death benefit or for each $1,000 of initial death benefit.

M.The words “free,” “no cost,” “without cost,” “no additional cost, “at no extra cost,” or words of similar import shall not be used with respect to any benefit or service being made available with a policy unless true. If there is no charge to the insured, then the identity of the payor shall be prominently disclosed. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the premium or use other appropriate language.

N.No insurance producer may use terms such as “financial planner,” “investment adviser,” “financial consultant,” or “financial counseling” in such a way as to imply that he or she is generally engaged in an advisory business in which compensation is unrelated to sales unless that actually is the case. This provision is not intended to preclude persons who hold some form of formal recognized financial planning or consultant designation from using this designation even when they are only selling insurance. This provision also is not intended to preclude persons who are members of a recognized trade or profession association having such terms as part of its name from citing membership, providing that a person citing membership, if authorized only to sell insurance products, shall disclose that fact. This provision does not permit persons to charge an additional fee for services that are customarily associated with the solicitation, negotiation or servicing of policies.

O.Nonguaranteed Elements

1.An advertisement shall not utilize or describe nonguaranteed elements in a manner that is misleading or has the capacity or tendency to mislead.

2.An advertisement shall not state or imply that the payment or amount of nonguaranteed elements is guaranteed. Unless otherwise specified in 230-RICR-20-25-14, if nonguaranteed elements are illustrated, they shall be based on the insurer’s current scale and the illustration shall contain a statement to the effect that they are not to be construed as guarantees or estimates of amounts to be paid in the future.

3.Unless otherwise specified in 230-RICR-200-25-14, an advertisement that includes any illustrations or statements containing or based upon nonguaranteed elements shall set forth, with equal prominence comparable illustrations or statements containing or based upon the guaranteed policy elements.

4.An advertisement shall not use or describe determinable policy elements in a manner that is misleading or has the capacity or tendency to mislead.

5.Advertisement may describe determinable policy elements as guaranteed but not determinable at issue. This description should include an explanation of how these elements operate, and their limitations, if any.

6.If an advertisement refers to any nonguaranteed policy element, it shall indicate that the insurer reserves the right to change any such element at any time and for any reason. However, if an insurer has agreed to limit this right in any way; such as, for example, if it has agreed to change these elements only at certain intervals or only if there is a change in the insurer’s current or anticipated experience, the advertisement may indicate any such limitation on the insurer’s right.

7.An advertisement shall not refer to dividends as “tax-free” or use words of similar import, unless the tax treatment of dividends is fully explained and the nature of the dividend as a return of premium is indicated clearly.

8.An advertisement may not state or imply that illustrated dividends under either or both a participating policy or pure endowment will be or can be sufficient at any future time to assure without the future payment of premiums, the receipt of benefits, such as a paid-up policy, unless the advertisement clearly and precisely explains the benefits or coverage provided at that time and the conditions required for that to occur.

P.An advertisement shall not state that a purchaser of a policy will share in or receive a stated percentage or portion of the earnings on the general account assets of the company.

Q.Testimonials, Appraisals, Analysis, or Endorsements by Third Parties

1.Testimonials, appraisals or analysis used in advertisements must be genuine; represent the current opinion of the author; be applicable to the policy advertised, if any; and be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective insureds as to the nature or scope of the testimonial, appraisal, analysis or endorsement. In using testimonials, appraisals or analysis; the insurer or insurance producer makes as its own all the statements contained therein, and these statements are subject to all the provisions of this regulation.

2.If the individual making a testimonial, appraisal, analysis or an endorsement has a financial interest in the insurer or related entity as a stockholder, director, officer, employee or otherwise, or receives any benefit directly or indirectly other than required union scale wages, that fact shall be prominently disclosed in the advertisement.

3.An advertisement shall not state or imply that an insurer or a policy has been approved or endorsed by a group of individuals, society, association or other organization unless such is the fact and unless any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial is owned, controlled or managed by the insurer, or receives any payment or other consideration from the insurer for making an endorsement or testimonial, that fact shall be disclosed in the advertisement.

4.When an endorsement refers to benefits received under a policy for a specific claim, the claim date, including claim number, date of loss and other pertinent information shall be retained by the insurer for inspection for a period of five (5) years after the discontinuance of its use or publication.

R.An advertisement shall not contain statistical information relating to any insurer or policy unless it accurately reflects recent and relevant facts. The source of any statistics used in advertisement shall be identified.

S.Policies Sold to Students

1.The envelope in which insurance solicitation material is contained may be addressed to the parents of students. The address may not include any combination of words which imply that the correspondence is from a school, college, university or other education or training institution nor may it imply that the institution has endorsed the material or supplied the insurer with information about the student unless such is a correct and truthful statement.

2.All advertisements including, but not limited to, informational flyers used in the solicitation of insurance shall be identified clearly as coming from an insurer or insurance producer, if such is the case, and these entities shall be clearly identified as such.

3.The return address on the envelope may not imply that the soliciting insurer or insurance producer is affiliated with a university, college, school or other educational or training institution, unless true.

T.Introductory, Initial or Special Offers and Enrollment Periods

1.An advertisement of an individual policy or combination of policies shall not state or imply that the policy or combination of policies is an introductory, initial or special offer, or that applicants will receive substantial advantages not available at a later date, or that the offer is available only to a specified group of individuals, unless that is the fact. An advertisement shall not describe an enrollment period as “special” or “limited” or use similar words or phrases in describing it when the insurer uses successive enrollment periods as its usual method of marketing its policies.

2.An advertisement shall not state or imply that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of the particular policy advertised because of special advantages available in the policy.

3.An advertisement shall not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and the amount of the reduced initial premium. A reduced initial or first year premium may not be described as constituting free insurance for a period of time. When insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, all references to the reduced initial premium shall be followed by an asterisk or other appropriate symbol that refers the reader to that specific portion of the advertisement that contains the full rate schedule for the policy being advertised.

4.An enrollment period during which a particular insurance policy may be purchased on an individual basis shall not be offered within this state unless there has been a lapse of not less than six months between the close of the immediately preceding enrollment period for the same policy and the opening of the new enrollment period. The advertisement shall specify the date by which the applicant must mail the application, which shall be not less than ten (10) days and not more than forty (40) days from the date on which the enrollment period is advertised for the first time. This regulation applies to all advertising media—i.e., mail, newspapers, radio, television, magazines and periodicals—by any one insurer or insurance producer. The phrase “any one insurer” includes all the affiliated companies of a group of insurance companies under common management or control. This regulation does not apply to the use of a termination or cutoff date beyond which an individual application for a guaranteed issue policy will not be accepted by an insurer in those instances where the application has been sent to the applicant in response to his or her request. It is also inapplicable to solicitations of employees or members of a particular group or association that otherwise would be eligible under specified provisions of the insurance code for group, blanket or franchise insurance. In cases where insurance product is marketed on a direct mail basis to prospective insurance by reason of some common relationship with a sponsoring organization, this regulation shall be applied separately to each sponsoring organization.

U.An advertisement of a particular policy shall not state or imply that prospective insureds shall be or become members of a special class, group, or quasi-group and as such enjoy special rates, dividends or underwriting privileges, unless that is the fact.

V.An advertisement shall not make unfair or incomplete comparisons of policies, benefits, dividends or rates of other insurers. An advertisement shall not disparage other insurers, insurance producers, policies, services or methods of marketing.

W.For individual deferred annuity products or deposit funds, the following shall apply:

1.Any illustrations or statements containing or based upon nonguaranteed interest rates shall likewise set forth with equal prominence comparable illustrations or statements containing or based upon the guaranteed accumulation interest rates. The nonguaranteed interest rate shall not be greater than those currently being credited by the company unless the nonguaranteed rates have been publicly declared by the company with an effective date for new issues not more than three (3) months subsequent to the date of declaration.

2.If an advertisement states the net premium accumulation interest rate, whether guaranteed or not, it shall also disclose in close proximity thereto and with equal prominence, the actual relationship between the gross and the net premiums.

3.If the contract does not provide a cash surrender benefit prior to commencement of payment of annuity benefits, an illustration or statement concerning the contract shall prominently state that cash surrender benefits are not provided.

4.Any illustrations, depictions or statements containing or based on determinable policy elements shall likewise set forth with equal prominence comparable illustrations, depictions or statements containing or based on guaranteed policy elements.

X.An advertisement of a life insurance policy or annuity that illustrates nonguaranteed values shall only do so in accordance with current applicable state law relative to illustrating such values for life insurance policies and annuity contracts.

Y.An advertisement for the solicitation or sale of a preneed funeral contract or prearrangement as defined in § 5.2(F) of this Part that is funded or to be funded by a life insurance policy or annuity contract shall adequately disclose the following:

1.The fact that a life insurance policy or annuity contract is being used to fund a prearrangement as defined in § 5.2(F) of this Part; and

2.The nature of the relationship among the soliciting agent or agents, the provider of the funeral or cemetery merchandise services, the administrator and any other person.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.7 Identity of Insurer

A.The name of the insurer shall be clearly identified in all advertisements about the insurer or its products, and if any specific individual policy is advertised it shall be identified either by form number or other appropriate description. If an application is a part of the advertisement, the name of the insurer shall be shown on the application. However, if an advertisement contains a listing of rates or features that is a composite of several different policies or contracts of different insurers, the advertisement shall so state, shall indicate, if applicable, that not all policies or contracts on which the composite is based may be available in all states, and shall provide a rating of the lowest rated insurer and reference the rating agency, but need not identify each insurer. If an advertisement identifies the issuing insurers, insurance issuer ratings need not be stated.

B.An advertisement shall not use a trade name, an insurance group designation, name of the parent company of the insurer, name of a particular division of the insurer, a reinsurer of the insurer, service mark, slogan, symbol or other device or reference without disclosing the name of the insurer, if the advertisement would have the capacity or tendency to mislead or deceive as to the true identity of the insurer or create the impression that a company other than the insurer would have any responsibility for the financial obligation under a policy.

C.An advertisement shall not use any combination of words, symbols or physical materials that by their content, phraseology, shape, color or other characteristics are so similar to a combination of words, symbols or physical materials used by a governmental program or agency or otherwise appear to be of such a nature that they tend to mislead prospective insureds into believing that the solicitation is in some manner connected with a governmental program or agency.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.8 Jurisdictional Licensing and Status of Insurer

A.An advertisement that is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed shall not imply licensing beyond those limits.

B.An advertisement may state that an insurer or insurance producer is licensed in a particular state or states, provided it does not exaggerate that fact or suggest or imply that competing insurers or insurance producers may not be so licensed.

C.An advertisement shall not create the impression that the insurer, its financial condition or status, the payment of its claims or the merits, desirability, or advisability of its policy forms or kinds of plans of insurance are recommended or endorsed by any governmental entity. However, where a governmental entity has recommended or endorsed a policy form or plan, that fact may be stated if the entity authorizes its recommendation or endorsement to be used in an advertisement.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.9 Statements About the Insurer

An advertisement shall not contain statements, pictures or illustrations that are false or misleading, in fact or by implication, with respect to the assets, liabilities, insurance in force, corporate structure, financial condition, age or relative position of the insurer in the insurance business. An advertisement shall not contain a recommendation by any commercial rating system unless it clearly defines the scope and extent of the recommendation including, but not limited to, the placement of insurer’s rating in the hierarchy of the rating system cited.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.10 Enforcement Procedures

A.Each insurer shall maintain at its home or principal office a complete file containing a specimen copy of every printed, published or prepared advertisement of its individual policies and specimen copies of typical printed, published or prepared advertisements of its blanket, franchise and group policies, hereafter disseminated in this state, with a notation indicating the manner and extent of distribution and the form number of any policy advertised. The file shall be subject to inspection by the department. All advertisements shall be maintained in the file for a period of five (5) years after discontinuance of its use or publication.

B.If the commissioner determines that an advertisement has the capacity or tendency to mislead or deceive the public, the commissioner may require an insurer or insurance producer to submit all or any part of the advertising material for review or approval prior to use.

C.Each insurer subject to the provisions of this regulation shall file with the commissioner with its annual statement a certificate of compliance executed by an authorized officer of the insurer stating that to the best of his or her knowledge, information and belief the advertisements that were disseminated by or on behalf of the insurer in this state during the preceding statement year, or during the portion of the year when these rules were in effect, complied or were made to comply in all respects with the provisions of these rules and the insurance laws of this state as implemented and interpreted by this regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.11 Penalties

An insurer or its officer, directors, producers or employees that violate any of the provisions of this regulation, or knowingly participate in or abet such violation, shall be subject to administrative penalties in accordance with R.I. Gen. Laws § 42-14-16.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.12 Conflict With Other Laws or Regulations

It is not intended that this regulation conflict with or supersede any regulations currently in force or subsequently adopted in this state governing specific aspects of the sale or replacement of life insurance including, but not limited to, laws or regulations dealing with life insurance cost comparison indices, deceptive practices in the sale of life insurance, replacement of life insurance policies, illustration of life insurance policies, and annuity disclosure. Consequently, no disclosure pursuant to or required under those regulations shall be deemed to be an advertisement within the meaning of this regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-5 § 5.13 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-7 Modified Guaranteed Annuities

230-RICR-20-25-7 § 7.1 Purpose

The purpose of this Regulation is to provide rules for the conduct of the business of Modified Guaranteed Annuity, as defined herein. These rules apply both to business conducted by companies domiciled in Rhode Island and to business conducted by companies selling or offering for sale Modified Guaranteed Annuities in Rhode Island or otherwise subject to Rhode Island insurance laws.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.2 Authority

This Regulation is issued pursuant to the authority vested in the Director under R.I. Gen. Laws § 27-32-7. This Regulation will take effect on May 1, 1996.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.3 Applicability and Scope

A.This Regulation shall apply to:

1.The qualifications of agents who sell modified guaranteed annuity contracts in this state;

2.The qualification of insurers who issue such contracts;

3.The required contract form and provisions for issue of such coverage in this state; and

4.The manner in which separate account assets, supporting such issued contracts, are to be maintained and reported.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.4 Definitions

A.As used in this Regulation, the following terms and phrases shall mean:

1."Director" means the Director of the Department of Business Regulation and the Insurance Commissioner.

2."Interest credits" means all interest that is credited to the contract.

3."Modified guaranteed annuity" means a deferred annuity contract, the underlying assets of which are held in a separate account, and the values of which are guaranteed if held for specified periods. The contract contains nonforfeiture values that are based upon a market value adjustment formula if held for shorter periods. This formula may or may not reflect the value of assets held in the separate account. The assets underlying the contract must be in a separate account during the period or periods when the contract holder can surrender the contract.

4."Separate account" means a separate account established pursuant to R.I. Gen. Laws § 27-32-1, or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.5 Authority of Insurers

A.The following requirements apply to all insurers either seeking or having authority to issue modified guaranteed annuities in this state.

1.Licensing and Approval to do Business.

a.No company shall deliver or issue for delivery modified guaranteed annuities within this state unless it is licensed or organized to do life insurance or annuity business in this state. The Director must be satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state. The Director shall consider among other things the history and financial condition of the company; the character, responsibility and fitness of the officers and directors of the company; and the law and regulation under which the company is authorized in the state of domicile to issue such annuities.

b.If the company is a subsidiary of an admitted life insurance company or affiliated with such company by common management or ownership, it may be deemed by the Director to have satisfied the provision of § 7.5(A)(1)(a) of this Part if either the subsidiary or the admitted life company satisfies the provisions of § 7.5(A)(1)(a) of this Part. Companies licensed and having a satisfactory record of doing business in this state for a period of at least three (3) years may be deemed to have satisfied the Director with respect to § 7.5(A)(1)(a) of this Part above.

c.Before any company shall deliver or issue for delivery modified guaranteed annuities within this state, it shall submit to the Director a general description of the kinds of annuities it intends to issue. If requested by the Director, the following shall be submitted:

(1)A copy of the statutes and regulations of its state of domicile under which it is authorized to issue modified guaranteed annuities; and/or

(2)Biographical data with respect to officers and directors of the company on the NAIC uniform biographical data forms.

2.Use of Sales Materials.

a.An insurer authorized to sell modified guaranteed annuities in this state shall not use any sales material, advertising material, descriptive literature or other materials of any kind in connection with the sale of modified guaranteed annuities in this state which is false, misleading, deceptive or inaccurate.

b.Illustrations of benefits payable under any modified guaranteed annuity shall not include projections of past investment experience into the future or attempted predictions of future investment experience, except that hypothetical assumed interest credits may be used to illustrate possible levels of benefits.

c.Before any insurer shall deliver or issue for delivery any modified guaranteed annuity contract in this state, the Director may require the filing of a copy of any prospectus or other sales material to be used in connection with the marketing of the insurer's modified guaranteed annuity contract. The sales material must clearly illustrate that there can be both upward and downward adjustments due to the application of the market value adjustment formula in determining nonforfeiture benefits.

3.Reports. Any insurer authorized to transact the business of modified guaranteed annuities in this state shall submit to the Director:

a.A separate account annual statement which shall include the business of its modified guaranteed annuities; and

b.Such additional information concerning its modified guaranteed annuity operations or separate accounts as the Director shall deem necessary.

4.Authority of Director to Disapprove. Any material required to be filed with and approved by the Director shall be subject to disapproval if at any time it is found by the Director not to comply with the standards established by this Regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.6 Filing of Contracts

The filing requirements applicable to modified guaranteed annuities shall be those filing requirements otherwise applicable under existing statutes and regulations of this state with respect to individual and group life insurance and annuity contract form filings, to the extent appropriate. Filings shall include a demonstration in a form satisfactory to the Director that the nonforfeiture provisions of the contract(s) comply with § 7.7(B) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.7 Modified Guaranteed Annuity Contract Requirements

A.Mandatory Contract Benefit and Design Requirements.

1.Any modified guaranteed annuity contract delivered or issued for delivery in this state shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of nonforfeiture benefits.

2.No modified guaranteed annuity contract calling for the payment of periodic stipulated payments shall be delivered or issued for delivery in this state unless it contains in substance the following provisions:

a.A provision that there shall be a grace period of thirty (30) days or one month during which the contract shall remain in force and within which any payment due to the insurer other than the first may be made. The contract may include a statement of the basis for determining the date as of which any such payment received during the grace period shall be applied to produce the values under the contract.

b.A provision that, at any time within one year from the date of default, the contract may be reinstated upon payment to the insurer of such overdue payments as required by contract and of all indebtedness to the insurer on the contract, including interest. Reinstatement may not occur if the cash value has been paid. The contract may include a statement of the basis for determining the date as of which the amount to cover such overdue payments and indebtedness shall be applied to produce the values under the contract.

c.A provision that, to the extent set out in the contract, the portion of the assets of any separate account which equal the reserves and other contract liabilities of the account shall not be chargeable with liabilities arising out of any other business of the company.

3.The market-value adjustment formula, used in determining nonforfeiture benefits, must be stated in the contract and must be applicable for both upward and downward adjustments. When a contract is filed, it must be accompanied by an actuarial statement indicating the basis for the market-value adjustment formula and a demonstration that the formula provides reasonable equity to both the contract holder and the insurance company.

B.Nonforfeiture Benefits.

1.This section shall not apply to any of the following:

a.Reinsurance;

b.Group annuity contracts purchased in connection with one or more retirement plans or deferred compensation plans established or maintained by or for one or more employers (including partnerships or sole proprietorships), employee organizations, or any combination thereof, other than plans providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code;

c.Premium deposit fund;

d.Investment annuity;

e.Immediate annuity;

f.Deferred annuity contract after annuity payments have commenced;

g.Reversionary annuity; or

h.Any contract which is to be delivered outside this state by an agent or other representative of the company issuing the contract.

2.No modified guaranteed annuity contracts shall be delivered or issued for delivery in this state unless it contains in substance the following provisions:

a.When premium payments cease under a contract, the insurer will grant a paid up annuity benefit on a plan described in the contract that complies with § 7.7(B)(5) of this Part. The provision will include a statement of the mortality table, if any, and guaranteed or assumed interest rates used in calculating annuity payments.

b.If a contract provides for a lump sum settlement at maturity or at any other time, upon surrender of the contract at or prior to the commencement of any annuity payments, the insurer will pay, in lieu of any paid-up annuity benefit, a cash surrender benefit as described in the contract that complies with § 7.7(B)(6) of this Part. The contract may provide that the insurer may defer payment of such cash surrender benefit for a period of six (6) months after demand.

3.The minimum values, as specified in this section, of any paid-up annuity, cash surrender or death benefits available under a modified guaranteed annuity contract shall be based upon nonforfeiture amounts meeting the requirements of this paragraph. The Unadjusted Minimum Nonforfeiture Amount on any date prior to the annuity commencement date shall be an amount equal to the percentages of net considerations (as specified in § 7.7(B)(4) of this Part) increased by the interest credits defined in § 7.4 of this Part allocated to the percentage of net considerations, which amount shall be reduced to reflect the effect of §§ 7.7(B)(3)(a), (b), (c), and (d) of this Part below:

a.Any partial withdrawals from or partial surrender of the contract;

b.The amount of any indebtedness on the contract, including interest due and accrued;

c.An annual contract charge equal to the lesser of

(1)Thirty dollars ($30.00), or

(2)Two percent (2%) of the end-of-year contract value less the amount of any annual contract charge deducted from any gross considerations credit to the contract during such contract year; and

d.A transaction charge of ten dollars ($10.00) for each transfer to another investment division within the same contract.

e.Guaranteed interest credits in each year for any period of time for which interest credits are guaranteed shall be reasonably related to the average guaranteed interest credits over that period of time.

f.The Minimum Nonforfeiture Amount shall be the Unadjusted Minimum Nonforfeiture Amount adjusted by the market-value adjustment formula contained in the contract.

g.The annual contract charge of thirty dollars ($30.00) and the transaction charge of ten dollars ($10.00) referenced will be adjusted to reflect changes in the Consumer Price Index in accordance with § 7.7(B)(4) of this Part.

4.The percentages of net considerations used to define the Minimum Nonforfeiture Amount in § 7.7(B)(3) of this Part shall meet the requirements of this paragraph.

a.With respect to contracts providing for periodic considerations, the net considerations for a given contract year used to define the Minimum Nonforfeiture Amount shall be an amount not less than zero and shall be equal to the corresponding gross considerations credited to the contract during that contract year less an annual contract charge of thirty dollars ($30.00) and less a collection charge of one dollar and twenty-five cents ($1.25) per consideration credited to the contract during that contract year and less any charges for premium taxes. The percentages of net considerations shall be sixty-five percent (65%) for the first contract year and eighty-seven and one-half percent (87 1/2%) for the second and later contract years. Notwithstanding the provisions of the preceding sentence, the percentage shall be sixty-five percent (65%) of the portion of the total net consideration for any renewal contract year which exceeds by not more than two times the sum of those portions of the net considerations in all prior contract years for which the percentage was sixty-five (65%).

b.With respect to contracts providing for a single consideration, the net consideration used to define the Minimum Nonforfeiture Amount shall be the gross consideration less a contract charge of seventy-five ($75.00) and less any charge for premium taxes. The percentage of the net consideration shall be ninety percent (90%).

c.The annual contract charge of thirty dollars ($30.00), the collection charge of one dollar and twenty-five cents ($1.25) per collection, and the single consideration contract charge of seventy-five dollars ($75.00) referred to above, will be adjusted to reflect changes in the Consumer Price Index in accordance with Paragraph 3 above.

d.The above contract charges shall be multiplied by the ratio of the Consumer Price Index for June of the calendar year preceding the date of filing, to the Consumer Price Index for June, 1979. As used here, the Consumer Price Index means such Index for all urban consumers for all items as published by the Bureau of Labor Statistics of the United States Department of Labor or any successor agency. If publication of the Consumer Price Index ceases, or if such Index otherwise becomes unavailable or is altered in such a way as to be unusable, the Director will substitute an index which the Director deems to be suitable.

5.Any paid-up annuity benefit available under a modified guaranteed annuity contract shall be such that its present value on the annuity commencement date is at least equal to the Minimum Nonforfeiture Amount on that date. Such present value shall be computed using the mortality table, if any, and the guaranteed or assumed interest rates used in calculating the annuity payments.

6.For modified guaranteed annuity contracts which provide cash surrender benefits, the cash surrender benefit at any time prior to the annuity commencement date shall not be less than the minimum Nonforfeiture Amount next computed after the request for surrender is received by the insurer. The death benefit under such contracts shall be at least equal to the cash surrender benefit.

7.Any modified guaranteed annuity contract which does not provide cash surrender benefits or does not provide death benefits at least equal to the Minimum Nonforfeiture Amount prior to the annuity commencement date shall include a statement in a prominent place in the contract that such benefits are not provided.

8.Despite the requirements of this section, a modified guaranteed annuity contract may provide under the situations specified in Subparagraphs a or b below that the insurer, at its option, may cancel the annuity and pay the contract holder the larger of the Unadjusted Minimum Nonforfeiture Amount and the Minimum Nonforfeiture Amount, and by such payment be released of any further obligation under the contract:

a.If at the time the annuity becomes payable the larger of the Unadjusted Minimum Nonforfeiture Amount and the Minimum Nonforfeiture Amount is less than two thousand ($2,000) or would provide an income the initial amount of which is less than twenty dollars twenty ($20) per month; or

b.If, prior to the time the annuity becomes payable under a periodic payment contract, no considerations have been received under the contract for a period of two (2) full years and both

(1)The total considerations paid prior to such period, reduced to reflect any partial withdrawals from or partial surrenders of the contract, and

(2)The larger of the Unadjusted Minimum Nonforfeiture Amount and the Minimum Nonforfeiture Amount is less than two thousand dollars ($2.000).

9.For any modified guaranteed annuity contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Despite the provisions of § 7.7(B)(8)(b)((2)) of this Part above, additional benefits payable

a.In the event of total and permanent disability,

b.As reversionary annuity or deferred reversionary annuity benefits, or

c.As other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits that may be required by this section. The inclusion of such additional benefits shall not be required in any paid-up benefits, unless the additional benefits separately would require Minimum Nonforfeiture Amounts, paid-up annuity, cash surrender and death benefits.

C.The Application.

The application for a modified guaranteed annuity shall prominently set forth language substantially stating that amounts payable under the contract are subject to a market value adjustment prior to a date or dates specified in the contract. The statement shall be placed immediately above the signature line.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.8 Reserve Liabilities

A.Reserve liabilities for modified guaranteed annuities shall be established in accordance with actuarial procedures that recognize:

1.That assets of the separate account are based on market values;

2.The variable nature of benefits provided; and

3.Any mortality guarantees.

B.As a minimum, the separate account liability will equal the surrender value based upon the market-value adjustment formula contained in the contract. If that liability is greater than the market value of the assets, a transfer of assets will be made into the separate account so that the market value of the assets at least equals that of the liabilities. Also, any additional reserve that is needed to cover future guaranteed benefits will also be set up by the valuation actuary.

C.The market-value adjustment formula, the interest guarantees, and the degree to which projected cash flow of assets and liabilities are matched must also be considered. Each year, the valuation actuary must provide an opinion on whether the assets in the separate account are adequate to provide all future benefits that are guaranteed.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.9 Separate Accounts

A.The following requirements apply to the establishment and administration of modified guaranteed annuity separate accounts by any domestic insurer:

1.Establishment and Administration of Separate Accounts. Any domestic insurer issuing modified guaranteed annuities shall establish one or more separate accounts pursuant to R.I. Gen. Laws § 27-32-1.

2.Amounts in the Separate Account. The insurer shall maintain in each separate account assets with a market or other value comporting to standards set out in R.I. Gen. Laws § 27-32-2 at least equal to the valuation reserves and other contract liabilities respecting such account.

3.Valuation of Separate Account Assets. Investments of the separate account shall be valued at their market value on the date of valuation, or at amortized cost if it approximates market value, or pursuant to standards contained in R.I. Gen. Laws § 27-32-4.

4.Investment Laws. Unless otherwise approved by the Director, separate accounts relating to modified guaranteed annuities will be subject to investment laws applicable to the insurer's general asset account.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.10 Reports to Policyholders

Companies will annually provide their contract holders with a report showing both the account value and the cash surrender value. The report should clearly indicate that the account value is prior to the application of any surrender charges or market value adjustment formula. It should also specify the surrender charge and market value adjustment used to determine the cash surrender value.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.11 Foreign Companies

If the law or regulation in the place of domicile of a foreign company provides a degree of protection to the policyholders and the public which is substantially similar to that provided by these Regulations, the Director to the extent deemed appropriate by him or her may consider compliance with such law or regulation as compliance with this Regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.12 Authorization of Producers

No person, corporation, partnership, or other legal entity may sell or offer for sale in this state any modified guaranteed annuity contract unless licensed to sell annuities under the insurance laws of this state.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-7 § 7.13 Severability

If any provision of this Regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the Regulation and the application of its provisions to other persons or circumstances shall not be affected.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-25-8 Valuation of Life Insurance Policies

230-RICR-20-25-8 § 8.1 Purpose

A.The purpose of this Part is to provide:

1.Tables of select mortality factors and rules for their use;

2.Rules concerning a minimum standard for the valuation of plans with nonlevel premiums or benefits; and

3.Rules concerning a minimum standard for the valuation of plans with secondary guarantees.

B.The method for calculating basic reserves defined in this Part will constitute the Commissioners’ Reserve Valuation Method for policies to which this Part is applicable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 08/26/2010

230-RICR-20-25-8 § 8.2 Authority

This Part is issued under the authority of R.I. Gen. Laws § 27-4.5-11.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 08/26/2010

230-RICR-20-25-8 § 8.3 Applicability

A.This Part shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after the effective date of this Part, subject to the following exceptions and conditions.

B.Exceptions

1.This Part shall not apply to any individual life insurance policy issued on or after the effective date of this Part if the policy is issued in accordance with and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount, issued before the effective date of this Part, that guarantees the premium rates of the new policy. This Part also shall not apply to subsequent policies issued as a result of the exercise of such a provision, or a derivation of the provision, in the new policy.

2.This Part shall not apply to any universal life policy that meets all the following requirements:

a.Secondary guarantee period, if any, is five (5) years or less;

b.Specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the CSO valuation tables as defined in § 8.4(F) of this Part and the applicable valuation interest rate; and

c.The initial surrender charge is not less than 100 percent of the first year annualized specified premium for the secondary guarantee period.

3.This Part shall not apply to any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

4.This of this Part shall not apply to any variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

5.This Part shall not apply to a group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.

C.Conditions

1.Calculation of the minimum valuation standard for policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits (other than universal life policies), or both, shall be in accordance with the provisions of § 8.6 of this Part.

2.Calculation of the minimum valuation standard for flexible premium and fixed premium universal life insurance policies, that contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period shall be in accordance with the provisions of § 8.7 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 08/26/2010

230-RICR-20-25-8 § 8.4 Definitions

A.For purposes of this Part:

1.“Basic reserves” means reserves calculated in accordance with R.I. Gen. Laws § 27-4.5-5.

2.“Contract segmentation method” means the method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment (from policy inception, for the first segment) to the end of the latest policy year as determined below. All calculations are made using the 1980 CSO valuation tables, as defined in Subsection 6 of this section, (or any other valuation mortality table adopted by the National Association of Insurance Commissioners (NAIC) after the effective date of this Part and promulgated by Part by the commissioner for this purpose), and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in § 8.5(B) of this Part.

a.The length of a particular contract segment shall be set equal to the minimum of the value t for which Gt is greater than Rt (if Gt never exceeds Rt the segment length is deemed to be the number of years from the beginning of the segment to the mandatory expiration date of the policy), where Gt and Rt are defined as follows:

where:

x =original issue age;

k =the number of years from the date of issue to the beginning of the segment;

t =1, 2, ...; t is reset to 1 at the beginning of each segment;

GPx+k+t-1 =Guaranteed gross premium per thousand of face amount for year t of the segment, ignoring policy fees only if level for the premium paying period of the policy.

= ,

However, Rt may be increased or decreased by one percent in any policy year, at the company’s option, but Rt shall not be less than one;

where:

x, k and t are as defined above, and

qx+k+t-1 = valuation mortality rate for deficiency reserves in policy year k+t but using the mortality of § 8.5(B)(2) if § 8.5B(3) is elected for deficiency reserves.

However, if GPx+k+t is greater than 0 and GPx+k+t-1 is equal to 0, Gt shall be deemed to be 1000. If GPx+k+t and GPx+k+t-1 are both equal to 0, Gt shall be deemed to be 0.

3.“Deficiency reserves” means the excess, if greater than zero, of

a.Minimum reserves calculated in accordance with R.I. Gen. Laws § 27-4.5-8, over

b.Basic reserves.

4.“Guaranteed gross premiums” means the premiums under a policy of life insurance that are guaranteed and determined at issue.

5.“Maximum valuation interest rates” means the interest rates defined in R.I. Gen. Laws § 27-4.5-4.1 (Computation of Minimum Standard by Calendar Year of Issue) that are to be used in determining the minimum standard for the valuation of life insurance policies.

6.“1980 CSO valuation tables” means the Commissioners’ 1980 Standard Ordinary Mortality Table (1980 CSO Table) without ten-year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law, and variations of the 1980 CSO Table approved by the NAIC, such as the smoker and nonsmoker versions approved in December 1983.

7.“Scheduled gross premium” means the smallest illustrated gross premium at issue for other than universal life insurance policies. For universal life insurance policies, scheduled gross premium means the smallest specified premium described in § 8.7(A)(3) of this Part, if any, or else the minimum premium described in § 8.7(A)(4) of this Part.

8.“Segmented reserves” means reserves, calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy, where the net premiums within each segment are a uniform percentage of the respective guaranteed gross premiums within the segment. The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment equals:

a.The present value of the death benefits within the segment, plus

b.The present value of any unusual guaranteed cash value (see § 8.6(D) of this Part) occurring at the end of the segment, less

c.Any unusual guaranteed cash value occurring at the start of the segment, plus

d.For the first segment only, the excess of the Item (1) over Item (2), as follows:

(1)A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.

(2)A net one year term premium for the benefits provided for in the first policy year.

e.The length of each segment is determined by the “contract segmentation method,” as defined in this section.

f.The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy.

g.For both basic reserves and deficiency reserves computed by the segmented method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.

9.“Tabular cost of insurance” means the net single premium at the beginning of a policy year for one-year term insurance in the amount of the guaranteed death benefit in that policy year.

10.“Ten-year select factors” means the select factors adopted with the 1980 amendments to the NAIC Standard Valuation Law.

11.“Unitary reserves” means the present value of all future guaranteed benefits less the present value of all future modified net premiums, where:

aGuaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy; and

b.Modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of Item (1) over Item (2), as follows:

(1)A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.

(2)A net one year term premium for the benefits provided for in the first policy year.

c.The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy.

12.“Universal life insurance policy” means any individual life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts) and mortality or expense charges are made to the policy.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 08/26/2010

230-RICR-20-25-8 § 8.5 General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves

A.At the election of the company for any one or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the NAIC after the effective date of this Part and promulgated by the commissioner for this purpose). If select mortality factors are elected, they may be:

1The ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;

2The select mortality factors in § 8.8 of this Part; or

3Any other table of select mortality factors adopted by the NAIC after the effective date of this Part and promulgated by the commissioner for the purpose of calculating basic reserves.

B.Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero, of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums. At the election of the company for any one or more specified plans of insurance, the quantity A and the corresponding net premiums used in the determination of quantity A may be based upon the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the NAIC after the effective date of this Part and promulgated by the commissioner). If select mortality factors are elected, they may be:

1.The ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;

2.The select mortality factors in § 8.8 of this Part,

3.For durations in the first segment, X percent of the select mortality factors in § 8.8 of this Part, subject to the following:

a.X may vary by policy year, policy form, underwriting classification, issue age, or any other policy factor expected to affect mortality experience;

b.X is such that, when using the valuation interest rate used for basic reserves, Item (1) is greater than or equal to Item (2);

(1)The actuarial present value of future death benefits, calculated using the mortality rates resulting from the application of X;

(2)The actuarial present value of future death benefits calculated using anticipated mortality experience without recognition of mortality improvement beyond the valuation date;

c.X is such that the mortality rates resulting from the application of X are at least as great as the anticipated mortality experience, without recognition of mortality improvement beyond the valuation date, in each of the first five years after the valuation date;

d.The appointed actuary shall increase X at any valuation date where it is necessary to continue to meet all the requirements of § 8.5(B)(3) of this Part;

e.The appointed actuary may decrease X at any valuation date as long as X continues to meet all the requirements of § 8.5(B)(3) of this Part; and

f.The appointed actuary shall specifically take into account the adverse effect on expected mortality and lapsation of any anticipated or actual increase in gross premiums.

g.If X is less than 100 percent at any duration for any policy, the following requirements shall be met:

(1)The appointed actuary shall annually prepare an actuarial opinion and memorandum for the company in conformance with the requirements of § 45-9.5 of this Chapter (Annuity Mortality Table for use in Determining Reserve Liabilities for Annuities) ;

(2)The appointed actuary shall disclose, in the Regulatory Asset Adequacy Issues Summary, the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one or more interim periods; and

(3)The appointed actuary shall annually opine for all policies subject to this Part as to whether the mortality rates resulting from the application of X meet the requirements of § 8.5(B)(3) of this Part. This opinion shall be supported by an actuarial report, subject to appropriate Actuarial Standards of Practice promulgated by the Actuarial Standards Board of the American Academy of Actuaries. The X factors shall reflect anticipated future mortality, without recognition of mortality improvement beyond the valuation date, taking into account relevant emerging experience.

4.Any other table of select mortality factors adopted by the NAIC after the effective date of this Part and promulgated by the commissioner for the purpose of calculating deficiency reserves.

C.This subsection applies to both basic reserves and deficiency reserves. Any set of select mortality factors may be used only for the first segment. However, if the first segment is less than ten years, the appropriate ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law may be used thereafter through the tenth policy year from the date of issue.

D.In determining basic reserves or deficiency reserves, guaranteed gross premiums without policy fees may be used where the calculation involves the guaranteed gross premium but only if the policy fee is a level dollar amount after the first policy year. In determining deficiency reserves, policy fees may be included in guaranteed gross premiums, even if not included in the actual calculation of basic reserves.

E.Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than one year after the date of the change shall be the greatest of the following:

1.reserves calculated ignoring the guarantee,

2.reserves assuming the guarantee was made at issue, and

3.reserves assuming that the policy was issued on the date of the guarantee.

F.The commissioner may require that the company document the extent of the adequacy of reserves for specified blocks, including but not limited to policies issued prior to the effective date of this Part. This documentation may include a demonstration of the extent to which aggregation with other non-specified blocks of business is relied upon in the formation of the appointed actuary opinion pursuant to and consistent with the requirements of § 45-9.8 of this Chapter (Annuity Mortality Table for use in Determining Reserve Liabilities for Annuities).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 08/26/2010

230-RICR-20-25-8 § 8.6 Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies)

A.Basic Reserves. Basic reserves shall be calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy shall use the same valuation mortality table and selection factors. At the option of the insurer, in calculating segmented reserves and net premiums, either of the adjustments described in §§ 8.6(A)(1) or (2) of this Part below may be made:

1.Treat the unitary reserve, if greater than zero, applicable at the end of each segment as a pure endowment and subtract the unitary reserve, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.

2.Treat the guaranteed cash surrender value, if greater than zero, applicable at the end of each segment as a pure endowment; and subtract the guaranteed cash surrender value, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.

B.Deficiency Reserves

1.The deficiency reserve at any duration shall be calculated:

a.On a unitary basis if the corresponding basic reserve determined by § 8.6(A) of this Part is unitary;

b.On a segmented basis if the corresponding basic reserve determined by § 8.6(A) of this Part is segmented; or

c.On the segmented basis if the corresponding basic reserve determined by § 8.6(A) of this Part is equal to both the segmented reserve and the unitary reserve.

2.This subsection shall apply to any policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality (specified in § 8.5(B) of this Part) and rate of interest.

3.Deficiency reserves, if any, shall be calculated for each policy as the excess if greater than zero, for the current and all remaining periods, of the quantity A over the basic reserve, where A is obtained as indicated in § 8.5(B) of this Part.

4.For deficiency reserves determined on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves.

C.Minimum Value. Basic reserves may not be less than the tabular cost of insurance for the balance of the policy year, if mean reserves are used. Basic reserves may not be less than the tabular cost of insurance for the balance of the current modal period or to the paid-to-date, if later, but not beyond the next policy anniversary, if mid-terminal reserves are used. The tabular cost of insurance shall use the same valuation mortality table and interest rates as that used for the calculation of the segmented reserves. However, if select mortality factors are used, they shall be the ten-year select factors incorporated into the 1980 amendments of the NAIC Standard Valuation Law. In no case may total reserves (including basic reserves, deficiency reserves and any reserves held for supplemental benefits that would expire upon contract termination) be less than the amount that the policyowner would receive (including the cash surrender value of the supplemental benefits, if any, referred to above), exclusive of any deduction for policy loans, upon termination of the policy.

D.Unusual Pattern of Guaranteed Cash Surrender Values

1.For any policy with an unusual pattern of guaranteed cash surrender values, the reserves actually held prior to the first unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n year policy providing term insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled.

2.The reserves actually held subsequent to any unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the policy as an n year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where

a.n is the number of years from the date of the last unusual guaranteed cash surrender value prior to the valuation date to the earlier of:

(1)The date of the next unusual guaranteed cash surrender value, if any, that is scheduled after the valuation date; or

(2)The mandatory expiration date of the policy; and

b.The net premium for a given year during the n year period is equal to the product of the net to gross ratio and the respective gross premium; and

c.The net to gross ratio is equal to Item (1) divided by Item (2) as follows:

(1)The present value, at the beginning of the n year period, of death benefits payable during the n year period plus the present value, at the beginning of the n year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the beginning of the n year period.

(2)The present value, at the beginning of the n year period, of the scheduled gross premiums payable during the n year period.

3.For purposes of this subsection, a policy is considered to have an unusual pattern of guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior year’s guaranteed cash surrender value by more than the sum of:

a.One hundred ten percent (110%) of the scheduled gross premium for that year;

b.One hundred ten percent (110%) of one year’s accrued interest on the sum of the prior year’s guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values; and

c.Five percent (5%) of the first policy year surrender charge, if any.

E.Optional Exemption for Yearly Renewable Term Reinsurance. At the option of the company, the following approach for reserves on YRT reinsurance may be used.

1.Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

2.Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in § 8.6(C) of this Part.

3.Deficiency reserves.

a.For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.

b.Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with § 8.6(E)(3)(a) of this Part above.

4.For purposes of this subsection, the calculations use the maximum valuation interest rate and the 1980 CSO mortality tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this Part by the NAIC and by the commissioner for this purpose.

5.A reinsurance agreement shall be considered YRT reinsurance for purposes of this subsection if only the mortality risk is reinsured.

6.If the assuming company chooses this optional exemption, the ceding company’s reinsurance reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.

F.Optional Exemption for Attained-Age-Based Yearly Renewable Term Life Insurance Policies. At the option of the company, the following approach for reserves for attained-age-based YRT life insurance policies may be used:

1.Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

2.Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in § 8.6(C) of this Part.

3.Deficiency reserves.

a.For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.

b.Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with § 8.6(F)(3)(a) of this Part above.

4.For purposes of this subsection, the calculations use the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this Part by the NAIC and promulgated by the commissioner for this purpose.

5.A policy shall be considered an attained-age-based YRT life insurance policy for purposes of this subsection if:

a.The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued; and

b.The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are the same as the premium rates for policies covering all insureds of the same sex, risk class, plan of insurance and attained age.

6.For policies that become attained-age-based YRT policies after an initial period of coverage, the approach of this subsection may be used after the initial period if:

a.The initial period is constant for all insureds of the same sex, risk class and plan of insurance; or

b.The initial period runs to a common attained age for all insureds of the same sex, risk class and plan of insurance; and

c.After the initial period of coverage, the policy meets the conditions of § 8.6(F)(5) of this Part above.

7.If this election is made, this approach shall be applied in determining reserves for all attained-age-based YRT life insurance policies issued on or after the effective date of this Part.

G.Exemption from Unitary Reserves for Certain n-Year Renewable Term Life Insurance Policies. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met:

1.The policy consists of a series of n-year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than 10 years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;

2.The guaranteed gross premiums in all n-year periods are not less than the corresponding net premiums based upon the 1980 CSO Table with or without the ten-year select mortality factors; and

3.There are no cash surrender values in any policy year.

H.Exemption from Unitary Reserves for Certain Juvenile Policies. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met, based upon the initial current premium scale at issue:

1.At issue, the insured is age twenty-four (24) or younger;

2.Until the insured reaches the end of the juvenile period, which shall occur at or before age twenty-five (25), the gross premiums and death benefits are level, and there are no cash surrender values; and

3.After the end of the juvenile period, gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 08/26/2010

230-RICR-20-25-8 § 8.7. Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period

A.General

1.Policies with a secondary guarantee include:

a.A policy with a guarantee that the policy will remain in force at the original schedule of benefits, subject only to the payment of specified premiums;

b.A policy in which the minimum premium at any duration is less than the corresponding one year valuation premium, calculated using the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this Part by the NAIC and promulgated by by the commissioner for this purpose; or

c.A policy with any combination of §§ 8.7(A)(1)(a) and (b) of this Part.

2.A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue shall be considered to have been made at issue. Reserves described in §§ 8.7(B) and (C) of this Part below shall be recalculated from issue to reflect these changes.

3.Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed.

4.For purposes of this section, the minimum premium for any policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors (including mortality charges, loads and expense charges) and the interest crediting rate, which are all guaranteed at issue.

5.The one-year valuation premium means the net one-year premium based upon the original schedule of benefits for a given policy year. The one-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in §§ 8.5(B)(2), (3), and (4) of this Part may not be used to calculate the one-year valuation premiums.

6.The one-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.

B.Basic Reserves for the Secondary Guarantees. Basic reserves for the secondary guarantees shall be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments will be determined according to the contract segmentation method as defined in § 8.4(B) of this Part.

C.Deficiency Reserves for the Secondary Guarantees. Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in § 8.6(B) of this Part with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force.

D.Minimum Reserves. The minimum reserves during the secondary guarantee period are the greater of:

1.The basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees; or

2.The minimum reserves required by other rules or regulations governing universal life plans.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 08/26/2010

230-RICR-20-25-8 § 8.8 Select Mortality Factors

A.This section contains tables of select mortality factors that are the bases to which the respective percentage of §§ 8.5(A)(2), 8.5(B)(2) and 8.5(B)(3) of this Part are applied.

B.The six tables of select mortality factors contained herein include:

1.male aggregate,

2.male nonsmoker,

3.male smoker,

4.female aggregate,

5.female nonsmoker, and

6.female smoker.

C.These tables apply to both age last birthday and age nearest birthday mortality tables.

D.For sex-blended mortality tables, compute select mortality factors in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated select mortality factors are eighty percent (80%) of the appropriate male table in this Appendix, plus twenty percent (20%) of the appropriate female table in this Appendix.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 08/26/2010

230-RICR-20-25-9 Annuity Mortality Tables (Formerly Insurance Regulation 94)

230-RICR-20-25-9 § 9.1 Authority

This Part promulgated by the Director of Business Regulation pursuant to R.I. Gen. Laws § 27-4.5-11.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Amendment — effective from 2015-12-24 to 02/18/2018
Periodic Refile — effective from 2001-12-19 to 12/24/2015

230-RICR-20-25-9 § 9.2 Purpose

The purpose of this Part is to define terms used in R.I. Gen. Laws § 27-4.5-4: to specify the application of the 1994 GAR Table and, as provided in R.I. Gen. Laws § 27-4.5-4(c), to recognize the 1983 Table "a" for certain special benefits and to specify the application of the 2012 Individual Annuity Reserving (2012 IAR) Table.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Amendment — effective from 2015-12-24 to 02/18/2018
Periodic Refile — effective from 2001-12-19 to 12/24/2015

230-RICR-20-25-9 § 9.3 Definitions

A.As used in this Part "1983 Table ‘a'" means that mortality table developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation and adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners. [See 1982 Proceedings of the NAIC II, page 454.]

B.As used in R.I. Gen. Laws § 27-4.5-4 and this Part, "1994 GAR Table" means that mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force and shown at XLVII Transactions of the Society of Actuaries 866-867 (1995).

C.As used in R.I. Gen. Laws § 27-4.5-4 and this Part, "Annuity 2000 Mortality Table" means that mortality table developed by the Society of Actuaries Committee on Life Insurance Research and shown at XLVII Transactions of the Society of Actuaries 240 (1995).

D.As used in this Part, “Period table” means a table of mortality rates applicable to a given calendar year (the Period).

E.As used in this Part, “Generational mortality table” means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a Period table and a projection scale containing rates of mortality improvement.

F.As used in this Part “2012 IAR Table” means that Generational mortality table developed by the Society of Actuaries Committee on Life Insurance Research and containing rates, qx2012+n, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in § 9.6 of this Part.

G.As used in this Part, “2012 Individual Annuity Mortality Period Life (2012 IAM Period) Table” means the Period table containing loaded mortality rates for calendar year 2012. This table contains rates, qx2012, developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices I-II which have been included in a bulletin issued for that purpose and available on the Department’s website.

H.As used in this Part, “Projection Scale G2 (Scale G2)” is a table of annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices III-IV which have been included in a bulletin issued for that purpose and available on the Department’s website.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Amendment — effective from 2015-12-24 to 02/18/2018
Periodic Refile — effective from 2001-12-19 to 12/24/2015

230-RICR-20-25-9 § 9.4 Individual Annuity or Pure Endowment Contracts

A.R.I. Gen. Laws §§ 27-4.5-4(a) and (b) shall apply as provided in those sections, except that, as provided in R.I. Gen. Laws § 27-4.5-4(c), the following § 9.4(B) of this Part shall apply to the special benefits described therein.

B.The 1983 Table "a" without projection is to be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after January 1, 2000, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:

1.Settlements of various forms of claims pertaining to court settlements or out of court settlements from tort actions;

2.Settlements involving similar actions such as worker's compensation claims; or

3.Settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

C.As provided in R.I. Gen. Laws § 27-4.5-4(b); The 2012 IAR is adopted as the standard for individual annuities issued on or after January 1, 2015, with the exception of the products covered by B. above.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Amendment — effective from 2015-12-24 to 02/18/2018
Periodic Refile — effective from 2001-12-19 to 12/24/2015

230-RICR-20-25-9 § 9.5 Application of the 1994 GAR Table

In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 + n) is calculated as follows:

qx 1994+n = qx 1994 (1 - AAx)n

where qx 1994 and AAx s are as specified in the 1994 GAR Table.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Amendment — effective from 2015-12-24 to 02/18/2018
Periodic Refile — effective from 2001-12-19 to 12/24/2015

230-RICR-20-25-9 § 9.6. Application of the 2012 IAR Mortality Table

A.In using the 2012 IAR Mortality Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows:

q_x^(2012+n)=q_x^2012 ?(1-?G2?_x)?^n

The resulting qx 2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. Also, the rounding shall occur according to the formula above, starting at the 2012 period table rate.

1.For example, for a male age 30, qx2012 = 0.741.

qx 2013 = 0.741 * (1 – 0.010) ^ 1 = 0.73359 which is rounded to 0.734.

qx 2014 = 0.741 * (1 – 0.010) ^ 2 = 0.7262541 which is rounded to 0.726.

A method leading to incorrect rounding would be to calculate qx 2014 as qx 2013 * (1 – 0.010) or 0.734 * 0.99 = 0.727. It is incorrect to use the already rounded qx 2013 to calculate qx 2014.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Amendment — effective from 2015-12-24 to 02/18/2018
Periodic Refile — effective from 2001-12-19 to 12/24/2015

230-RICR-20-25-9 § 9.7 Severability

If any provision of this Part or its application to any person or circumstances is for any reason held to be invalid, the remainder of the Part and the application of its provisions to other persons or circumstances shall not be affected.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-02-18 to 01/04/2022
Amendment — effective from 2015-12-24 to 02/18/2018
Periodic Refile — effective from 2001-12-19 to 12/24/2015

230-RICR-20-25-10 2001 CSO Mortality Table

230-RICR-20-25-10 § 10.1 Authority

This Regulation is promulgated in accordance with R.I. Gen. Laws §§ 27-4-17(d)(3), 27-4.3-5(h)(6) and 42-14-17 and § 8.5(A) and (B) of this Subchapter.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-08-08 to 01/04/2022
Technical Revision — effective from 2005-04-14 to 08/08/2018 Click here to view previous versions of this Part.

230-RICR-20-25-10 § 10.2 Purpose

The purpose of this Regulation is to recognize, permit and prescribe the use of the 2001 Commissioners Standard Ordinary (CSO) Mortality Table in accordance with R.I. Gen. Laws §§ 27-4-17(d)(3), 27-4.3-5(h)(6) and § 8.5(A) and (B) of this Subchapter.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-08-08 to 01/04/2022
Technical Revision — effective from 2005-04-14 to 08/08/2018 Click here to view previous versions of this Part.

230-RICR-20-25-10 § 10.3 Definitions

A.As used in this Regulation:

1.“2001 CSO mortality table” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002). Unless the context indicates otherwise, the “2001 CSO Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables.

2.“2001 CSO mortality table (F)” means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.

3.“2001 CSO mortality table (M)” means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.

4.“Composite mortality tables” means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.

5.“Smoker and nonsmoker mortality tables” means mortality tables with separate rates of mortality for smokers and nonsmokers.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-08-08 to 01/04/2022
Technical Revision — effective from 2005-04-14 to 08/08/2018 Click here to view previous versions of this Part.

230-RICR-20-25-10 § 10.4 2001 CSO Mortality Table

A.At the election of the company for any one or more specified plans of insurance and subject to the conditions stated in this regulation, the 2001 CSO Mortality Table may be used as the minimum standard for policies issued on or after January 1, 2005 and before the date specified in § 10.4(B) of this Part to which R.I. Gen. Laws §§ 27-4-17(d)(3), 27-4.3-5(h)(6) and § 8.5(A) and (B) of this Subchapter are applicable. If the company elects to use the 2001 CSO Mortality Table, it shall do so for both valuation and nonforfeiture purposes.

B.Subject to the conditions stated in this regulation, the 2001 CSO Mortality Table shall be used in determining minimum standards for policies issued on and after January 1, 2009, to which R.I. Gen. Laws §§ 27-4-17(d)(3), 27-4.3-5(h)(6) and § 8.5(A) and (B) of this Subchapter are applicable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-08-08 to 01/04/2022
Technical Revision — effective from 2005-04-14 to 08/08/2018 Click here to view previous versions of this Part.

230-RICR-20-25-10 § 10.5 Conditions

A.For each plan of insurance with separate rates for smokers and nonsmokers an insurer may use:

1.Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits;

2.Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by R.I. Gen. Laws § 27-4.5-8 and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; or

3.Smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.

B.For plans of insurance without separate rates for smokers and nonsmokers the composite mortality tables shall be used.

C.For the purpose of determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits, the 2001 CSO Mortality Table may, at the option of the company for each plan of insurance, be used in its ultimate or select and ultimate form, subject to the restrictions of § 10.6 of this Part and Part 8 of this Subchapter relative to use of the select and ultimate form.

D.When the 2001 CSO Mortality Table is the minimum reserve standard for any plan for a company, the actuarial opinion in the annual statement filed with the commissioner shall be based on an asset adequacy analysis as specified in § 45-9.5(A) of this Chapter. A commissioner may exempt a company from this requirement if it only does business in this state and in no other state.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-08-08 to 01/04/2022
Technical Revision — effective from 2005-04-14 to 08/08/2018 Click here to view previous versions of this Part.

230-RICR-20-25-10 § 10.6 Applicability of the 2001 CSO Mortality Table to Part 8 of this Subchapter

A.The 2001 CSO Mortality Table may be used in applying Part 8 of this Subchapter in the following manner, subject to the transition dates for use of the 2001 CSO Mortality Table in § 10.4 of this Part (unless otherwise noted, the references in this section are to Part 8 of this Subchapter).

1.§ 8.3(A)(2)(b): The net level reserve premium is based on the ultimate mortality rates in the 2001 CSO Mortality Table.

2.§ 8.4(B): All calculations are made using the 2001 CSO Mortality Rate, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in § 10.6(A)(4) of this Part. The value of “qx+k+t-1” is the valuation mortality rate for deficiency reserves in policy year k+t, but using the unmodified select mortality rates if modified select mortality rates are used in the computation of deficiency reserves.

3.§ 8.5(A): The 2001 CSO Mortality Table is the minimum standard for basic reserves.

4.§ 8.5(B): The 2001 CSO Mortality Table is the minimum standard for deficiency reserves. If select mortality rates are used, they may be multiplied by X percent for durations in the first segment, subject to the conditions specified in § 8.5(B)(3)(a) to (i). In demonstrating compliance with those conditions, the demonstrations may not combine the results of tests that utilize the 1980 CSO Mortality Table with those tests that utilize the 2001 CSO Mortality Table, unless the combination is explicitly required by regulation or necessary to be in compliance with relevant Actuarial Standards of Practice.

5.§ 8.6(C): The valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO Mortality Table.

6.§ 8.6(E)(4): The calculations specified in § 8.6(E) shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

7.§ 8.6(F)(4): The calculations specified in § 8.6(F) shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

8.§ 8.6(G)(2): The calculations specified in § 8.6(G) shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

9.§ 8.7(A)(1)(b): The one-year valuation premium shall be calculated using the ultimate mortality rates in the 2001 CSO Mortality Table.

B.Nothing in this section shall be construed to expand the applicability of Part 8 of this Subchapter to include life insurance policies exempted under § 8.3(A) of this Subchapter.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-08-08 to 01/04/2022
Technical Revision — effective from 2005-04-14 to 08/08/2018 Click here to view previous versions of this Part.

230-RICR-20-25-10 § 10.7 Gender-Blended Tables

A.For any ordinary life insurance policy delivered or issued for delivery in this state on and after January 1, 2005, that utilizes the same premium rates and charges for male and female lives or is issued in circumstances where applicable law does not permit distinctions on the basis of gender, a mortality table that is a blend of the 2001 CSO Mortality Table (M) and the 2001 CSO Mortality Table (F) may, at the option of the company for each plan of insurance, be substituted for the 2001 CSO Mortality Table for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits. No change in minimum valuation standards is implied by this subsection of the regulation.

B.The company may choose from among the blended tables developed by the American Academy of Actuaries CSO Task Force and adopted by the NAIC in December 2002.

C.It shall not, in and of itself, be a violation of R.I. Gen. Laws §§ 27-29-1 et seq. for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-08-08 to 01/04/2022
Technical Revision — effective from 2005-04-14 to 08/08/2018 Click here to view previous versions of this Part.

230-RICR-20-25-10 § 10.8 Severability

If any provision of this Regulation or the application thereof to any person or circumstance is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Regulation which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Regulation are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-08-08 to 01/04/2022
Technical Revision — effective from 2005-04-14 to 08/08/2018 Click here to view previous versions of this Part.

230-RICR-20-25-11 Military Sales Practices

230-RICR-20-25-11 § 11.1 Purpose

A.The purpose of this Part is to set forth standards to protect active duty service members of the United States Armed Forces from dishonest and predatory insurance sales practices by declaring certain identified practices to be false, misleading, deceptive or unfair.

B.Nothing herein shall be construed to create or imply a private cause of action for a violation of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-10-20 to 01/04/2022
Technical Revision — effective from 2011-10-20 to 10/20/2011
Amendment — effective from 2011-10-20 to 10/20/2011
Adoption — effective from 2007-09-05 to 10/20/2011

230-RICR-20-25-11 § 11.2 Scope

This Part shall apply only to the solicitation or sale of any life insurance or annuity product by an insurer or insurance producer to an active duty service member of the United States Armed Forces.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-10-20 to 01/04/2022
Technical Revision — effective from 2011-10-20 to 10/20/2011
Amendment — effective from 2011-10-20 to 10/20/2011
Adoption — effective from 2007-09-05 to 10/20/2011

230-RICR-20-25-11 § 11.3 Authority

This Part is issued under the authority of R.I. Gen. Laws Chapter 27-29 and § 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-10-20 to 01/04/2022
Technical Revision — effective from 2011-10-20 to 10/20/2011
Amendment — effective from 2011-10-20 to 10/20/2011
Adoption — effective from 2007-09-05 to 10/20/2011

230-RICR-20-25-11 § 11.4 Exemptions

A.This Part shall not apply to solicitations or sales involving:

1.Credit insurance;

2.Group life insurance or group annuities where there is no in-person, face-to-face solicitation of individuals by an insurance producer or where the contract or certificate does not include a side fund;

3.An application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner; or, when a term conversion privilege is exercised among corporate affiliates;

4.Individual stand-alone health policies, including disability income policies;

5.Contracts offered by Servicemembers’ Group Life Insurance (SGLI) or Veterans’ Group Life Insurance (VGLI), as authorized by 38 U.S.C. § 1965 et seq.

6.State Sponsored Life Insurance (SSLI) provided by a State or a State National Guard Association as authorized by 37 U.S.C. § 707 et seq.;

7.Life insurance contracts offered through or by a non-profit military association, qualifying under § 501(c)(23) of the Internal Revenue Code (IRC), and which are not underwritten by an insurer; or

8.Contracts used to fund:

a.An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

b.A plan described by §§ 401(a), 401(k), 403(b), 408(k) or 408(p) of the IRC, as amended, if established or maintained by an employer;

c.A government or church plan defined in § 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under § 457 of the IRC;

d.A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

e.Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or

f.Prearranged funeral contracts.

B.Nothing herein shall be construed to abrogate the ability of nonprofit organizations (and/or other organizations) to educate members of the United States Armed Forces in accordance with Department of Defense DoD Instruction 1344.07 – Personal Commercial Solicitation on DoD Installations or successor directive.

C.For purposes of this Part, general advertisements, direct mail and internet marketing shall not constitute “solicitation.” Telephone marketing shall not constitute "solicitation" provided the caller explicitly and conspicuously discloses that the product concerned is life insurance and makes no statements that avoid a clear and unequivocal statement that life insurance is the subject matter of the solicitation. Provided however, nothing in this subsection shall be construed to exempt an insurer or insurance producer from this Part in any in-person, face-to-face meeting established as a result of the “solicitation” exemptions identified in this subsection.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-10-20 to 01/04/2022
Technical Revision — effective from 2011-10-20 to 10/20/2011
Amendment — effective from 2011-10-20 to 10/20/2011
Adoption — effective from 2007-09-05 to 10/20/2011

230-RICR-20-25-11 § 11.5 Definitions

A.“Active duty” means full-time duty in the active military service of the United States and includes members of the reserve component (National Guard and Reserve) while serving under published orders for active duty or full-time training. The term does not include members of the reserve component who are performing active duty or active duty for training under military calls or orders specifying periods of less than 31 calendar days.

B.“Department of Defense (DoD) personnel” means all active duty service members and all civilian employees, including nonappropriated fund employees and special government employees, of the Department of Defense.

C.“Door to door” means a solicitation or sales method whereby an insurance producer proceeds randomly or selectively from household to household without prior specific appointment.

D.“General advertisement” means an advertisement having as its sole purpose the promotion of the reader's or viewer's interest in the concept of insurance, or the promotion of the insurer or the insurance producer.

E.“Insurer” means an insurance company required to be licensed under the laws of this state to provide life insurance products, including annuities.

F.“Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate life insurance, including annuities.

G.“Known” or “Knowingly” means, depending on its use herein, the insurance producer or insurer had actual awareness, or in the exercise of ordinary care should have known, at the time of the act or practice complained of, that the person solicited:

1.Is a service member; or

2.Is a service member with a pay grade of E-4 or below.

H.“Life insurance” means insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income and unless otherwise specifically excluded, includes individually issued annuities.

I.“Military installation” means any federally owned, leased, or operated base, reservation, post, camp, building, or other facility to which service members are assigned for duty, including barracks, transient housing, and family quarters.

J.“MyPay” is a Defense Finance and Accounting Service (DFAS) web-based system that enables service members to process certain discretionary pay transactions or provide updates to personal information data elements without using paper forms.

K.“Service member” means any active duty officer (commissioned and warrant) or enlisted member of the United States Armed Forces.

L.“Side fund” means a fund or reserve that is part of or otherwise attached to a life insurance policy (excluding individually issued annuities) by rider, endorsement or other mechanism which accumulates premium or deposits with interest or by other means. The term does not include:

1.Accumulated value or cash value or secondary guarantees provided by a universal life policy;

2.Cash values provided by a whole life policy which are subject to standard nonforfeiture law for life insurance; or

3.A premium deposit fund which:

a.Contains only premiums paid in advance which accumulate at interest;

b.Imposes no penalty for withdrawal;

c.Does not permit funding beyond future required premiums;

d.Is not marketed or intended as an investment; and

e.Does not carry a commission, either paid or calculated.

M.“Specific appointment” means a prearranged appointment agreed upon by both parties and definite as to place and time.

N.“United States Armed Forces” means all components of the Army, Navy, Air Force, Marine Corps, and Coast Guard.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-10-20 to 01/04/2022
Technical Revision — effective from 2011-10-20 to 10/20/2011
Amendment — effective from 2011-10-20 to 10/20/2011
Adoption — effective from 2007-09-05 to 10/20/2011

230-RICR-20-25-11 § 11.6 Practices Declared False, Misleading, Deceptive or Unfair on a Military Installation

A.The following acts or practices when committed on a military installation by an insurer or insurance producer with respect to the in-person, face-to-face solicitation of life insurance are declared to be false, misleading, deceptive or unfair:

1.Knowingly soliciting the purchase of any life insurance product “door to door” or without first establishing a specific appointment for each meeting with the prospective purchaser.

2.Soliciting service members in a group or “mass” audience or in a “captive” audience where attendance is not voluntary.

3.Knowingly making appointments with or soliciting service members during their normally scheduled duty hours.

4.Making appointments with or soliciting service members in barracks, day rooms, unit areas, or transient personnel housing or other areas where the installation commander has prohibited solicitation.

5.Soliciting the sale of life insurance without first obtaining permission from the installation commander or the commander’s designee.

6.Posting unauthorized bulletins, notices or advertisements.

7.Failing to present DD Form 2885, Personal Commercial Solicitation Evaluation, to service members solicited or encouraging service members solicited not to complete or submit a DD Form 2885.

8.Knowingly accepting an application for life insurance or issuing a policy of life insurance on the life of an enlisted member of the United States Armed Forces without first obtaining for the insurer’s files a completed copy of any required form which confirms that the applicant has received counseling or fulfilled any other similar requirement for the sale of life insurance established by regulations, directives or rules of the DoD or any branch of the Armed Forces.

B.The following acts or practices when committed on a military installation by an insurer or insurance producer constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:

1.Using DoD personnel, directly or indirectly, as a representative or agent in any official or business capacity with or without compensation with respect to the solicitation or sale of life insurance to service members.

2.Using an insurance producer to participate in any United States Armed Forces sponsored education or orientation program.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-10-20 to 01/04/2022
Technical Revision — effective from 2011-10-20 to 10/20/2011
Amendment — effective from 2011-10-20 to 10/20/2011
Adoption — effective from 2007-09-05 to 10/20/2011

230-RICR-20-25-11 § 11.7 Practices Declared False, Misleading, Deceptive or Unfair Regardless of Location

A.The following acts or practices by an insurer or insurance producer constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:

1.Submitting, processing or assisting in the submission or processing of any allotment form or similar device used by the United States Armed Forces to direct a service member’s pay to a third party for the purchase of life insurance. The foregoing includes, but is not limited to, using or assisting in using a service member's “MyPay” account or other similar internet or electronic medium for such purposes. This subsection does not prohibit assisting a service member by providing insurer or premium information necessary to complete any allotment form.

2.Knowingly receiving funds from a service member for the payment of premium from a depository institution with which the service member has no formal banking relationship. For purposes of this section, a formal banking relationship is established when the depository institution:

a.provides the service member a deposit agreement and periodic statements and makes the disclosures required by the Truth in Savings Act, 12 U.S.C. § 4301 et seq. and the regulations promulgated thereunder; and

b.permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums.

3.Employing any device or method or entering into any agreement whereby funds received from a service member by allotment for the payment of insurance premiums are identified on the service member’s Leave and Earnings Statement or equivalent or successor form as “Savings” or “Checking” and where the service member has no formal banking relationship as defined in § 11.7(A)(2) of this Part.

4.Entering into any agreement with a depository institution for the purpose of receiving funds from a service member whereby the depository institution, with or without compensation, agrees to accept direct deposits from a service member with whom it has no formal banking relationship.

5.Using DoD personnel, directly or indirectly, as a representative or agent in any official or unofficial capacity with or without compensation with respect to the solicitation or sale of life insurance to service members who are junior in rank or grade, or to the family members of such personnel.

6.Offering or giving anything of value, directly or indirectly, to DoD personnel to procure their assistance in encouraging, assisting or facilitating the solicitation or sale of life insurance to another service member.

7.Knowingly offering or giving anything of value to a service member with a pay grade of E-4 or below for his or her attendance to any event where an application for life insurance is solicited.

8.Advising a service member with a pay grade of E-4 or below to change his or her income tax withholding or State of legal residence for the sole purpose of increasing disposable income to purchase life insurance.

B.The following acts or practices by an insurer or insurance producer lead to confusion regarding source, sponsorship, approval or affiliation and are declared to be false, misleading, deceptive or unfair:

1.Making any representation, or using any device, title, descriptive name or identifier that has the tendency or capacity to confuse or mislead a service member into believing that the insurer, insurance producer or product offered is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, the United States Armed Forces, or any state or federal agency or government entity. Examples of prohibited insurance producer titles include, but are not limited to, "Battalion Insurance Counselor," "Unit Insurance Advisor," "Servicemen's Group Life Insurance Conversion Consultant" or “Veteran’s Benefits Counselor.”

2.Nothing herein shall be construed to prohibit a person from using a professional designation awarded after the successful completion of a course of instruction in the business of insurance by an accredited institution of higher learning. Such designations include, but are not limited to, Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of Science In Financial Services (MSFS), or Masters of Science Financial Planning (MS).

3.Soliciting the purchase of any life insurance product through the use of or in conjunction with any third party organization that promotes the welfare of or assists members of the United States Armed Forces in a manner that has the tendency or capacity to confuse or mislead a service member into believing that either the insurer, insurance producer or insurance product is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, or the United States Armed Forces.

C.The following acts or practices by an insurer or insurance producer lead to confusion regarding premiums, costs or investment returns and are declared to be false, misleading, deceptive or unfair:

1.Using or describing the credited interest rate on a life insurance policy in a manner that implies that the credited interest rate is a net return on premium paid.

2.Excluding individually issued annuities, misrepresenting the mortality costs of a life insurance product, including stating or implying that the product "costs nothing" or is "free."

D.The following acts or practices by an insurer or insurance producer regarding SGLI or VGLI are declared to be false, misleading, deceptive or unfair:

1.Making any representation regarding the availability, suitability, amount, cost, exclusions or limitations to coverage provided to a service member or dependents by SGLI or VGLI, which is false, misleading or deceptive.

2.Making any representation regarding conversion requirements, including the costs of coverage, or exclusions or limitations to coverage of SGLI or VGLI to private insurers which is false, misleading or deceptive.

3.Suggesting, recommending or encouraging a service member to cancel or terminate his or her SGLI policy or issuing a life insurance policy which replaces an existing SGLI policy unless the replacement shall take effect upon or after the service member’s separation from the United States Armed Forces.

E.The following acts or practices by an insurer and or insurance producer regarding disclosure are declared to be false, misleading, deceptive or unfair:

1.Deploying, using or contracting for any lead generating materials designed exclusively for use with service members that do not clearly and conspicuously disclose that the recipient will be contacted by an insurance producer, if that is the case, for the purpose of soliciting the purchase of life insurance.

2.Failing to disclose that a solicitation for the sale of life insurance will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser.

3.Excluding individually issued annuities, failing to clearly and conspicuously disclose the fact that the product being sold is life insurance.

4.Failing to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by Section 10 of the “Military Personnel Financial Services Protection Act,” Pub. L. No. 109-290, p.16.

5.Excluding individually issued annuities, when the sale is conducted in-person face-to-face with an individual known to be a service member, failing to provide the applicant at the time the application is taken:

a.An explanation of any free look period with instructions on how to cancel if a policy is issued; and

b.Either a copy of the application or a written disclosure. The copy of the application or the written disclosure shall clearly and concisely set out the type of life insurance, the death benefit applied for and its expected first year cost. A basic illustration that meets the requirements of Part 3 of this Subchapter shall be deemed sufficient to meet this requirement for a written disclosure.

F.The following acts or practices by an insurer or insurance producer with respect to the sale of certain life insurance products are declared to be false, misleading, deceptive or unfair:

1.Excluding individually issued annuities, recommending the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable.

2.Offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI, is presumed unsuitable unless, after the completion of a needs assessment, the insurer demonstrates that the applicant’s SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant’s insurable needs for life insurance.

a.“Insurable needs” are the risks associated with premature death taking into consideration the financial obligations and immediate and future cash needs of the applicant’s estate and/or survivors or dependents.

b.“Other military survivor benefits” include, but are not limited to: the Death Gratuity, Funeral Reimbursement, Transition Assistance, Survivor and Dependents’ Educational Assistance, Dependency and Indemnity Compensation, TRICARE Healthcare benefits, Survivor Housing Benefits and Allowances, Federal Income Tax Forgiveness, and Social Security Survivor Benefits.

3.Excluding individually issued annuities, offering for sale or selling any life insurance contract which includes a side fund:

a.Unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;

b.Unless the applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product. For this disclosure, the effective rate of return will consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage. This schedule will be provided for at least each policy year from one (1) to ten (10) and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and

c.Which by default diverts or transfers funds accumulated in the side fund to pay, reduce or offset any premiums due.

4.Excluding individually issued annuities, offering for sale or selling any life insurance contract which after considering all policy benefits, including but not limited to endowment, return of premium or persistency, does not comply with standard nonforfeiture law for life insurance.

5.Selling any life insurance product to an individual known to be a service member that excludes coverage if the insured’s death is related to war, declared or undeclared, or any act related to military service except for an accidental death coverage, e.g., double indemnity, which may be excluded.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-10-20 to 01/04/2022
Technical Revision — effective from 2011-10-20 to 10/20/2011
Amendment — effective from 2011-10-20 to 10/20/2011
Adoption — effective from 2007-09-05 to 10/20/2011

230-RICR-20-25-11 § 11.8 Severability

If any provision of these sections or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of these sections which can be given effect without the invalid provisions or application. To this end all provisions of these sections are declared to be severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-10-20 to 01/04/2022
Technical Revision — effective from 2011-10-20 to 10/20/2011
Amendment — effective from 2011-10-20 to 10/20/2011
Adoption — effective from 2007-09-05 to 10/20/2011

230-RICR-20-25-12 Preneed Life Insurance Minimum Standards for Determining Reserve Liabilities and Nonforfeiture Values

230-RICR-20-25-12 § 12.1 Authority

This Part is promulgated in accordance with R.I. Gen. Laws Chapters 27-4.5 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-01-20 to 01/04/2022
Adoption — effective from 2009-01-20 to 01/20/2009

230-RICR-20-25-12 § 12.2 Scope

A.This Part applies to preneed insurance contracts, as defined in this Part, and to similar policies and certificates.

B.The definition of preneed insurance is not well defined. The definition in this model regulation is based on policies used in the study that determined the 2001 CSO was inappropriate for determining reserves for policies used to fund funeral services and expenses. The commissioner shall have the authority to determine what constitutes similar policies and certificates.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-01-20 to 01/04/2022
Adoption — effective from 2009-01-20 to 01/20/2009

230-RICR-20-25-12 § 12.3 Purpose

A.The purpose of this Part is to establish for preneed insurance products minimum mortality standards for reserves and nonforfeiture values, and to require the use of the 1980 Commissioners Standard Ordinary (CSO) Life Valuation Mortality Table for use in determining the minimum standard of valuation of reserves and the minimum standard nonforfeiture values for preneed insurance products.

B.Research completed by the Deloitte University of Connecticut Actuarial Center and commissioned by the Society of Actuaries as a part of a study of preneed mortality determined that the 2001 CSO Mortality Table, currently recognized as the prevailing table for the purposes of calculating reserves and nonforfeiture values both on a statutory basis and on a tax basis, produced inadequate reserves for policies issued in support of a prearrangement agreement which provides goods and services at the time of an insured’s death.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-01-20 to 01/04/2022
Adoption — effective from 2009-01-20 to 01/20/2009

230-RICR-20-25-12 § 12.4 Definitions

A.As used in this Part:

1."2001 CSO Mortality Table" means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002). Unless the context indicates otherwise, the “2001 CSO Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables.

2."Ultimate 1980 CSO" means the Commissioners’ 1980 Standard Ordinary Life Valuation Mortality Tables (1980 CSO) without ten-year (10-year) selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law approved in December 1983.

3.“Insurance Commissioner” or “Commissioner” means the Director of the Department of Business Regulation or his or her designee.

4."Preneed insurance" means any life insurance policy or certificate that is issued in combination with, in support of, with an assignment to, or as a guarantee for a prearrangement agreement for goods and services to be provided at the time of and immediately following the death of the insured. Goods and services may include, but are not limited to embalming, cremation, body preparation, viewing or visitation, coffin or urn, memorial stone, and transportation of the deceased. The status of the policy or contract as preneed insurance is determined at the time of issue in accordance with the policy form filing.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-01-20 to 01/04/2022
Adoption — effective from 2009-01-20 to 01/20/2009

230-RICR-20-25-12 § 12.5 Minimum Valuation Mortality Standards

For preneed insurance contracts, as defined in this Part, and similar policies and contracts, the minimum mortality standard for determining reserve liabilities and nonforfeiture values for both male and female insureds shall be the Ultimate 1980 CSO.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-01-20 to 01/04/2022
Adoption — effective from 2009-01-20 to 01/20/2009

230-RICR-20-25-12 § 12.6 Minimum Valuation Interest Rate Standards

A.The interest rates used in determining the minimum standard for valuation of preneed insurance shall be the calendar year statutory valuation interest rates as defined in R.I. Gen. Laws § 27-4.5-4.1.

B.The interest rates used in determining the minimum standard for nonforfeiture values for preneed insurance shall be the calendar year statutory nonforfeiture interest rates as defined in R.I. Gen. Laws § 27-4.3-5(i).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-01-20 to 01/04/2022
Adoption — effective from 2009-01-20 to 01/20/2009

230-RICR-20-25-12 § 12.7 Minimum Valuation Method Standards

A.The method used in determining the standard for the minimum valuation of reserves of preneed insurance shall be the method defined in R.I. Gen. Laws Chapter 27-4.5.

B.The method used in determining the standard for the minimum nonforfeiture values for preneed insurance shall be the method defined in R.I. Gen. Laws Chapter 27-4.3.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-01-20 to 01/04/2022
Adoption — effective from 2009-01-20 to 01/20/2009

230-RICR-20-25-12 § 12.8 Transition Rules

A.For preneed insurance policies issued on or after the effective date of this Part and before January 1, 2012, the 2001 CSO may be used as the minimum standard for reserves and minimum standard for nonforfeiture benefits for both male and female insureds.

B.If an insurer elects to use the 2001 CSO as a minimum standard for any policy issued on or after the effective date of this Part and before January 1, 2012, the insurer shall provide, as a part of the actuarial opinion memorandum submitted in support of the company’s asset adequacy testing, an annual written notification to the domiciliary commissioner. The notification shall include:

1.A complete list of all preneed policy forms that use the 2001 CSO as a minimum standard;

2.A certification signed by the appointed actuary stating that the reserve methodology employed by the company in determining reserves for the preneed policies issued after the effective date and using the 2001 CSO as a minimum standard, develops adequate reserves (For the purposes of this certification, the preneed insurance policies using the 2001 CSO as a minimum standard cannot be aggregated with any other policies.); and

3.Supporting information regarding the adequacy of reserves for preneed insurance policies issued after the effective date of this Part and using the 2001 CSO as a minimum standard for reserves.

C.Preneed insurance policies issued on or after January 1, 2012, must use the Ultimate 1980 CSO in the calculation of minimum nonforfeiture values and minimum reserves.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-01-20 to 01/04/2022
Adoption — effective from 2009-01-20 to 01/20/2009

230-RICR-20-25-12 § 12.9 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-01-20 to 01/04/2022
Adoption — effective from 2009-01-20 to 01/20/2009

230-RICR-20-25-13 Senior Specifications

230-RICR-20-25-13 § 13.1 Authority

A.This Part is promulgated in accordance with R.I. Gen. Laws Chapter 27-29.

B.Nothing in this Part shall limit the commissioner’s authority to enforce existing provisions of law.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-05-26 to 01/04/2022
Adoption — effective from 2009-05-26 to 05/26/2009

230-RICR-20-25-13 § 13.2 Scope

This Part shall apply to any solicitation, sale or purchase of, or advice made in connection with, a life insurance or annuity product by an insurance producer.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-05-26 to 01/04/2022
Adoption — effective from 2009-05-26 to 05/26/2009

230-RICR-20-25-13 § 13.3 Purpose

The purpose of this Part is to set forth standards to protect consumers from misleading and fraudulent marketing practices with respect to the use of senior-specific certifications and professional designations in the solicitation, sale or purchase of, or advice made in connection with, a life insurance or annuity product.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-05-26 to 01/04/2022
Adoption — effective from 2009-05-26 to 05/26/2009

230-RICR-20-25-13 § 13.4 Definitions

A.As used in this Part:

1.“Insurance Commissioner” or “Commissioner” means the Director of the Department of Business Regulation or his or her designee.

2."Insurance producer" means a person required to be licensed under the laws of this State to sell, solicit or negotiate insurance, including annuities.

3.“Life insurance or annuity product” means any policy, plan, certificate, including a fraternal benefit certificate, contract, agreement, statement of coverage, rider or endorsement which provides for life insurance or annuity benefits.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-05-26 to 01/04/2022
Adoption — effective from 2009-05-26 to 05/26/2009

230-RICR-20-25-13 § 13.5 Prohibited Uses of Senior-Specific Certifications and Professional Designations

A.It is an unfair and deceptive act or practice in the business of insurance within the meaning of R.I. Gen. Laws Chapter 27-29 for an insurance producer to use a senior-specific certification or professional designation that indicates or implies in such a way as to mislead a purchaser or prospective purchaser that the insurance producer has special certification or training in advising or servicing seniors in connection with the solicitation, sale or purchase of a life insurance or annuity product or in the provision of advice as to the value of or the advisability of purchasing or selling a life insurance or annuity product, either directly or indirectly through publications or writings, or by issuing or promulgating analyses or reports related to a life insurance or annuity product.

B.The prohibited use of senior-specific certifications or professional designations includes, but is not limited to, the following:

1.Use of a certification or professional designation by an insurance producer who has not actually earned or is otherwise ineligible to use such certification or designation;

2.Use of a nonexistent or self-conferred certification or professional designation;

3.Use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training or experience that the insurance producer using the certification or designation does not have; and

4.Use of a certification or professional designation that was obtained from a certifying or designating organization that:

a.Is primarily engaged in the business of instruction in sales or marketing;

b.Does not have reasonable standards or procedures for assuring the competency of its certificants or designees;

c.Does not have reasonable standards or procedures for monitoring and disciplining its certificants or designees for improper or unethical conduct; or

d.Does not have reasonable continuing education requirements for its certificants or designees in order to maintain the certificate or designation.

C.There is a rebuttable presumption that a certifying or designating organization is not disqualified solely for purposes of § 13.5(A)(2)(d) of this Part when the certification or designation issued from the organization does not primarily apply to sales or marketing and when the organization or the certification or designation in question has been accredited by:

1.The American National Standards Institute (ANSI);

2.The National Commission for Certifying Agencies; or

3.Any organization that is on the U.S. Department of Education’s list entitled “Accrediting Agencies Recognized for Title IV Purposes.”

D.In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing seniors, factors to be considered shall include:

1.Use of one or more words such as “senior,” “retirement,” “elder,” or like words combined with one or more words such as “certified,” “registered,” “chartered,” “advisor,” “specialist,” “consultant,” “planner,” or like words, in the name of the certification or professional designation; and

2.The manner in which those words are combined.

E.For purposes of this regulation, a job title within an organization that is licensed or registered by a State or federal financial services regulatory agency is not a certification or professional designation, unless it is used in a manner that would confuse or mislead a reasonable consumer, when the job title:

1.Indicates seniority or standing within the organization; or

2.Specifies an individual’s area of specialization within the organization.

3.For purposes of this subsection, financial services regulatory agency includes, but is not limited to, an agency that regulates insurers, insurance producers, broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-05-26 to 01/04/2022
Adoption — effective from 2009-05-26 to 05/26/2009

230-RICR-20-25-13 § 13.6 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-05-26 to 01/04/2022
Adoption — effective from 2009-05-26 to 05/26/2009

230-RICR-20-25-14 Life Insurance Illustrations

230-RICR-20-25-14 § 14.1 Authority

This Regulation is promulgated in accordance with R.I. Gen. Laws §§ 27-29-1 et seq. and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.2 Purpose

The purpose of this regulation is to provide rules for life insurance policy illustrations that will protect consumers and foster consumer education. The regulation provides illustration formats, prescribes standards to be followed when illustrations are used, and specifies the disclosures that are required in connection with illustrations. The goals of this regulation are to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable. Insurers will, as far as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.3 Applicability and Scope

A.This regulation applies to all group and individual life insurance policies and certificates except:

1.Variable life insurance;

2.Individual and group annuity contracts;

3.Credit life insurance; or

4.Life insurance policies with no illustrated death benefits on any individual exceeding $10,000.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.4 Definitions

A.For the purposes of this regulation:

1.“Actuarial Standards Board” means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.

2.“Contract premium” means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.

3.“Currently payable scale” means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next ninety-five (95) days.

4.“Disciplined current scale” means a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the Actuarial Standards Board may be relied upon if the standards:

a.Are consistent with all provisions of this regulation;

b.Limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;

c.Do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and

d.Do not permit assumed expenses to be less than minimum assumed expenses.

5.“Generic name” means a short title descriptive of the policy being illustrated such as “whole life,” “term life” or “flexible premium adjustable life.”

6.“Guaranteed elements” and “non-guaranteed elements”

a.“Guaranteed elements” means the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue.

b.“Non-guaranteed elements” means the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.

7.“Illustrated scale” means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:

a.The disciplined current scale; or

b.The currently payable scale.

8.“Illustration” means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years and that is one of the three (3) types defined below:

a.“Basic illustration” means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements.

b.“Supplemental illustration” means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this regulation, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration.

c.“In force illustration” means an illustration furnished at any time after the policy that it depicts has been in force for one year or more.

9.“Illustration actuary” means an actuary meeting the requirements of § 14.11 of this Part who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board.

10.“Insurance Commissioner” or “Commissioner” means the Director of the Department of Business Regulation or his or her designee.

11.“Lapse-supported illustration” means an illustration of a policy form failing the test of self-supporting as defined in this regulation, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five (5) years and 100 percent policy persistency thereafter.

12.“Minimum assumed expenses” means the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from the following:

a.Fully allocated expenses;

b.Marginal expenses; and

c.A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the National Association of Insurance Commissioners or by the commissioner.

d.Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used.

13.“Non-term group life” means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where:

a.Every plan of coverage was selected by the employer or other group representative;

b.Some portion of the premium is paid by the group or through payroll deduction; and

c.Group underwriting or simplified underwriting is used.

14.“Policy owner” means the owner named in the policy or the certificate holder in the case of a group policy.

15.“Premium outlay” means the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket.

16.“Self-supporting illustration” means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner’s election.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.5 Policies to Be Illustrated

A.Each insurer marketing policies to which this regulation is applicable shall notify the commissioner whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on the effective date of this regulation, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after the effective date of this regulation, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the commissioner.

B.If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited.

C.If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this regulation is required, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered.

D.Potential enrollees of non-term group life subject to this regulation shall be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and non-guaranteed basis appropriate to the group and the coverage. This quotation shall not be considered an illustration for purposes of this regulation, but all information provided shall be consistent with the illustrated scale. A basic illustration shall be provided at delivery of the certificate to enrollees for non-term group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer shall make a basic illustration available to any non-term group life enrollee who requests it.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.6 General Rules and Prohibitions

A.An illustration used in the sale of a life insurance policy shall satisfy the applicable requirements of this regulation, be clearly labeled “life insurance illustration” and contain the following basic information:

1.Name of insurer;

2.Name and business address of producer or insurer’s authorized representative, if any;

3.Name, age and sex of proposed insured, except where a composite illustration is permitted under this regulation;

4.Underwriting or rating classification upon which the illustration is based;

5.Generic name of policy, the company product name, if different, and form number;

6.Initial death benefit; and

7.Dividend option election or application of non-guaranteed elements, if applicable.

B.When using an illustration in the sale of a life insurance policy, an insurer or its producers or other authorized representatives shall not:

1.Represent the policy as anything other than a life insurance policy;

2.Use or describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;

3.State or imply that the payment or amount of non-guaranteed elements is guaranteed;

4.Use an illustration that does not comply with the requirements of this regulation;

5.Use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated;

6.Provide an applicant with an incomplete illustration;

7.Represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact;

8.Use the term “vanish” or “vanishing premium,” or a similar term that implies the policy becomes paid up, to describe a plan for using non-guaranteed elements to pay a portion of future premiums;

9.Except for policies that can never develop nonforfeiture values, use an illustration that is “lapse-supported”; or

10.Use an illustration that is not “self-supporting.”

C.If an interest rate used to determine the illustrated non-guaranteed elements is shown, it shall not be greater than the earned interest rate underlying the disciplined current scale.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.7 Standards for Basic Illustrations

A.Format. A basic illustration shall conform with the following requirements:

1.The illustration shall be labeled with the date on which it was prepared.

2.Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration shall be labeled “page 4 of 7 pages”).

3.The assumed dates of payment receipt and benefit pay-out within a policy year shall be clearly identified.

4.If the age of the proposed insured is shown as a component of the tabular detail, it shall be issue age plus the numbers of years the policy is assumed to have been in force.

5.The assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments shall be identified as premium outlay.

6.Guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium shall be shown and clearly labeled guaranteed.

7.If the illustration shows any non-guaranteed elements, they cannot be based on a scale more favorable to the policy owner than the insurer’s illustrated scale at any duration. These elements shall be clearly labeled non-guaranteed.

8.The guaranteed elements, if any, shall be shown before corresponding non-guaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., “see page one for guaranteed elements.”)

9.The account or accumulation value of a policy, if shown, shall be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender.

10.The value available upon surrender shall be identified by the name this value is given in the policy being illustrated and shall be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans and policy loan interest, as applicable.

11.Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form.

12.Any illustration of non-guaranteed elements shall be accompanied by a statement indicating that:

a.The benefits and values are not guaranteed;

b.The assumptions on which they are based are subject to change by the insurer; and

c.Actual results may be more or less favorable.

13.If the illustration shows that the premium payer may have the option to allow policy charges to be paid using non-guaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure shall be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display shall not be left blank or show zero unless accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up.

14.If the applicant plans to use dividends or policy values, guaranteed or non-guaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values.

B.Narrative Summary. A basic illustration shall include the following:

1.A brief description of the policy being illustrated, including a statement that it is a life insurance policy;

2.A brief description of the premium outlay or contract premium, as applicable, for the policy. For a policy that does not require payment of a specific contract premium, the illustration shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code;

3.A brief description of any policy features, riders or options, guaranteed or non-guaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy;

4.Identification and a brief definition of column headings and key terms used in the illustration; and

5.A statement containing in substance the following: “This illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown.”

C.Numeric Summary.

1.Following the narrative summary, a basic illustration shall include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. For a policy that provides for a contract premium, the guaranteed death benefits and values shall be based on the contract premium. This summary shall be shown for at least policy years five (5), ten (10) and twenty (20) and at age 70, if applicable, on the three bases shown below. For multiple life policies the summary shall show policy years five (5), ten (10), twenty (20) and thirty (30).

a.Policy guarantees;

b.Insurer’s illustrated scale;

c.Insurer’s illustrated scale used but with the non-guaranteed elements reduced as follows:

(1)Dividends at fifty percent (50%) of the dividends contained in the illustrated scale used;

(2)Non-guaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and

(3)All non-guaranteed charges, including but not limited to, term insurance charges, mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used.

2.In addition, if coverage would cease prior to policy maturity or age 100, the year in which coverage ceases shall be identified for each of the three (3) bases.

D.Statements. Statements substantially similar to the following shall be included on the same page as the numeric summary and signed by the applicant, or the policy owner in the case of an illustration provided at time of delivery, as required in this regulation.

1.A statement to be signed and dated by the applicant or policy owner reading as follows: “I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed.”

2.A statement to be signed and dated by the insurance producer or other authorized representative of the insurer reading as follows: “I certify that this illustration has been presented to the applicant and that I have explained that any non-guaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration.”

E.Tabular Detail.

1.A basic illustration shall include the following for at least each policy year from one (1) to ten (10) and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and except for term insurance beyond the 20th year, for any year in which the premium outlay and contract premium, if applicable, is to change:

a.The premium outlay and mode the applicant plans to pay and the contract premium, as applicable;

b.The corresponding guaranteed death benefit, as provided in the policy; and

c.The corresponding guaranteed value available upon surrender, as provided in the policy.

2.For a policy that provides for a contract premium, the guaranteed death benefit and value available upon surrender shall correspond to the contract premium.

3.Non-guaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer’s current practice is to pay terminal dividends. If any non-guaranteed elements are shown they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a non-guaranteed benefit or value is shown, a zero shall be displayed in the guaranteed column.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.8 Standards for Supplemental Illustrations

A.A supplemental illustration may be provided so long as:

1.It is appended to, accompanied by or preceded by a basic illustration that complies with this regulation;

2.The non-guaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration;

3.It contains the same statement required of a basic illustration that non-guaranteed elements are not guaranteed; and

4.For a policy that has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration shall be equal to the premium outlay shown in the basic illustration.

B.The supplemental illustration shall include a notice referring to the basic illustration for guaranteed elements and other important information.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.9 Delivery of Illustration and Record Retention

A.If a basic illustration is used by an insurance producer or other authorized representative of the insurer in the sale of a life insurance policy and the policy is applied for as illustrated, a copy of that illustration, signed in accordance with this regulation, shall be submitted to the insurer at the time of policy application. A copy also shall be provided to the applicant.

1.If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued shall be sent with the policy. The revised illustration shall conform to the requirements of this regulation, shall be labeled “Revised Illustration” and shall be signed and dated by the applicant or policy owner and producer or other authorized representative of the insurer no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.

B.If no illustration is used by an insurance producer or other authorized representative in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the producer or representative shall certify to that effect in writing on a form provided by the insurer. On the same form the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and shall further acknowledge an understanding that an illustration conforming to the policy as issued will be provided no later than at the time of policy delivery. This form shall be submitted to the insurer at the time of policy application.

1.If the policy is issued, a basic illustration conforming to the policy as issued shall be sent with the policy and signed no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.

C.If the basic illustration or revised illustration is sent to the applicant or policy owner by mail from the insurer, it shall include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page of the illustration for the policy issued and return the signed copy to the insurer. The insurer’s obligation under this subsection shall be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the numeric summary page. The requirement to make a diligent effort shall be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page.

D.A copy of the basic illustration and a revised basic illustration, if any, signed as applicable, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, shall be retained by the insurer until three (3) years after the policy is no longer in force. A copy need not be retained if no policy is issued.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.10 Annual Report; Notice to Policy Owners

A.In the case of a policy designated as one for which illustrations will be used, the insurer shall provide each policy owner with an annual report on the status of the policy that shall contain at least the following information:

1.For universal life policies, the report shall include the following:

a.The beginning and end date of the current report period;

b.The policy value at the end of the previous report period and at the end of the current report period;

c.The total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders);

d.The current death benefit at the end of the current report period on each life covered by the policy;

e.The net cash surrender value of the policy as of the end of the current report period;

f.The amount of outstanding loans, if any, as of the end of the current report period; and

g.For fixed premium policies: If, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy’s net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report; or

h.For flexible premium policies: If, assuming guaranteed interest, mortality and expense loads, the policy’s net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report.

2.For all other policies, where applicable:

a.Current death benefit;

b.Annual contract premium;

c.Current cash surrender value;

d.Current dividend;

e.Application of current dividend; and

f.Amount of outstanding loan.

3.Insurers writing life insurance policies that do not build nonforfeiture values shall only be required to provide an annual report with respect to these policies for those years when a change has been made to nonguaranteed policy elements by the insurer.

B.If the annual report does not include an in force illustration, it shall contain the following notice displayed prominently: “IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling [insurer’s phone number], writing to [insurer’s name] at [insurer’s address] or contacting your agent. If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department.” The insurer may vary the sequential order of the methods for obtaining an in force illustration.

C.Upon the request of the policy owner, the insurer shall furnish an in force illustration of current and future benefits and values based on the insurer’s present illustrated scale. This illustration shall comply with the requirements of §§ 14.6(A), 14.6(B), 14.7(A) and 14.7(E) of this Part. No signature or other acknowledgment of receipt of this illustration shall be required.

D.If an adverse change in non-guaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report shall contain a notice of that fact and the nature of the change prominently displayed.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.11 Annual Certifications

A.The board of directors of each insurer shall appoint one or more illustration actuaries.

B.The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations promulgated by the Actuarial Standards Board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this regulation.

C.The illustration actuary shall:

1.Be a member in good standing of the American Academy of Actuaries;

2.Be familiar with the standard of practice regarding life insurance policy illustrations;

3.Not have been found by the commissioner, following appropriate notice and hearing to have:

a.Violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as an illustration actuary;

b.Been found guilty of fraudulent or dishonest practices;

c.Demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary; or

d.Resigned or been removed as an illustration actuary within the past five (5) years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards;

4.Not fail to notify the commissioner of any action taken by a commissioner of another state similar to that under § 14.11(C)(3) of this Part above;

5.Disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five (5) years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If nonguaranteed elements illustrated for new policies are not consistent with those illustrated for similar in force policies, this must be disclosed in the annual certification. If nonguaranteed elements illustrated for both new and in force policies are not consistent with the nonguaranteed elements actually being paid, charged or credited to the same or similar forms, this must be disclosed in the annual certification; and

6.Disclose in the annual certification the method used to allocate overhead expenses for all illustrations:

a.Fully allocated expenses;

b.Marginal expenses; or

D.The illustration actuary shall file a certification with the board and with the commissioner:

1.Annually for all policy forms for which illustrations are used; and

2.Before a new policy form is illustrated.

a.If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the commissioner promptly.

E.If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the commissioner promptly of his or her inability to certify.

F.A responsible officer of the insurer, other than the illustration actuary, shall certify annually:

1.That the illustration formats meet the requirements of this regulation and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary; and

2.That the company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in § 14.11(C)(6) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.12 Penalties

In addition to any other penalties provided by the laws of this state, an insurer or producer that violates a requirement of this regulation shall be guilty of a violation of R.I. Gen. Laws § 27-29-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

230-RICR-20-25-14 § 14.13 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-09-30 to 01/04/2022
Technical Revision — effective from 2009-09-30 to 09/30/2009
Adoption — effective from 2009-09-30 to 09/30/2009

Subchapter 30 Health Insurance

230-RICR-20-30-1 Minimum Standards for Health Benefit Plans

230-RICR-20-30-1 § 1.1 Purpose and Scope

A.The purpose of this Part is to:

1.Provide reasonable standardization and simplification of coverages under health benefits plans, as defined in R.I. Gen. Laws § 42-62-4;

2.Facilitate consumer understanding and comparisons;

3.Eliminate provisions which may be misleading or unreasonably confusing to the consumer in connection with the purchase of such coverages or with the settlement of claims;

4.Eliminate deceptive practices in connection with the sale of such coverages;

5.Eliminate provisions which may be contrary to the health needs of the public; to make available qualified plans to persons residing in the state who apply therefor regardless of age, sex, race, occupational status, or medical condition;

6.Eliminate coverages which are so limited in scope as to be of no substantial economic value to the holders thereof; and

7.Add coverages, the sale of which is required by the public interest to protect the health of persons residing in the State.

B.This Part applies to all health benefits plans issued, delivered or offered for sale in Rhode Island to the extent that such plans cover Rhode Island residents and is not limited to plans described under R.I. Gen. Laws § 42-62-10. This Part does not apply to that portion of any such plans covering participating employers, associations and/or their members located outside this state. This Part applies to all advertisements for health benefits plans intended for presentation, distribution or dissemination in the state.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.2 Authority

This Part is promulgated pursuant to R.I. Gen. Laws § 42-62-12.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.3 Definitions

A."Accident and sickness insurance" means Accident and sickness insurance as defined in R.I. Gen. Laws Chapter 27-18.

B."Agent" means an insurance agent, broker or solicitor as defined in R.I. Gen. Laws Chapters 27-2.4. 27-2.4 and 27-3 or any person who acts or aids in negotiation for a Health Benefits Plan on behalf of an insurer, as defined herein. Where this Part requires notices or printed statements referring to "your agent," such notice may refer to the agent as a "sales representative" or use other appropriate terms.

C."Approval by the Director of Business Regulation" means personal approval by the Director or approval by any duly authorized deputy acting on behalf of the Director.

D."Blanket health benefit contract" means any health benefit contract which is issued or intended to be issued in at least one of the following manners:

1.Under any contract issued to any railroad, steamship, motorbus or airplane carrier of passengers, which shall be deemed the contractholder, to provide health benefits for a group defined as all persons who become such passengers, insuring them while being such passengers;

2.Under a contract issued to an employer, who shall be deemed the contractholder, to provide health benefits for any group of employees defined by reference to exceptional hazards incident to such employment insuring such employees with respect to such exceptional hazards;

3.Under a contract issued to a college, school or other institution of learning, a school district or districts, or school jurisdictional unit, or to the head, principal or governing board of any such educational unit, who or which shall be deemed the contractholder, covering students, teachers or employees.

4.Under a contract issued to any religious, charitable, recreational, educational, or civic organization, or branch thereof, which shall be deemed the contractholder, covering any group of members or participants defined by reference to specified hazards incident to an activity or activities or operations sponsored or supervised by such contractholder.

5.Under a contract issued to a sports team, camp or sponsor thereof, which shall be deemed the contractholder, covering members, campers, employees, officials or supervisors.

6.Under a contract issued to any volunteer fire department, first aid, civil defense, or other such volunteer organization, which shall be deemed the contractholder, covering any group of members or participants defined by reference to specified hazards incident to an activity or activities or operations sponsored or supervised by such contractholder.

7.Under a contract issued to a newspaper or other publisher, which shall be deemed the contractholder, covering its carriers.

8.Under a contract issued to an association of persons having a common interest or calling which shall have a constitution and bylaws and which has been organized and is maintained in good faith for purposes other than that of obtaining insurance and which shall be deemed the contractholder to provide health benefits for such persons with respect to specific hazards arising out of such common interest or calling.

E."Director" means the Director of Business Regulation.

F."Direct response insurance" means insurance issued to an applicant who has himself completed the application and forwarded it directly to the insurer in response to a solicitation coming into his possession by any means of mass communication.

G."Expense incurred benefits" means a health benefit which promises to pay all or part of the actual expenses incurred by a person insured for covered services.

H."Group health benefit contract" means that form of health benefit contract covering groups of persons in one of the manners described below, with or without one or more members of their families or one or more dependents, or covering one or more members of the families or one or more dependents of such groups or persons:

1.Benefits are offered under any contract issued to an employer or trustees of a fund established by an employer, who shall be deemed the master contractholder, insuring employees of such employer for the benefit of persons other than the employer. The term "employees as used herein may include the officers, managers, and employees of the employer, the individual proprietor or partner if the employer is an individual proprietor or partnership, the officers, managers, and employees of subsidiary or affiliated corporations, the individual proprietors, partners and employees of individuals and firms, if the business of the employer and such individual or firm is under common control through stock ownership, contract, or otherwise. The term "employees" as used herein may include retired employees. The term "employees" as used with respect to a contract issued to insure employees of a public body may include elected or appointed officials. The term "employees" may include the trustees or their employees, or both, if their duties are principally connected with such trusteeship.

2.Benefits are offered under any contract issued to an association, including a labor union, which shall have a constitution and bylaws insuring members, employees, or employees of members of the association for the benefit of persons other than the association or its officers or trustees. The term "employees" as used herein may include retired employees.

3.Benefits are offered under any contract issued to the trustees of a fund established by two or more employers or by one or more labor unions or by one or more employers and one or more labor unions or by an association as defined in § 1.3(H)(2) of this Part which trustees shall be the master contractholder, to insure employees of the employers or members of the unions or of such association, or employees of members of such association for the benefit of persons other than the employers or the unions or such association. The term "employees" as used herein may include the officers, managers and employees of the employer, and the individual proprietor or partners if the employer is an individual proprietor or partnership. The term "employees" as used herein may include retired employees. The term "employees" may include the trustees or their employees, or both, if their duties are principally connected with such trusteeship.

4.Benefits are offered under any contract issued to cover any other group which in the Director's judgment is substantially similar to those described in § 1.3(H)(1) through (3) of this Part.

I."Group-type basis" means a health benefit plan, other than "salary budget" plans utilizing individual contracts, which meets the following conditions:

1.Coverage is provided through health benefit contracts to classes of employees or members defined in terms of conditions pertaining to employment or membership.

2.The coverage is not available to the general public and can be obtained and maintained only because of the covered person's membership in or connection with the particular organization or group.

3.There are arrangements for bulk payment of premiums or subscription charges to the insurer.

4.There is sponsorship of the plan by the employer, union or association.

J."Health benefit contract" means any policy or other contract issued, delivered or available for issue or delivery in Rhode Island by an insurer, as defined herein, which provides health benefits, as defined in R.I. Gen. Laws § 42-62-4 including both contracts which determine benefits in recognition of actual services or actual charges for services and contracts which determine benefits based on the status of hospitalization or receipt of medical treatment. Where this Part requires notices or printed statements referring to "this contract," such notice may refer to the contract as a "policy" whenever such term appropriately describes such contract. "Health benefit contract" shall also mean that portion of an accident and sickness insurance policy or life and accident and sickness insurance policy that provides health benefits, if such health benefits account for one- third (1/3) or more of the pure premium (i.e., that portion of the total premium needed for payment of benefits, exclusive of all portions of the premium intended to pay sales and administrative costs.) for accident and sickness insurance in such policy.

K."Health maintenance organization" shall have the same meaning as that given such term in R.I. Gen. Laws § 42-62-4(d).

L."Indemnity basis" means, with respect to Hospital Confinement Indemnity Coverage, that basis for determining benefits which depends solely on the insured person's being confined in a hospital and provides for payment of a stated amount per day of hospital confinement without regard to actual services rendered or expenses incurred during such confinement.

M."Individual health benefit contract" means any health benefit contract that is not a group health benefit contract or a blanket health benefit contract.

N."Insured" means any resident of the State of Rhode Island who is entitled to receive benefits in the form of cash or services under a health benefit contract.

O."Insurance" means the benefits provided by any health benefit contract, as defined herein.

P."Insurer" shall have the same meaning as that given such term in R.I. Gen. Laws § 42- 62-4(c).

Q."Premium" means the consideration for any health benefit contract, including, but not limited to, the premium for an accident and sickness insurance policy and the subscription fee charged by a hospital service corporation, physicians service corporation or health maintenance organization.

R."Qualified plan" means a qualified health program as defined in R.I. Gen. Laws § 42-62-10.

S."Replacement" means any transaction wherein a new health benefit contract is to be purchased, and it is known to the agent or insurer at the time of application that as part of the transaction, an existing health benefit contract has been or is to be lapsed or the benefits thereof substantially reduced.

T."Service benefit" means a health benefit which promises to defray the cost of health services provided to a person insured but which reserves the right to make payments directly to the provider and may reserve the right to negotiate the amount of payment for such services with the provider.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.4 Availability of Qualified Plans

The Director shall from time to time consider whether a sufficient number of qualified plans is available to persons residing in the state regardless of age, sex, race, occupational status or medical condition. If he determines that a sufficient number of such plans is not available he may promulgate regulations requiring all insurers or all of a class of insurers to offer qualified plans as a condition of doing business in the state.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.5 Coverage of Newborn Children

A.All health benefit contracts which provide coverage for a family member of the insured or subscriber shall, as to such family member's coverage, also provide that the health benefits applicable for children shall be payable with respect to a newly born child of the insured or subscriber from the moment of birth. In the event that no other children are covered under the contract, benefits for the newborn must be provided to the same extent as those provided to the insured.

B.The coverage for newly born children shall consist of coverage of injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities. This provision is not intended to imply, and should not be construed so as to imply, the inclusion of coverages for routine well-baby care services.

C.If payment of a specific premium is required to provide coverage for a child, the contract may require that notification of birth of a newly born child and payment of the required premium must be furnished to the insurer within thirty-one (31) days after the date of birth in order to have the coverage continue beyond such thirty-one (31) day period.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.6 Statements in the Application for Health Benefit Contracts

A.No application designed to elicit information regarding the applicant's physical condition or that of his dependents shall be used in this state in connection with any health benefit contract which by its terms permits the insurer to reduce or deny a claim or avoid the contract on the grounds that misstatements were made by the insured in the application unless a statement is made which satisfies the requirements of § 1.6(A)(1) or (2) of this Part.

1.A statement contained in the application to be signed by the applicant which states that he has read or has had read to him all questions and answers contained in the application and that any misstatements made by him may allow the insurer to reduce or deny a claim or avoid the contract within the contestable period.

a.The following statement is acceptable:

(1)I hereby certify that I have read the above statements or that they have been read to me and that the above statements are true and complete to the best of my knowledge and belief. I understand that any misrepresentation contained herein relied on by the Company may be used to reduce or deny a claim or void the contract within the contestable period if such misrepresentation materially affects the acceptance of the risk.

b.The Director may approve any other statement that clearly expresses the same intent as the above statement.

2.A statement furnished to the applicant, within ten (10) days of the issuance of a contract or amendment of a contract, in the form of a sticker to be attached to the first page of the contract, a letter or other form containing substantially the following:

a.Please read the copy of the application attached to this notice or to your contract. Omissions or misstatements in the application could cause an otherwise valid claim to be denied or cause your contract to be voided or reformed. Carefully check the application and write to the insurer within ten (10) days if any information shown on the application is not correct and complete or if any medical history has not been included. The application is part of the insurance contract. The insurance contract was issued on the basis that the answers to all questions and any other material information shown on the application are correct and complete.

B.Each insurer shall instruct its agents that such agents must ascertain whether each applicant is able to read and understand the English language. When questions or answers on such application are written in English and the applicant is unable to read and/or understand English, the agent must read or interpret or have someone else interpret all questions and answers in such manner that they could reasonably be expected to be understood by the applicant.

1.Each insurer shall file with the Director a description of the procedure it will follow and the form or forms it will use to meet the requirements of § 1.6 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.7 Individual Health Benefit Contracts

1.7.1Purpose, Applicability, and Definitions

A.The purpose of this part is to provide reasonable standardization and simplification of terms and coverages of individual health benefit contracts in order to facilitate public understanding and comparison and to eliminate provisions contained in individual health benefit contracts which may be misleading or confusing in connection either with the purchase of such coverages or with the settlement of claims and to provide for full disclosure in the sale of such coverages.

B.This part shall apply to all individual health benefit contracts delivered or issued for delivery in this state on or after the effective date hereof, except it shall not apply to individual health benefit contracts issued pursuant to a conversion privilege under a group health benefit contract or individual health benefit contract when such group or individual contract includes provisions which are inconsistent with the requirements of this Part, nor to health benefit contracts being issued to employees or members as additions to franchise plans in existence on the effective date of this Part. Neither shall this part apply to health benefit contracts issued by a health maintenance organization which has been certified as a health maintenance organization by the United States Secretary of Health, Education and Welfare for purposes of compliance with Section 1310 of Public Law 93-222 nor shall it apply to health benefit contracts issued by a health maintenance organization which has been certified as a health maintenance organization by the State of Rhode Island Director of Health for purposes of compliance with R.I. Gen. Laws § 42-62-9. The requirements contained in this Part shall be in addition to any other applicable laws and regulations.

C.Except as provided hereafter, no individual health benefit contract delivered or issued for delivery to any person in this State shall contain definitions respecting the matters set forth below unless such definitions comply with the requirements of § 1.7.1 of this Part.

1."Accident," "Accidental Injury," "Accidental Means," shall be defined to employ "result" language and shall not include words which establish an accidental means test or use words such as "external, violent, visible wounds" or similar words of description or characterization.

a.The definition shall not be more restrictive than the following: Injury or injuries, for which benefits are provided, means accidental bodily injury sustained by the insured person which is the direct cause, independent of disease or bodily infirmity or any other cause and occurs while the insurance is in force.

b.Such definition may provide that injuries shall not include injuries for which benefits are provided under any workmen's compensation, employer's liability or similar law, motor vehicle no fault plan, unless prohibited by law, or injuries occurring while the insured person is engaged in any activity pertaining to any trade, business, employment or occupation for wage or profit.

2."Convalescent Nursing Home," "Extended Care Facility," or "Skilled Nursing Facility" shall be defined in relation to its status, facilities and available services and, only with respect to insurers permitted to contract with convalescent nursing homes, extended care facilities or skilled nursing facilities under R.I. Gen. Laws Chapter 27-19 such facilities may be defined to include only "contracting" facilities with which the insurer or another insurer with similar powers in another state has made a contract for the provision of services to its subscribers.

a.A definition of such home or facility shall not be more restrictive than one requiring that it:

(1)Be operated pursuant to law and, with respect to insurers permitted to contract with such facilities, be a contracting facility;

(2)Be approved for payment of Medicare benefits or be qualified to receive such approval, if so requested;

(3)Be primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician;

(4)Provide continuous twenty-four (24) hour a day nursing service by or under the supervision of a registered graduate professional nurse (R.N.);

(5)Maintain a daily medical record of each patient.

b.The definition of such home or facility may provide that such term shall not be inclusive of:

(1)Any home, facility or part thereof used primarily for rest;

(2)A home of facility for the aged or for the care of drug addicts or alcoholics; or

(3)A home or facility primarily used for the care and treatment of mental diseases or disorders or for custodial or educational care.

3."Hospital" may be defined in relation to its status, facilities and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals and, only with respect to insurers permitted to contract with hospitals under R.I. Gen. Laws § 27-19-5 "hospital" may be defined to include only "contracting" hospitals with which the insurer or another insurer with similar powers in another state has made a contract for the provision of services to its subscribers.

a.The definition of the term "hospital" shall not be more restrictive than one requiring that the hospital:

(1)Be an institution operated pursuant to law and, with respect to insurers permitted to contract with hospitals, be a contracting hospital; and

(2)Be primarily and continuously engaged in providing or operating either on its premises or in facilities available to the hospital on a prearranged basis and under the supervision of a staff of duly licensed physicians, medical, diagnostic and major surgical facilities for the medical care and treatment of sick or injured persons on an in-patient basis for which a charge is made; and

(3)Provide twenty-four (24) hour nursing service by or under the supervision of registered graduate professional nurses (R.N.'s).

b.The definition of the term "hospital" may state that such term shall not be inclusive of:

(1)Convalescent homes, convalescent, rest or nursing facilities; or

(2)Facilities primarily affording custodial, educational or rehabilitory care; or

(3)Facilities for the aged, drug addicts, or alcoholics; or

(4)Any military or veterans hospital or soldiers home or any hospital contracted for or operated by any national government or agency thereof for the treatment of members or ex-members of the armed forces, except for services rendered on an emergency basis where a legal liability exists for charges made to the individual for such services, except that, with respect to "Hospital Confinement Indemnity Coverage," the same benefits must be provided for the first thirty five (35) days of any one confinement in any of the above government hospitals as is provided for confinement in any other hospital. Benefits for confinement in any of the above government hospitals may be reduced after the 35th day of confinement to no less than 2/3 of the benefit payable for confinement in any other hospital.

4."Medicare" may be substantially defined as "The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or later Amended," or "Title I, Part I of Public Laws 89- 97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof" or words of similar import.

5."Mental or Nervous Disorders" shall not be defined more restrictively than a definition including neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder of any kind.

6."Nurses" may be defined so that the description of nurse is restricted to a type of nurse, such as a registered graduate professional nurse (R.N.), a licensed practical nurse (L.P.N.), or a licensed vocational nurse (L.V.N.). If the words "nurse," "trained nurse," or "registered nurse" are used without specific instruction, then the use of such terms requires the insurer to recognize the services of any individual who qualifies under such terminology in accordance with R.I. Gen. Laws Chapter 5-34 and any administrative rules of the Board of Nursing Registration and Nursing Education or in accordance with similar laws or rules of other states.

7."One period of confinement" means consecutive days of in-hospital service received as an in-patient, or successive confinements when discharge from and readmission to the hospital occurs within a period of time not more than ninety (90) days or three (3) times the maximum number of days of in-hospital coverage provided by the policy to a maximum of one hundred eighty (180) days.

8."Physician" may be defined by including words such as "legally qualified physician" or "legally licensed physician." The use of such terms requires an insurer to recognize and to accept, to the extent of its obligation under the contract, all providers of medical care and treatment when such services are within the scope of the provider's licensed authority and are provided pursuant to applicable laws, except to the extent provided to the contrary in R.I. Gen. Laws Title 27.

9."Pre-Existing Condition" shall not be defined to be more restrictive than the following: Pre-existing condition means the existence of symptoms which would cause an ordinarily prudent person to seek diagnosis, care or treatment within a thirty six (36) month period preceding the effective date of the coverage of the insured person; or a condition for which medical advice or treatment was recommended by a physician or received from a physician within a thirty six (36) month period preceding the effective date of coverage of the insured person.

a.This definition does not prohibit an insurer, using an application form designed to elicit the complete health history of a prospective insured and on the basis of the answers on that application, from underwriting in accordance with that insurer's established standards. It is assumed that an insurer that elicits a complete health history of a prospective insured will act on the information and if the review of the health history results in a decision to exclude a condition, the policy will be endorsed or amended by including the specific exclusion. This same requirement of notice to the prospective insured of the specific exclusion will also apply to insurers which elect to use simplified application forms containing questions relating to the prospective insured's health.

b.This definition does, however, prohibit an insurer that elects to use a simplified application, with or without a question as to the applicant's health at the time of application, from reducing or denying a claim on the basis of the existence of a pre-existing condition that is defined more restrictively than above.

10."Sickness" shall not be defined to be more restrictive than the following: Sickness means sickness or disease of an insured person which first manifests itself after the effective date of the insurance and while the insurance is in force. A definition of sickness may provide for a probationary period which will not exceed thirty (30) days from the effective date of the coverage of the insured person. The definition may be further modified to exclude sickness or accident for which benefits are provided under any workman's compensation, occupational disease, employer's liability or similar law.

1.7.2Prohibited Contract Provisions

A.Except as provided in § 1.7.1(C)(10) of this Part, no contract shall contain provisions establishing a probationary or waiting period during which no coverage is provided under the contract subject to the further exception that a contract may specify a probationary or waiting period not to exceed six (6) months for losses resulting from hernia, disorder of reproduction organs, varicose veins, adenoids, appendix and tonsils. However, the permissible six (6) months exception shall not be applicable where such specified diseases or conditions are treated on an emergency basis. Accident contracts shall not contain probationary or waiting periods.

B.No contract or rider for additional coverage may be issued as a dividend unless an equivalent cash payment is offered to the contractholder as an alternative to such dividend contract or rider. No such dividend contract or rider shall be issued for an initial term of less than six (6) months.

1.The initial renewal subsequent to the issuance of any contract or rider as a dividend shall clearly disclose that the contractholder is renewing the coverage that was provided as a dividend for the previous term and that such renewal is optional with the contractholder.

C.No contract shall exclude coverage for a loss due to a pre-existing condition for a period greater than twelve (12) months following contract issue where the application for such insurance does not seek disclosure of prior illness, disease or physical conditions or prior medical care and treatment and such pre-existing condition is not specifically excluded by the terms of the contract.

D.No contract shall limit or exclude coverage by type of illness, accident, treatment or medical condition, except as follows:

1.Pre-existing conditions or diseases, except for congenital anomalies of a covered dependent child; [This exclusion shall not be interpreted so as to reduce any benefits required to be provided for newborn children in § 1.5 of this Part]

2.Mental or emotional disorders, alcoholism and drug addiction;

3.Pregnancy, except for complications of pregnancy;

4.Illness, treatment or medical condition arising out of:

a.war or act of war (whether declared or undeclared); participation in a felony, riot or insurrection; service in the armed forces or units auxiliary thereto,

b.suicide (sane or insane), attempted suicide or intentionally self-inflicted injury,

c.aviation,

d.with respect to short-term non-renewable contracts, interscholastic sports;

5.Cosmetic surgery, except that "cosmetic surgery" shall not include reconstructive surgery when such service is incidental to or follows surgery resulting from trauma, infection or other diseases of the involved part, and reconstructive surgery because of congenital disease or anomaly of a covered dependent child which has resulted in a functional defect;

6.Foot care in connection with corns, calluses, flat feet, fallen arches, weak feet, chronic foot strain, or symptomatic complaints of the feet;

7.Care in connection with the detection and correction by manual or mechanical means of structural imbalance, distortion, or subluxation in the human body for purposes of removing nerve interference and the effects thereof where such interference is the result of or related to distortion, misalignment or subluxation of, or in the vertebral column;

8.Treatment provided in a government hospital, however, contracts providing hospital confinement indemnity coverage shall not contain provisions excluding coverage because of confinement in a hospital operated by the Federal Government; benefits provided under Medicare or other governmental program (except Medicaid), any state or federal workmen's compensation, employers liability or occupational disease law, or any motor vehicle no-fault law; services rendered by employees of hospitals, laboratories or other institution; services performed by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance.

a.Benefits provided by R.I. Gen. Laws Chapter 42-62, are, by their nature, supplemental to all health benefit contracts and are not to be treated as benefits provided under a governmental program for purposes of this exclusion.

9.Dental care or treatment;

10.Eye glasses, hearing aids and examination for the prescription or fitting thereof;

11.Rest cures, custodial care, transportation and routine physical examinations;

12.Territorial limitations.

E.Other provisions of § 1.7 of this Part shall not impair or limit the use of waivers to exclude, limit or reduce coverage or benefits for specifically named or described pre-existing diseases, physical condition or extra hazardous activity. Where waivers are required as a condition of issuance, renewal or reinstatement, signed acceptance by the insured is required unless on initial issuance the full text of the waiver is contained either on the first page or specification page of the contract or unless notice of the waiver appears on the first page or specification page.

F.Contract provisions precluded in § 1.7.2 of this Part shall not be construed as a limitation on the authority of the Director to disapprove other contract provisions which, in the opinion of the Director, are unjust, unfair or unfairly discriminatory to the contractholder, beneficiary or any person insured under the contract; nor shall such provisions be construed as a limitation on the authority of the director to approve other exclusions which he finds to be in the interest of the public.

1.7.3Minimum Standards for Benefits

A.The following minimum standards for benefits are prescribed for the categories of coverage noted in the following subsections. Except as provided in § 1.7.3(H) of this Part no individual health benefit contract shall be delivered or issued for delivery in this state which does not meet the required minimum standards for the specified categories unless the Director finds that such contracts are approvable as Limited Benefit Health Contracts and the Outline of Coverage complies with the appropriate outline in § 1.7.4 (H) of this Part.

B.Nothing in § 1.7.3 of this Part shall preclude the issuance of any contract combining two (2) or more categories of coverage defined in § 1.7.3 of this Part or combining one (1) or more categories of coverage defined in § 1.7.3 of this Part with life insurance or with any form of policy of Accident and Sickness insurance or health benefit contract that may legally be issued in this State.

C.General Rules

1.A "non-cancelable," "guaranteed renewable" or "non-cancelable and guaranteed renewable" contract shall not provide for termination of coverage of the spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than nonpayment of premium. The contract shall provide that in the event of the insured's death, the spouse of the insured, if covered under the contract, shall become the insured.

2.The terms "non-cancelable," "guaranteed renewable" or "non-cancelable and guaranteed renewable" shall not be used without further explanatory language in accordance with the disclosure requirements of § 1.7.4(A)(1) and (2) of this Part. The terms "non-cancelable" or "Non-cancelable and guaranteed renewable" may be used only in a health benefit contract which the insured has the right to continue in force by the timely payment of premiums set forth in the contract until the age of sixty-five (65) or to eligibility for Medicare, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force. The term "guaranteed renewable" may be used only in a contract which the insured has the right to continue in force by the timely payment of premiums until the age of sixty-five (65) or to eligibility for Medicare, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force, except that the insurer may make changes in premium rates by classes.

3.In a family contract covering both husband and wife, the age of the younger spouse must be used as the basis for meeting the age and durational requirements of the definitions of "non-cancelable" or "guaranteed renewable." However, this requirement shall not prevent termination of coverage of the older spouse upon attainment of the stated age limit (e.g., age 65) so long as the contract may be continued in force as to the younger spouse to the age or for the duration period as specified in said definition.

4.If a contract contains a status type military service exclusion or a provision which suspends coverage during military service, the contract shall provide, upon receipt of written request, for refund of premiums as applicable to such person on a pro rata basis.

5.In the event the insurer cancels or refuses to renew, contracts providing pregnancy benefits shall provide for an extension of benefits as to pregnancy commencing while the contract is in force and for which benefits would have been payable had the contract remained in force.

6.Contracts providing convalescent or extended care benefits following hospitalization shall not condition such benefits upon admission to the convalescent or extended care facility within a period of less than fourteen (14) days after discharge from the hospital.

7.Family coverage shall continue for any dependent child who is incapable of self-sustaining employment due to mental retardation or physical handicap on the date that such child's coverage would otherwise terminate under the contract due to the attainment of a specified age limit for children and is chiefly dependent on the insured for support and maintenance. The contract may require that within thirty-one (31) days of such date the insurer receive due proof of such incapacity in order for the insured to elect to continue the contract in force with respect to such child, or that a separate converted contract be issued at the option of the insured or contractholder.

8.Any contract providing coverage for the recipient in a transplant operation shall also provide reimbursement of any medical expenses of a live donor to the extent that benefits remain and are available under recipient's contract, after benefits for the recipient's own expenses have been paid.

9.A contract may contain a provision relating to recurrent disabilities; provided however, that no such provision shall specify that a recurrent disability be separated by a period greater than six (6) months.

10.Any accident only contract providing benefits which vary according to the type of accidental cause shall prominently set forth in the outline of coverage the circumstances under which benefits are payable which are lesser than the maximum amount payable under the contract.

11.No contract that provides in-hospital benefits only shall be represented in any manner to be a supplement to Medicare unless it shall include in its provided benefits the initial Part A Medicare deductible as established from time to time by the Social Security Administration. Premiums may be reduced or raised to correspond with changes in the covered deductible, subject to approval by the Director of each proposed reduction or increase.

12.Termination of the contract shall be without prejudice to any continuous loss which commenced while the contract was in force, but the extension of benefits beyond the period the contract was in force may be predicated upon the continuous disability of the insured, limited to the duration of the benefit period, if any, or payment of the maximum benefits.

D.Basic Hospital Expense Coverage

1."Basic Hospital Expense Coverage" is a health benefit contract which provides coverage for a period of not less than thirty-one (31) days during any one period of confinement for each person insured under the contract, for expense incurred for necessary treatment and services rendered as a result of accident or sickness or which provides service benefits of equivalent value to the insured for at least the following:

a.Daily hospital room and board in an amount not less than the lesser of:

(1)eighty percent (80%) of the charges for semi-private room accommodations or

(2)fifty dollars ($50) per day.

b.Miscellaneous hospital services for expenses incurred for the charges made by the hospital for services and supplies which are customarily rendered by the hospital and provided for use during any period of confinement in an amount not less than either eighty percent (80%) of the charges incurred up to at least one thousand eight hundred ($1,800) or ten times the daily hospital room and board benefits; and

c.Hospital outpatient services consisting of (a) hospital services on the day surgery is performed, and (b) hospital services rendered within 24 hours after accidental injury, in an amount not less than nine hundred dollars ($900).

d.Benefits provided § 1.7.3(D)(1)(a) and (b) of this Part above may be provided subject to a combined deductible amount not in excess of one hundred fifty ($150).

e.The above benefits may be provided in the form of equivalent services in lieu of reimbursement of actual expenses.

E.Basic Medical-Surgical Expense Coverage

1."Basic Medical-Surgical Expense Coverage" is a health benefit contract which provides coverage for each person insured under the contract for the expenses incurred for the necessary services rendered by a physician for treatment of an injury or sickness or which provides service benefits of equivalent value to the insured for at least the following:

a.Surgical services;

(1)In amounts not less than those provided on a fee schedule based on the relative values contained in the State of New York certified surgical fee schedule, except that each relative value shall be multiplied by four dollars and fifty cents ($4.50) instead of the two dollars and fifty cents ($2.50) specified in the New York certified fee schedule; or other acceptable relative value scale of surgical procedures, up to a maximum of at least nine hundred dollars ($900) for any one procedure; or

(2)Not less than eighty percent (80%) of the usual and customary charges.

b.Anesthesia services, consisting of administration of necessary general anesthesia and related procedures in connection with covered surgical service rendered by a physician other than the physician (or his assistant) performing the surgical services:

(1)In an amount not less than eighty percent (80%) of the usual and customary charges; or

(2)fifteen percent (15%) of the surgical service benefit.

c.In-hospital medical services, consisting of physician services rendered to a person who is a bed patient in a hospital for treatment of sickness or injury other than that for which surgical care is required, in an amount not less than eighty (80%) of the reasonable charges; or eight dollars ($8.00) per day for not less than twenty-one (21) days during one continuous hospital confinement.

F.Hospital Confinement Indemnity Coverage

1."Hospital Confinement Indemnity Coverage" is a health benefit contract which provides daily benefits for hospital confinement on an indemnity basis in an amount not less than fifty dollars ($50) per day and not less than thirty-one (31) days during any one period of confinement for each person insured under the contract.

G.Major Medical Expense Coverage

1."Major Medical Expense Coverage" is a health benefit contract which provides hospital, medical and surgical expense coverage, to an aggregate maximum of not less than $10,000; copayment by the covered person not to exceed twenty five percent (25%), fifty percent (50%) in the case of the expense of diagnosis and treatment of mental and nervous disorders, of covered charges, a deductible stated on a per person, per family, per illness, per benefit period, or per year basis, or a combination of such bases not to exceed five percent (5%) of the aggregate maximum limit under the contract, unless the contract is written to complement underlying hospital and medical insurance in which case such deductible may be increased by the amount of the benefits provided by such underlying insurance (In no event, however, may the deduction of benefits of an underlying plan be applied to reduce the aggregate maximum.), for each covered person for at least:

a.Daily hospital room and board expense, prior to application of the co- payment percentages, for not less than ninety dollars ($90) daily (or in lieu thereof the average daily cost of semi-private room rate in the State of Rhode Island) for a period of not less than thirty-one (31) days during continuous hospital confinement;

b.Miscellaneous Hospital Services, prior to application of co-payment percentage, for an aggregate maximum of not less than two thousand six hundred dollars ($2,600) or fifteen (15) times the daily room and board rate if specified in dollar amounts;

c.Surgical Services, prior to application of co-payment percentage to a maximum of not less than one thousand one hundred dollars ($1,100) for the most severe operation with the amounts provided for other operations reasonably related to such maximum amount;

d.Anesthesia Services, prior to application of the co-payment percentage, for a maximum of not less than fifteen percent (15%) of the covered surgical fees or, alternatively, if the surgical schedule is based on relative values, not less than the amount provided therein for anesthesia services at the same unit value as used for the surgical schedule;

e.In-Hospital Medical Services, prior to application of the co-payment percentage, as defined in § 1.7.5(E)(1)(c) of this Part.

f.Out of Hospital Care, prior to application of the co-payment percentage, consisting of usual and customary charges for physicians' services rendered on an ambulatory basis where coverage is not provided elsewhere in the contract, for diagnosis and treatment of sickness or injury, and for diagnostic x-ray, laboratory services, radiation therapy and hemodialysis ordered by a physician; and

g.Not fewer than three of the following additional benefits, prior to application of the co-payment percentage, for an aggregate maximum of such covered charges of not less than one thousand dollars ($1,000):

(1)In-hospital private duty graduate registered nurse services.

(2)Convalescent nursing home care.

(3)Diagnosis and treatment by a radiologist or physiotherapist.

(4)Rental of special medical equipment, as defined by the insurer in the contract.

(5)Artificial limbs or eyes; casts, splints, trusses or braces.

(6)Treatment for functional nervous disorders, and mental and emotional disorders.

(7)Out-of-hospital prescription drugs and medications.

H.Limited Health Benefit Coverage

"Limited Health Benefit Coverage" is any contract which provides benefits that are less than the minimum standards for benefits required under § 1.7.3(D), (E), (F) and (G) of this Part or any other health benefit contract which does not satisfy the requirements of § 1.7.3(D), (E), (F) and (G) of this Part. Such policies or contracts may be issued or issued for delivery in this state only if the outline of coverage required by § 1.7.4(H) of this Part is completed and delivered as required by § 1.7.4(B) of this Part.

1.7.4Required Disclosure Provisions

A.General Rules

1.Each individual health benefit contract shall include a renewal, continuation, or nonrenewal provision. The language or specifications of such provision must be consistent with the type of contract to be issued. Such provision shall be appropriately captioned, and shall clearly state the duration, where limited, of renewability and the duration of the term of coverage for which the contract is issued and for which it may be renewed.

2.No health benefit contract shall be delivered or issued for delivery to any person in this state unless provisions respecting renewability or cancellability by the insurer shall appear on the first page of the contract or reference shall be made thereto in a brief description of the first page. For purposes of this requirement, the "first page" shall include any parts of other pages which are visible at the same time as the first page through a cut out section of the first page or below a shortened first page.

3.The following texts for the brief description are considered as among those which would be acceptable:

a.Cancelable at Option of Company

b.Renewal Subject to Consent of Company

c.Renewal Subject to Company Consent

d.Renewal at Option of Company

4.A more general statement such as the following is not acceptable:

a.SEE SPECIAL RENEWAL PROVISION

b.The above captions are recommended without prejudice to the right of an insurer to submit another caption, subject to approval by the Director, which it believes is equally clear or more definite as to the subject matter.

5.If a contract contains a cancellation provision, the existence of the cancellation provisions must be referred to in the renewal provision by a specific cross reference to the cancellation provision in the Renewal Provision on the first page of the contract.

6.Except for riders or endorsements by which the insurer effectuates a request made in writing by the contractholder or exercises a specifically reserved right under the contract, all riders or endorsements added to a contract after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the contract shall require signed acceptance by the contractholder. After date of contract issue, any rider or endorsement which increases benefits or coverage with concomitant increase in premium during the contract term must be agreed to in writing signed by the insured, unless the increased benefit or coverage is required by law.

7.Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, such premium charge shall be set forth in the contract.

8.A contract which provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or words of similar import shall include a definition of such terms and an explanation of such terms in its accompanying outline of coverage.

9.If a contract contains any limitations with respect to pre-existing conditions such limitations must appear as a separate paragraph of the contract and be labeled as "Pre-existing Condition Limitation".

10.All accident only contracts shall contain a prominent statement on the first page of the contract or attached thereto in either contrasting color or in boldface type at least equal to the size of type used for policy captions, a prominent statement as follows: "This is an accident only contract and it does not pay benefits for loss from sickness."

11.All contracts, except single premium nonrenewable contracts, shall have a notice prominently printed on the first page of the contract or attached thereto stating in substance that the contractholder shall have the right to return the contract within ten (10) days of its delivery and to have the premium refunded if after examination of the contract the contractholder is not satisfied for any reason.

12.If age is to be used as a determining factor for reducing the maximum aggregate benefits made available in the contract as originally issued, such fact must be prominently set forth in the outline of coverage.

13.If a contract contains a conversion privilege, it shall comply, in substance, with the following: The caption of the provision shall be "Conversion Privilege," or words of similar import. The provision shall indicate the persons eligible for conversion, the circumstances applicable to the conversion privilege, including any limitations on the conversion, and the person by whom the conversion privilege may be exercised. The provision shall specify the benefits to be provided on conversion or may state that the converted coverage will be as provided on a contract form then being used by the insurer for that purpose.

B.Outline of Coverage Requirements for Individual Coverages

1.No individual health benefit contract subject to this Part shall be delivered or issued for delivery in this State unless an appropriate outline of coverage, as prescribed in § 1.7.4 (C) through (H) of this Part is completed as to such contract; and

a.Is either delivered with the contract; or

b.Delivered to the applicant at the time application is made and acknowledgement of receipt or certification of delivery of such outline of coverage is provided to the insurer.

2.If an outline of coverage was delivered at the time of application and the contract is issued on a basis which would require revision of the outline, a substitute outline of coverage properly describing the contract must accompany the contract when it is delivered and contain the following statement, in no less than twelve (12) point type, immediately above the company name: "NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued."

3.The appropriate outline of coverage for contracts providing hospital coverage which only meets the standards of § 1.7.3(D) of this Part shall be that statement contained in § 1.7.4(G) of this Part. The appropriate outline of coverage for contracts providing coverage which meets the standards of both § 1.7.3(D) and (E) of this Part shall be the statement contained in § 1.7.4(E) of this Part. The appropriate outline of coverage for contracts providing coverage which meets the standards of both §§ 1.7.3(D) and (G) or § 1.7.3(D), (E) and (G) of this Part shall be the statement contained in § 1.7.4(G) of this Part.

4.Appropriate changes in terminology may be made in outlines of coverages in the case of contracts of nonprofit hospital, medical, or dental service corporations as defined in R.I. Gen. Laws Title 27. In any other case where the prescribed outline of coverage is inappropriate for the coverage provided by the contract, an alternate outline of coverage shall be submitted to the Director for prior approval.

C.Basic Hospital Expense Coverage (Outline of Coverage).

1.An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of § 1.7.3(D) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a.(INSURER'S NAME)

b.BASIC HOSPITAL EXPENSE COVERAGE

c. OUTLINE OF COVERAGE

(1)The contract itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you READ YOUR CONTRACT CAREFULLY! (Instead of the word "contract," the word "policy" may be used where appropriate).

e.Basic Hospital Expense Coverage -- Contracts of this category are designed to provide to persons insured coverage for hospital expenses incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services, and hospital out-patient services, subject to any limitations, deductibles and co-payment requirements set forth in the contract. Coverage is not provided for physicians or surgeons fees or unlimited hospital expenses.

f.A brief specific description of the benefits, including dollar amounts and number of days duration where applicable, contained in this contract, in the following order;

(1)Daily hospital room and board;

(2)Miscellaneous hospital services;

(3)Hospital outpatient services; and

(4)Other benefits, if any.

(5)(Note: The above description of benefits shall be stated clearly and concisely, and shall include a description of any deductible or co-payment provision applicable to the benefits described.)

g.(A description of any contract provisions which exclude, eliminate, restrict, reduce, limit, delay, or in any other manner operate to qualify payment of the benefits described in § 1.7.4(C)(1)(f) of this Part.)

h.(A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

D.Basic Medical-Surgical Expense Coverage (Outline of Coverage) –

1.An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of § 1.7.3(E)of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a.(INSURER'S NAME)

b.BASIC MEDICAL-SURGICAL EXPENSE COVERAGE

c.OUTLINE OF COVERAGE

d.Read Your Contract Carefully -- This outline of coverage provides a very brief description of the important features of your contract. This is not the insurance contract and only the actual contract provisions will control. The contract itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you READ YOUR CONTRACT CAREFULLY! (Instead of the word "contract," the word "policy" may be used where appropriate.)

e.Basic Medical-Surgical Expense Coverage -- Contracts of this category are designed to provide to persons insured coverage for medical-surgical expenses incurred as a result of a covered accident or sickness. Coverage is provided for surgical services, anesthesia services, and in-hospital medical services, subject to limitations, deductibles and co-payment requirements set forth in the contract. Coverage is not provided for hospital expenses or unlimited medical surgical expenses.

f.A brief specific description of the benefits, including dollar amounts and number of days duration where applicable, contained in this contract in the following order:

(1)Surgical services;

(2)Anesthesia services;

(3)In-hospital medical services; and

(4)Other benefits, if any.

(5)(Note: The above description of benefits shall be stated clearly and concisely, and shall include a description of any deductible or co-payment provision applicable to the benefits described.)

h.(A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

E.Basic Hospital and Medical Surgical Expense Coverage (Outline of Coverage) –

1.An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of § 1.7.3(D) and (E) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a.(INSURER'S NAME)

b.BASIC HOSPITAL AND MEDICAL SURGICAL EXPENSE

c.COVERAGE OUTLINE OF COVERAGE

e.Basic Hospital and Medical Surgical Expense Coverage -- Contracts of this category are designed to provide, to persons insured, coverage for hospital and medical-surgical expenses incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services, hospital outpatient services, surgical services, anesthesia services, and in-hospital medical services, subject to any limitations, deductibles and co-payment requirements set forth in the contract. Coverage is not provided for unlimited hospital or medical surgical expenses.

f.A brief specific description of the benefits, including dollar amounts and number of days duration where applicable, contained in this contract, in the following order:

(1)Daily hospital room and board;

(2)Miscellaneous hospital services;

(3)Hospital outpatient services;

(4)Surgical services;

(5)Anesthesia services;

(6)In-hospital medical services; and

(7)Other benefits, if any.

g.(Note: The above description of benefits shall be stated clearly and concisely, and shall include a description of any deductible or co-payment provision applicable to the benefits described.)

h.(A description of any contract provisions which exclude, eliminate, restrict, reduce, limit, delay, or in any other manner operate to qualify payment of the benefits described in § 1.7.4(E)(1)(f) of this Part.)

i.(A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

F.Hospital Confinement Indemnity Coverage (Outline of Coverage) –

1.An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of § 1.7.3(F) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a.(INSURER'S NAME)

b.HOSPITAL CONFINEMENT INDEMNITY COVERAGE

c. OUTLINE OF COVERAGE

e.Hospital Confinement Indemnity Coverage -- Contracts of this category are designed to provide, to persons insured, coverage in the form of a fixed daily benefit during periods of hospitalization resulting from a covered accident or sickness and any additional benefit described below, subject to any limitations set forth in the contract. Such contracts do not provide any benefits other than the fixed daily indemnity for hospital confinement and any additional benefit described below.

f.(A brief specific description of the benefits in this contract, in the following order:

(1)Daily benefit payable during hospital confinement; and

(2)Duration of benefit described in (a).

(3)(Note: The above description of benefits shall be stated clearly and concisely.)

h.(A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

i.(Any benefits provided in addition to the daily hospital benefit.)

G.Major Medical Expense Coverage (Outline of Coverage) –

1.An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of § 1.7.3(G) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a.(INSURER'S NAME)

b.MAJOR MEDICAL EXPENSE COVERAGE

c.OUTLINE OF COVERAGE

e.Major Medical Expense Coverage -- Contracts of this category are designed to provide, to persons insured, coverage for major hospital, medical, and surgical expenses incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services, surgical services, anesthesia services, in- hospital medical services, and out of hospital care, subject to any deductibles, co-payment provisions, or other limitations which may be set forth in the contract. Basic hospital or basic medical insurance coverage is not provided. (If, in accordance with § 1.7.4(B)(3) of this Part this form of outline is used for coverage which meets the standards of § 1.7.3(D) and (G) or § 1.7.3(D), (E) and (G) of this Part the preceding sentence shall be omitted and an appropriate description in accordance with §§ 1.7.4(C)(3) or (E)(3) of this Part shall be included.)

f.(A brief specific description of the benefits, including dollar amounts, contained in this contract, in the following order:

(1)Daily hospital room and board;

(2)Miscellaneous hospital services;

(3)Surgical services;

(4)Anesthesia services;

(5)In-hospital medical services;

(6)Out of hospital care;

(7)Maximum dollar amount for covered charges; and

(8)Other benefits, if any.)

(9)(Note: The above description of benefits shall be stated clearly and concisely, and shall include a description of any deductible or co-payment provision applicable to the benefits described.)

h.(A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

H.Limited Benefit Health Coverage (Outline of Coverage) –

1.An outline of coverage, in the form prescribed below, shall be issued in connection with contracts which do not meet the minimum standards of §1.7.4(D), (E), (F) and (G) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a.(INSURER'S NAME)

b.LIMITED BENEFIT HEALTH COVERAGE

c.OUTLINE OF COVERAGE

d.Read Your Contract Carefully -- This outline of coverage provides a very brief description of the important features of your contract. This is not the insurance contract and only the actual contract provisions will control. The contract itself sets forth in detail the rights and obligations of both you and your insurance company. It is, therefore, important that you READ YOUR CONTRACT CAREFULLY! (Instead of the word "contract," the word "policy" may be used where appropriate.)

e.Limited Benefit Health Coverage -- Contracts of this category are designed to provide, to persons insured, limited or supplemental coverage.

f.(A brief specific description of the benefits, including dollar amounts, contained in this policy.)

g.(Note: The above description of benefits shall be stated clearly and concisely, and shall include a description of any deductible or co-payment provisions applicable to the benefits described. Proper disclosure of benefits which vary according to accidental cause shall be made in accordance with § 1.7.3(C)(10) of this Part.

i.(A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

1.7.5Replacement of Individual Health Benefit Contracts

A.Application forms, except applications designed exclusively for use with accident only and single premium non-renewable contracts, shall include a question designed to elicit information as to whether the insurance to be issued is intended to replace any health benefit contract presently in force. A supplementary application or other form to be signed by the applicant containing such a question may be used.

B.Upon determining that a sale will involve replacement, an insurer, other than an insurer offering direct response insurance or its agent shall furnish the applicant, prior to issuance or delivery of the contract, the notice described in § 1.7.5(C) of this Part. One (1) copy of such notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the insurer. An insurer offering direct response insurance shall deliver to the applicant upon issuance of the contract, the notice described in § 1.7.5(D) of this Part. In no event, however, will such a notice be required in the solicitation of the following types of contracts: accident only and single premium non-renewable contracts.

C.The notice required by § 1.7.5(B) of this Part for an insurer, other than an insurer offering direct response insurance, shall provide, in substantially the following form:

1.NOTICE TO APPLICANT REGARDING REPLACEMENT OF HEALTH BENEFIT CONTRACTS

2.According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing health benefits and replace them with a contract to be issued by (Insurer's Name). For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new contract.

a.Health conditions which you may presently have, (pre-existing conditions) may not be immediately or fully covered under the new contract. This could result in denial or delay of a claim for benefits under the new contract, whereas a similar claim might have been payable under your present contract.

b.You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present contract. This is not only your right, but it is also in your best interests to make sure you understand all the relevant factors involved in replacing your present coverage.

c.If, after due consideration, you still wish to terminate your present contract and replace it with new coverage, be certain to answer truthfully and completely all questions on the application concerning your medical/health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your contract had never been in force. After the application has been completed and before you sign it, re-read it carefully to be certain that all information has been properly recorded.

d.The above "Notice to Applicant" was delivered to me on:

(1)(Date)

(2)(Applicant's Signature)

e.Note: The term "accident and sickness insurance" may be used instead of "health benefits" or "health benefit contracts." "Policy" may be used instead of "contract.”

D.The notice required by § 1.7.5(B) of this Part for an insurer offering direct response insurance shall be as follows:

1.NOTICE TO APPLICANT REGARDING REPLACEMENT OF HEALTH BENEFIT CONTRACTS

2.According to (your application) (information you have furnished) you intend to lapse or otherwise terminate existing health benefits and replace them with the contract delivered herewith issued by (Insurer's Name). Your new contract provides 10 days within which you may decide without cost whether you desire to keep the contract. For your own information and protection you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new contract.

c.(To be included only if the application is attached to the contract.) If, after due consideration, you still wish to terminate your present contract and replace it with new coverage, read the copy of the application attached to your new contract and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to (Insurer's Name and Address) within 10 days if any information is not correct and complete, or if any past medical history has been left out of the application.

d.(Insurer's Name)

e.Note: The term "accident and sickness insurance" may be used instead of "health benefits" or "health benefit contract." "Policy" may be used instead of "contract."

1.7.6Violation

Notwithstanding anything to the contrary in R.I. Gen. Laws Chapters 27-19 and 27-20 a violation of this section shall be prima facie evidence of a misrepresentation for the purpose of inducing a person to purchase insurance. A person guilty of such violation shall be subject to R.I. Gen. Laws § 27-29-4.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.8 Group and Blanket Health Benefit Contract Standard Provisions

1.8.1General Provisions

A.No group or blanket health benefit contract shall be delivered or issued for delivery in the state unless it contains in substance the following provisions, or provisions which in the opinion of the Director are more favorable to the persons covered; or at least as favorable to the persons covered and more favorable to the master contractholder. PROVIDED; HOWEVER, that:

1.the standard provisions required for individual health benefit contracts shall not apply to group health benefit contracts;

2.if any provision of this section is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of contract, the insurer, with the approval of the Director, shall omit from such contract any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of a provision in such a manner as to make the provision as contained in the contract consistent with the coverage provided by the contract;

3.§ 1.8.1(A)(6)(g) of this Part, below, shall be optional with respect to blanket contracts;

4.if the group contract (but not a blanket contract) provides hospital, surgical, or major medical benefits or any combination of these coverages for other than specified diseases or accidental injuries only, it shall also contain a conversion privilege conforming to the requirements of § 1.8.2 of this Part;

5.if a contract subject to this section shall contain other benefits in addition to health benefits, some or all of the provisions required in this section may be restricted so as to apply to health benefits only, and other appropriate provisions may be included which apply to non-health benefit portions of the contract.

6.The text of all master contract, certificate and subscriber contract forms, including any riders or endorsements to be attached to such forms shall be plainly printed in light-face type of a style in general use, the size of which shall be uniform and not less than ten (10) point with a lower-case unspaced alphabet length not less than one hundred and twenty (120) point (the "text" shall include all printed matter except the name and address of the insurer, any specific information required by law or regulation to be in some other type, the name or title of the contract, certificate, etc., and captions and subcaptions). The effective date of this § 1.8 of this Part shall be the same as that generally provided in § 1.11 of this Part for filing of forms.

a.A provision that the master contractholder is entitled to a grace period of thirty-one (31) days or, at the option of the insurer, one month for the payment of any premium due except the first, during which grace period the contract shall continue in force, unless the master contractholder shall have given the insurer written notice of discontinuance of the coverage in advance of the date of discontinuance and in accordance with the terms of the contract. The contract may provide that the master contractholder shall be liable to the insurer for the payment of a pro rata premium for the time the coverage was in force during such grace period.

b.A provision that validity of the contract shall not be contested, except for non-payment of premiums, after it has been in force for two years from its date of issue; and that no statement made for the purpose of effecting insurance coverage under the contract with respect to a person shall be used to avoid the insurance with respect to which such statement was made or to reduce benefits thereunder after such insurance has been in force for a period of two (2) years during such person's lifetime, nor unless such statement is contained in a written instrument signed by the person making such statement and a copy of that instrument is or has been furnished to him.

c.A provision that a copy of the application, if any, of the master contractholder shall be attached to the master contract when issued, and that all statements made by the master contractholder or by the persons covered shall be deemed representations and not warranties.

d.A provision that no agent has authority to change the contract or waive any of its provisions and that no change in the contract shall be valid unless approved by an officer of the insurer and evidenced by an endorsement on the contract, or by rider or amendment to the contract signed by the insurer, provided that any such amendment which reduces or eliminates coverage was either requested in writing by the master contractholder or signed by the master contractholder.

e.A provision specifying the additional exclusions or limitations, if any, applicable under the contract with respect to a disease or physical condition of a person, not otherwise excluded from the person's coverage by name or specific description effective on the date of the person's loss, which existed prior to the effective date of the person's coverage under the contract. Any such exclusion or limitation may only apply to a disease or physical condition for which medical advice or treatment was received by the person during the twelve (12) months prior to the effective date of his coverage. In no event shall such exclusion or limitation apply to loss incurred after the earlier of (a) the end of a continuous period of twelve (12) months commencing on or after the effective date of the person's coverage during all of which the person has received no medical advice or treatment in connection with such disease or physical condition and (b) the end of the two (2) year period commencing on the effective date of the person's coverage.

f.A provision specifying the ages, if any, to which the insurance provided shall be limited; and the ages, if any, for which additional restrictions are placed on benefits, and the additional restrictions placed on the benefits at such ages. If the premiums or benefits vary by age, there shall also be a provision specifying an equitable adjustment of premiums or of benefits, or both, to be made in the event the age of a covered person has been misstated, such provision to contain a clear statement of the method of adjustment to be used. In no event, however, shall coverage be required for any person during any period when, according to his correct age, coverage would otherwise not be provided for him under the contract.

g.(Optional with respect to blanket contracts) A provision that the insurer will issue to the master contractholder for delivery to each person insured, a certificate or subscriber contract, which may be in summary form, setting forth the essential features of the coverage and to whom the benefits are payable. If family members or dependents are included in the coverage, only one certificate or subscriber contract need be issued for each family unit.

h.A provision that written notice of claim must be given to the insurer within twenty (20) days after the occurrence or commencement of any loss covered by the contract. Failure to give notice within such time shall not invalidate nor reduce any claim if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible.

i.A provision that the insurer will furnish to the person making the claim, or to the master contractholder for delivery to such person, such forms as are usually furnished by it for filing proof of loss. If such forms are not furnished before the expiration of fifteen (15) days after the insurer received notice of any claim under the contract, the person making such claim shall be deemed to have complied with the requirements of the contract as to proof of loss, upon submitting within the time fixed in the contract for filing proof of loss, written proof covering the occurrence, character and extent of the loss for which claim is made.

j.A provision that, in the case of claim for loss, written proof of such loss must be furnished to the insurer within ninety (90) days after the date of such loss. Failure to furnish such proof within such time shall not invalidate nor reduce any claim if it was not reasonably possible to furnish such proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity of the claimant, later than one (1) year from the time proof is otherwise required.

k.A provision that all benefits payable under the contract will be payable not more than sixty (60) days after receipt of such proof.

l.A provision that all indemnities of the contract are payable to the insured, except that the master contract may provide that all or any portion of any benefits on account of hospital, medical, surgical or other services may, at the insurer's option, be paid directly to the hospital or person rendering such services. Any payment made by the insurer in good faith pursuant to the foregoing provisions shall discharge an insurer's obligation with respect to the extent of such payment.

m.A provision that the insurer shall have the right and opportunity to examine the person of the individual for whom claim is made when and so often as it may reasonably require during the pendency of claim under the contract.

n.A provision that no action at law or in equity shall be brought to recover on the contract prior to the expiration of sixty (60) days after proof of loss has been filed in accordance with the requirements of the contract and that no such action shall be brought at all unless brought within three (3) years from the expiration of the time within which proof of loss is required by the contract.

1.8.2Conversion Privilege

A.A group health benefit contract delivered or issued for delivery in the state which provides hospital, surgical, or major medical expense benefits, or any combination of these coverages, but not a contract which provides benefits for specified disease or for accidental injuries only, shall provide that an employee or member whose insurance under the group contract has been terminated for any reason other than discontinuance of the group contract in its entirety or with respect to an insured class, and who has been continuously covered under the group contract (and under any group contract providing similar benefits which it replaces) for at least three months immediately prior to termination, shall be entitled to have issued to him by the insurer a health benefit contract (hereafter referred to as the converted contract).

B.An employee or member shall not be entitled to have a converted contract issued to him if termination of his insurance under the group contract occurred because:

1.he failed to pay any required contribution, or

2.any discontinued group coverage was replaced by similar group coverage within thirty-one days.

C.Issuance of a converted contract shall be subject to the following conditions:

1.Written application for the converted contract shall be made and the first premium therefor paid to the insurer not later than thirty-one (31) days after such termination.

2.The converted contract shall be issued without evidence of insurability.

3.The premium for the converted contract shall be determined in accordance with the insurer's table of premium rates applicable to the age and class of risk of each person to be covered under the converted contract and to the type and amount of insurance provided.

4.The effective date of the converted contract shall be the day following the termination of coverage under the group contract.

5.The converted contract shall cover the employee or member and his dependents who were covered by the group contract on the date of termination of coverage. At the option of the insurer, a separate converted contract may be issued to cover any dependent.

6.The insurer shall not be required to issue a converted contract covering any person if such person is or could be covered by Medicare (Title XVIII of the United States Social Security Act as added by the Social Security Amendments of 1965 or as later amended or superseded).

a.Furthermore, the insurer shall not be required to issue a converted contract covering any person if

(1)such person is covered for similar benefits by another hospital, surgical, medical or major medical expense contract; or

(2)such person is eligible for similar benefits (whether or not covered therefor) under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis, or

(3)similar benefits are provided for or available to such person, pursuant to or in accordance with the requirement of any state or federal law (benefits under R.I. Gen. Laws § 42-62-6 shall not be deemed "similar benefits" for purposes of this subsection), and

b.The benefits provided under the sources referred to in § 1.8.2(C)(6)(a)(1) of this Part for such person or benefits provided or available under the sources referred to in §1.8.2(A)(6)(a)(2) and (3) of this Part for such person, together with the benefits provided by the converted contract would result in overinsurance according to the insurer's standards. The insurer's standards must bear some relationship to actual health care costs in the area in which the insured lives at the time of conversion and must be filed with the Director of Business Regulation prior to their use in denying coverage.

7.A converted contract may include a provision whereby the insurer may request information in advance of any premium due date of such contract of any person covered thereunder as to whether:

a.he is covered for similar benefits by another health benefit contract,

b.he is covered for similar benefits under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis or

c.similar benefits are provided for or available to such person, pursuant to or in accordance with the requirements of any state or federal law.

d.The converted contract may provide that the insurer may refuse to renew the contract or the coverage of any person insured thereunder for the following reasons only:

(1)either the benefits provided under the sources referred to in §§ 1.8.2(C)(7)(a) and (b) of this Part above for such person or benefits provided or available under the sources referred to in 1.8.2(C)(7)(c) of this Part above for such person, together with the benefits provided by the converted contract, would result in overinsurance according to the insurer's standards on file with the Director of Business Regulation, or the converted contractholder fails to provide the requested information.

(2)fraud or material misrepresentation in applying for any benefits under the converted contract;

(3)eligibility of the insured person for coverage under Medicare (Title XVIII of the United States Social Security Act as amended by the Social Security Amendments of 1965 or as later amended or superseded) or under any other state or federal law providing for benefits similar to those provided by the converted contract;

(4)other reasons approved by the Director of Business Regulation.

8.An insurer shall not be required to issue a converted contract which provides benefits in excess of those provided under the group contract form which conversion is made.

9.The converted contract shall not exclude a pre-existing condition not excluded by the group contract. However, the converted contract may provide that any hospital, surgical or medical benefits payable thereunder may be reduced by the amount of any such benefits payable under the group contract after termination of the individual's insurance thereunder. The converted contract may also include provisions so that during the first contract year the benefits payable under the converted contract, together with the benefits payable under the group contract, shall not exceed those that would have been payable had the individual's insurance under the group contract remained in force and effect.

10.Subject to the provisions and conditions of § 1.8 of this Part, if the group health benefit contract from which conversion is made insured the employee or member for basic hospital or surgical expense insurance, the employee or member shall be entitled to obtain a converted contract providing, at his option, coverage on an expense incurred basis or equivalent service benefits under any one of the plans meeting the following requirements:

a.Plan A

(1)hospital room and board daily expense benefits in a maximum dollar amount approximately the average semi-private rate charged in this state, for a maximum duration of at least seventy days,

(2)miscellaneous hospital expense benefits of a maximum amount of ten times the hospital room and board daily expense benefits, or, at the insurer's option, full benefits for ancillary services for the period covered § 1.8.2(C)(10)(a)(1) of this Part, and,

(3)surgical operation expense benefits according to a surgical schedule consistent with those customarily offered by the insurer under group or individual health benefit contracts and providing a maximum benefit of nine hundred dollars, or, at the insurer's option, full coverage of the usual and customary fee for surgical operations, or

b.Plan B

(1)hospital room and board daily expense benefits in a maximum amount equal to seventy five percent (75%) of the maximum dollar amount determined for Plan A, for a maximum duration of at least seventy (70) days,

(2)miscellaneous hospital expense benefits of a maximum amount of ten times the hospital room and board daily expense benefits, or, at the insurer's option, benefits covering seventy five percent (75%) of the ancillary services for the period covered by § 1.8.2(C)(10)(b)(1) of this Part, and

(3)surgical operation expense benefits according to a surgical schedule consistent with those customarily offered by the insurer under group or individual health benefit contracts and providing a maximum benefit of six hundred seventy-five dollars, or, at the insurer's option, benefits equivalent to 75% of the usual and customary fee for surgical operations, or

c.Plan C

(1)hospital room and board daily expense benefits in a maximum dollar amount equal to fifty percent (50%) of the maximum dollar amount determined for Plan A, for a maximum duration of at least seventy days,

(2)miscellaneous hospital benefits of a maximum amount of ten times the hospital room and board daily expense benefits, or, at the insurer's option, benefits covering fifty percent (50%) of the ancillary services for the period covered by § 1.8.2(C)(10)(c)(1) of this Part, and

(3)surgical operation expense benefits according to a surgical schedule consistent with those customarily offered by the insurer under group or individual health benefit contracts and providing a maximum benefit of four hundred fifty dollars, or at the insurer's option, benefits equivalent to seventy five percent (75%) of the usual and customary fee for surgical operations.

d.The maximum dollar amount in Plan A shall be determined by the Director of Business Regulation and may be redetermined by him from time to time as to converted contracts issued subsequent to such redetermination. Such redetermination shall not be made more often than once in three (3) years. The maximum dollar amounts in Plans A, B and C shall be rounded to the nearest multiple of ten dollars ($10).

(1)Note: As of December 14, 1978, it has been determined that the maximum dollar amounts, rounded as required, are as follows:

(AA)Plan A $130.00

(BB)Plan B $100.00

(CC)Plan C $70.00

(2)This determination shall be effective until October 9, 1981, and it shall remain in effect thereafter until a redetermination shall be made by the Director.

11.Subject to the provisions and conditions of § 1.8 of this Part, if the group health benefit contract from which conversion is made insures the employee or member for major medical expense insurance, the employee or member shall be entitled to obtain a converted contract providing catastrophic or major medical coverage under a plan meeting the following requirements:

a.A maximum benefit at least equal to either, at the option of the insurer, § 1.8.2(C)(11)(a)(1) or (2) of this Part below:

(1)The smaller of the following amounts:

(AA)The maximum benefit provided under the group contract.

(BB)A maximum payment of ten thousand dollars ($10,000) per covered person for all covered medical expenses incurred during the covered person's lifetime.

(2)The smaller of the following amounts:

(AA)The maximum benefit provided under the group contract.

(BB)A maximum payment of ten thousand dollars ($10,000) for each unrelated injury or sickness.

b.Payment of benefits at the rate of eighty percent (80%) of covered medical expenses which are in excess of the deductible. Payment of benefits for outpatient treatment of mental illness, if provided in the converted contract, may be at a lesser rate but not less than fifty percent (50%) and may be subject to a maximum of no more than one thousand dollars ($1,000) in any one benefit period.

c.A deductible for each benefit period which, at the option of the insurer, shall be:

(1)the sum of the benefits deductible and one hundred dollars ($100), or

(2)the corresponding deductible in the group contract. The term "benefits deductible," as used herein, means the value of any benefits provided on an expense incurred or a service benefit basis which are provided with respect to covered medical expenses by any other health benefit contract, or any other plan or program whether on an insured or uninsured basis, or in accordance with the requirements of any state or federal law except that benefits provided under R.I. Gen. Laws § 42-62-6 shall not be included in the "benefits deductible", and, if pursuant to § 1.8.2(C)(12) of this Part, the converted contract provides both basic hospital or surgical coverage and major medical coverage, the value of such basic benefits. If the maximum benefit is determined by § 1.8.2(C)(11)(a)(2) of this Part, the insurer may require that the deductible be satisfied during a period of not less than three months if the deductible is one hundred dollars ($100) or less, and not less than six months if the deductible exceeds one hundred dollars ($100).

d.The benefit period shall be each calendar year when the maximum benefit is determined by § 1.8.2(C)(11)(a)(1) of this Part or twenty-four months when the maximum benefit is determined § 1.8.2(C)(11)(a)(2) of this Part.

e.The term "covered medical expenses," as used above, shall include at least, in the case of hospital room and board charges, the lesser of the dollar amount in Plan A and the average semi-private room and board rate for the hospital in which the individual is confined and twice such amount for charges in an intensive care unit. Any surgical schedule shall be consistent with those customarily offered by the insurer under group or individual health insurance contracts and must provide at least a one thousand two hundred dollar ($1,200) maximum benefit.

12.The conversion privilege required by § 1.8 of this Part shall, if the group health benefit contract insures the employee or member for basic hospital or surgical expense insurance as well as major medical expense insurance, make available the plans of benefits set forth in conditions 10 and 11 hereof. At the option of the insurer, such plans of benefits may be provided under one contract. Instead of the plans of benefits set forth in § 1.8.2(C)(10) and (11) of this Part the insurer may provide a contract of comprehensive benefits without first-dollar coverage. Such a contract shall conform to the requirements of § 1.8.2(C)(11), except that the maximum payment shall be two hundred fifty thousand dollars ($250,000), where ten thousand dollars ($10,000) is established in § 1.8.2(C)(11) of this Part.

13.The insurer may, at its option, also offer alternative plans for group health conversion in addition to those required by § 1.8 of this Part.

14.In the event coverage would be continued under the group contract on an employee following his retirement prior to the time he is or could be covered by Medicare, he may elect, in lieu of such continuation of group insurance, to have the same conversion rights as would apply had his insurance terminated by reason of termination of employment or membership.

15.The converted contract may provide for reduction of coverage on any person upon his eligibility for coverage under Medicare (Title XVIII of the United States Social Security Act as added by the Social Security Amendments of 1965 or as later amended or superseded) or under any other state or federal law providing for benefits similar to those provided by the converted contract, except that benefits provided under R.I. Gen. Laws § 42-62-6 shall not be considered to be "similar" for purposes of such reduction.

16.Subject to the conditions set forth above, the conversion privilege shall also be available:

a.to the surviving spouse, if any, at the death of the employee or member, with respect to the spouse and such children whose coverage under the group contract terminates by reason of such death, otherwise to each surviving child whose coverage under the group contract terminates by reason of such death, or, if the group contract provides for continuation of dependents coverage following the employee's or members' death, at the end of such continuation,

b.to the spouse of the employee or member upon termination of coverage of the spouse, while the employee or member remains covered under the group contract, by reason of ceasing to be a qualified family member under the group contract, with respect to the spouse and such children whose coverage under the group contract terminates at the same time, or

c.to a child solely with respect to himself upon termination of his coverage by reason of ceasing to be a qualified family member under the group contract, if a conversion privilege is not otherwise provided above with respect to such termination.

17.If the benefit levels required in § 1.8.2(C)(10) of this Part above exceed the benefit levels provided under the group contract, the conversion may offer benefits which are substantially similar to those provided under the group contract in lieu of those required in § 1.8.2(C)(10) of this Part.

18.The insurer may elect to provide group insurance coverage in lieu of the issuance of a converted individual contract.

19.A notification of the conversion privilege shall be included in each certificate of coverage or group subscriber contract.

20.The insurer may elect to issue a converted contract itself, or it may arrange with another appropriately licensed insurer for such other insurer to issue the converted contract required by § 1.8 this Part.

21.A converted contract which is delivered outside this state must be on a form which could be delivered in such other jurisdiction as a converted contract had the group contract been issued in that jurisdiction. Except for this requirement, converted contracts issued outside this state shall not be required to be in accordance with § 1.8.2 of this Part.

1.8.3Notice of Group Health Conversion

A.An employee or member who is entitled to make application for a converted health benefit contract in accordance with the provision of § 1.8.2 of this Part shall be given written notice of the existence of the conversion privilege at least fifteen (15) days prior to the expiration of the thirty-one (31) day conversion period established by the group contract. If the employee or member is not given notice of his conversion rights as provided above, the employee or member shall have an additional period within which to exercise such conversion privilege. This additional period shall expire fifteen (15) days after the employee or member has been given such notice, or ninety (90) days after termination of his coverage under the group contract, whichever comes earlier.

B.Written notice presented to the employee or member by his employer, the master contractholder or insurer or mailed by his employer, the master contractholder or insurer to the last known address of the employee or member, as furnished by the master contractholder, shall constitute the giving of notice for the purpose of this provision. If an employee or member is permitted an additional period for conversion, as provided herein, and if written application for the converted contract, accompanied by the initial premium, is made within the additional period, the effective date of the converted contract shall be the day following his termination of insurance under the group contract.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.9 Group or "Group-Type" Coverage Discontinuance and Replacement

1.9.1Scope

§ 1.9 of this Part is applicable to all health benefit contracts issued or provided by an insurance company or a non-profit service corporation on a group or group-type basis covering persons as employees of employers or as members of unions or associations.

1.9.2Effective Date of Discontinuance for Non-Payment of Premium or Subscription Charges

A.If a contract subject to § 1.9 of this Part provides for automatic discontinuance of the contract after a premium or subscription charge has remained unpaid through the grace period allowed for such payment, the insurer shall be liable for valid claims for covered losses incurred prior to the end of the grace period.

B.If the actions of the insurer after the end of the grace period indicate that it considers the contract as continuing in force beyond the end of the grace period (such as, by continuing to recognize claims subsequently incurred except to the extent that specific limited coverage may be provided after termination by the terms of the contract), the insurer shall be liable for valid claims for losses beginning prior to the effective date of written notice of discontinuance to the master contractholder or other entity responsible for making payments or submitting subscription charges to the insurer. The effective date of discontinuance shall not be prior to midnight at the end of the third scheduled work day after the date upon which the notice is delivered.

1.9.3Requirements for Notice of Discontinuance

A.Any notice of discontinuance so given by the insurer, shall include a request to the group master contractholder or other entity involved to notify employees covered under the contract of the date as of which the group contract will discontinue and to advise that, unless otherwise provided in the contract, the insurer shall not be liable for claims for losses incurred after such date. Such notice of discontinuance shall also advise that, in any instance in which the plan involves employee contributions, that if the master contractholder or other entity continues to collect contributions for the coverage beyond the date of discontinuance, the master contractholder or other entity may be held solely liable for the benefits with respect to which the contributions have been collected.

B.The insurer will prepare and furnish to the master contractholder or other entity at the same time a supply of notice forms to be distributed to the employees or members concerned indicating such discontinuance and the effective date thereof, and urging the employees or members to refer to their certificates of contracts in order to determine what rights, if any, are available to them upon such discontinuance. Instead of furnishing such notice to the master contractholder, the insurer may mail such notice to the employees or members.

1.9.4Extension of Benefits

A.Every group contract subject to § 1.9 of this Part hereafter issued, or under which the level of benefits is hereafter altered, modified, or amended, must provide a reasonable provision for extension of benefits in the event of total disability at the date of discontinuance of the group contract, as required by the following paragraphs of § 1.9.4 of this Part.

B.In the case of a group plan providing specific indemnity during hospital confinement, discontinuance of the contract during a disability shall have no effect on benefits payable for that confinement.

C.In the case of hospital or medical expense coverages other than dental and maternity expense, a reasonable extension of benefit or accrued liability provision is required. Such a provision will be considered "reasonable" if it provides an extension of at least twelve (12) months under "major medical" and "comprehensive medical" type coverages, and under other types of hospital or medical expense coverages provides either an extension of at least ninety (90) days or an accrued liability for expenses incurred during a period of disability or during a period of at least ninety (90) days starting with a specific event which occurred while coverage was in force (e.g., an accident).

D.Any applicable extension of benefits or accrued liability shall be described in any master contract as well as in group insurance certificates or subscriber contracts. The benefits payable during any period of extension or accrued liability may be subject to the contract's regular benefits limits (e.g., benefits ceasing at exhaustion of a benefit period or of maximum benefits).

1.9.5Continuance of Coverage in Situations Involving Replacement of One Insurer by Another

A.§ 1.9.5 of this Part shall indicate the insurer responsible for liability in those instances in which one insurer's contract replaces a plan of similar benefits of another.

B.Liability of Prior Insurer. The prior insurer remains liable only to the extent of its accrued liability and extensions of benefits. The position of the prior insurer shall be the same whether the group master contractholder or other entity secures replacement coverage from a new insurer, self-insures, or foregoes the provision of coverage.

C.Liability of Succeeding Insurer

1.Each person who is eligible for coverage in accordance with the succeeding insurer's plan of benefits (in respect of classes eligible and activity at work and non-confinement rules) shall be covered by that insurer's plan of benefits.

2.Each person not covered under the succeeding insurer's plan of benefits in accordance with § 1.9.5(C)(1) of this Part, must nevertheless be covered by the succeeding insurer in accordance with the following rules if such individual was validly covered (including benefit extension) under the prior plan on the date of discontinuance and if such individual is a member of the class or classes of individuals eligible for coverage under the succeeding insurer's plan. Any reference in the following rules to an individual who was or was not totally disabled is a reference to the individual's status immediately prior to the date the succeeding insurer's coverage becomes effective.

a.The minimum level of benefits to be provided by the succeeding insurer shall be the applicable level of benefits of the prior insurer's plan reduced by any benefits payable by the prior plan.

b.Coverage must be provided by the succeeding insurer until at least the earliest of the following dates:

(1)the date the individual becomes eligible under the succeeding insurer's plan as described in § 1.9.5(C)(1) of this Part.

(2)for each type of coverage, the date the individual's coverage would terminate in accordance with the succeeding insurer's plan provisions applicable to individual termination of coverage (e.g., at termination of employment or ceasing to be an eligible dependent, as the case may be.)

(3)in the case of an individual who was totally disabled, and in the case of a type of coverage for which § 1.9.5 of this Part requires an extension of accrued liability, the end of any period of extension or accrued liability which is required of the prior insurer by § 1.9.5 of this Part or, if the prior insurer's contract is not subject to § 1.9.5 of this Part, would have been required of that insurer had its contract been subject to § 1.9.5 of this Part at the time the prior plan was discontinued and replaced by the succeeding insurer's plan.

3.In the case of a pre-existing conditions limitation included in the succeeding insurer's plan, the level of benefits applicable to pre-existing conditions of persons becoming covered by the succeeding insurer's plan in accordance with this subsection during the period of time this limitation applies under the new plan shall be the lesser of:

a.the benefits of the new plan determined without application of the pre-existing conditions limitation; and

b.the benefits of the prior plan.

4.The succeeding insurer, in applying any deductibles or waiting periods in its plan, shall give credit for the satisfaction or partial satisfaction of the same or similar provisions under a prior plan providing similar benefits. In the case of deductible provisions, the credit shall apply for the same or overlapping benefit periods and shall be given for expenses actually incurred and applied against the deductible provisions of the prior insurer's plan during the ninety (90) days preceding the effective date of the succeeding insurer's plan but only to the extent these expenses are recognized under the terms of the succeeding insurer's plan and are subject to a similar deductible provision.

5.In any situation where a determination of the prior insurer's benefits is required by the succeeding insurer, at the succeeding insurer's request the prior insurer shall furnish a statement of the benefits available or pertinent information, sufficient to permit verification of the benefit determination or the determination itself by the succeeding insurer. For the purpose of § 1.9.5 of this Part, benefits of the prior plan will be determined in accordance with all of the definitions, conditions, and covered expense provisions of the prior plan rather than those of the succeeding plan. The benefit determination will be made as if coverage has not been replaced by the succeeding insurer.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.10 Group Anti-Duplication Provision

A.If a group health benefit contract contains a provision restricting benefit payments on account of the benefit paid by another plan, such provision shall be at least as favorable to the insured as the following:

1.Provision for Co-Ordination Between This Contract and Other Benefits

a.Benefits Subject to This Program

(1)All of the benefits provided under this contract are subject to this provision.

(2)(Note: When contract provides both integrated Major Medical Expense Benefits and the underlying Basic Benefits, but provision applies to Major Medical only, use the following alternate wording: Only the Major Medical Expense Benefits under this contract are subject to this provision).

b.Definitions

(1)(Note: Include here the definition of a Plan, that is, the benefits, including those provided by this contract, that are to be co-ordinated. The following definition is illustrative only, except that “plan” may not be defined to include individual health benefit contracts. If government programs are excluded, language substantially equivalent to that at (iv) must be used.)

(AA)“Plan” means any plan providing benefits or services for or by reason of medical or dental care or treatment, which benefits or services are provided by:

(i)group, blanket or franchise insurance coverage,

(ii)Blue Cross, Blue Shield, group practice, individual practice and other prepayment coverage,

(iii)any coverage under labor-management trusteed plans, union welfare plans, employer organization plans, or employee benefit organization plans, and

(iv)any coverage under governmental programs, and any coverage required or provided by any statute; except that “plan” shall not include benefits provided under R.I. Gen. Laws §§ 42-62-5, 6, 7 and 8.

(BB)The term “plan” shall be construed separately with respect to each contract or other arrangement for benefits or services and separately with respect to that portion of any such contract or other arrangement which reserves the right to take the benefits or services of other Plans into consideration in determining its benefits and that portion which does not.

(2)“This Plan” means that portion of this contract which provides the benefits that are subject to this provision.

(3)“Allowable Expense” means any necessary, reasonable, and customary item of expense at least a portion of which is covered under at least one the Plans covering the person for whom claim is made.

(AA)When a Plan provides benefits in the form of services rather than cash payments, the reasonable cash value of each service rendered shall be deemed to be both an Allowable Expense and a benefit paid.

(4)“Claim Determination Period” means (Note: Insert here an appropriate period of time such as, “calendar year” or “Benefit Period as defined elsewhere in this contract.”)

c.Effective on Benefits

(1)This provision shall apply in determining the benefits as to a person covered under this Plan for any Claim Determination Period if, for the Allowable Expenses incurred as to such person during such period, the sum of

(AA)the benefits that would be payable under this Plan in the absence of this provision, and

(BB)the benefits that would be payable under all other Plans in the absence therein of provision of similar purpose to this provision would exceed such Allowable Expenses.

(2)As to any Claim Determination Period with respect to which this provision is applicable, the benefits that would be payable under this Plan in the absence of this provision for the Allowable Expenses incurred as to such person during such Claim Determination Period shall be reduced to the extent necessary so that the sum of such reduced benefits and all the benefits payable for such Allowable Expenses under all other Plans except as provided in § 1.10(A)(1)(c)(3) of this Part, shall not exceed the total of such Allowable Expenses. Benefits payable under another Plan include the benefits that would have been payable had claim been duly made therefor.

(3)If:

(AA)another Plan which is involved in § 1.10(A)(1)(c)(2) of this Part and which contains a provision co-ordinating its benefits with those of this Plan would, according to its rules, determine its benefits after the benefits of this Plan have been determined, and

(BB)the rules set forth in § 1.10(A)(1)(c)(4) of this Part would require this Plan to determine its benefits before such other Plan which the benefits of such other Plan will be ignored for the purposes of determining the benefits under this Plan.

(4)For the purposes of item § 1.10(A)(1)(c)(3) of this Part, the rules establishing the order of benefit determination are:

(AA)The benefits of Plan which cover the person on whose expenses claim is based other than as a dependent shall be determined before the benefits of a Plan which covers such person as a dependent;

(BB)Dependent Child/Parents Not separated or Divorced. Except as stated in § 1.10(A)(1)(c)((4))((BB))((iii)) of this Part below, when this Plan and another Plan cover the same child as a dependent of different persons, called “parents”:

(i)the benefits of the plan of the parent whose birthday falls earlier in a year are determined before those of the Plan of the parent whose birthday falls later in that year; but

(ii)if both parents have the same birthday, the benefits of the Plan which covered the parent longer are determined before those of the Plan which covered the other parent for a shorter period of time.

(iii)However, if the other Plan does not have the rule described in § 1.10(A)(1)(c)((4))((BB))((i)) of this Part immediately above but instead has a rule based upon the gender of the parents, and if, as a result, the Plans do not agree on the order of benefits, the rule in the other Plan will determine the order of benefits.

(CC)Dependent Child/Separated or Divorced Parents, If two or more Plans cover a person as a dependent child of divorced or separated parents, benefits for the child are determined in this order;

(i)first, the Plan of the parent with custody of the child;

(ii)then, the Plan of the spouse of the parent with the custody of the child; and

(iii)finally, the plan of the parent not having custody of the child.

(iv)However, if the specific terms of a court decree state that one of the parents is responsible for the health care expenses of the child, and the entity obligated to pay or provide the benefits of the Plan of that parent has actual knowledge of those terms, the benefits of that Plan are determined first. This paragraph does not apply with respect to any Claim Determination Period of plan year during which any benefits are actually paid or provided before the entity has that actual knowledge

(DD)Active/Inactive Employee. The benefits of a Plan which covers a person as an employee who is neither laid off nor retired (or as that employee’s dependent) are determined before those of a Plan which covers that person as a laid off or retired employee (or as that employee’s dependent). If the other Plan does not have this rule, and if, as a result, the Plans do not agree on the order of benefits, this rule § 1.10(A)(1)(c)((4))((DD)) of this Part is ignored.

(EE)When rules § 1.10(A)(1)(c)((4))(AA) and (BB) of this Part do not establish an order of benefits determination, the benefits of a Plan which has covered the person on whose expenses claim is based for the longer period of time shall be determined before the benefit of a Plan which has covered such person the shorter period of time.

(FF)This amendment is effective immediately. However, it shall apply to all claims incurred on or after January 1, 1988.

(5)(Note: This item (5) may be omitted if the Plan provides only one benefit. The wording shown is illustrative.)

(AA)When this provision operates to reduce the total amount of benefits otherwise payable as to a person covered under this Plan during any Claim Determination period, each benefit that would be payable in the absence of this provision shall be reduced proportionately, and such reduced amount shall be charges against any applicable benefit limit of this Plan.

d.Right to Receive and Release Necessary Information

(1)For the purpose of determining the applicability of and implementing the terms of this provision of this Plan or any provision of similar purpose of any other Plan, the insurer may, without the consent of or notice to any person, release to or obtain from any other insurance company or other organization or person any information, with respect to any person, which the insurer deems to be necessary for such purposes. Any person claiming benefits under this Plan shall furnish to the insurer such information as may be necessary to implement this provision.

e.Facility of Payment

(1)Whenever payment which should have been made under this Plan is accordance with this provision have been made under any other Plans, the insurer shall have the right, exercisable alone and in its sole discretion, to pay over to any organizations making such other payments any amounts it shall determine to be warranted in order to satisfy the intent of this provision, and amounts so paid shall be deemed to be benefits paid under this Plan and, to the extent of such payments, the insurer shall be fully discharged form liability under this Plan.

f.Right of Recovery

(1)Whenever payments have been made by the insurer with respect to Allowable Expenses in a total amount, in excess of the maximum amount or payment necessary at that time to satisfy the intent of this provision, the insurer shall have the right to recover such payments, to the extent of such excess, from among one or more of the following, as the insurer shall determine: any persons to or for or with respect to whom such payments were made, any other insurers, any other organizations.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.11 Filing of Forms and Rates

1.11.1 Approval of Director

A.No health benefit contract shall be issued or delivered to any person in this state nor shall any application, rider, endorsement, individual certificate, subscriber contract or group master contract to be used in connection therewith be issued or delivered until a copy of the form thereof and of the classification of risks and the premium rates or the rating formula have been approved by the Director of Business Regulation. This requirement shall take effect two hundred seventy (270) days after promulgation of this Part, subject to the following conditions and exceptions:

1.No forms submitted to the Director for approval after the promulgation of this Part shall be approved unless such forms are in compliance with this Part.

2.Forms filed and approved under R.I. Gen. Laws Chapters 27-18 and 27-2 or otherwise approved in writing by the Director of Business Regulation may be issued or delivered without re-filing, provided that such forms are in compliance with this Part.

3.Forms filed and approved under R.I. Gen. Laws Chapter 27-18 or otherwise approved in writing by the Director of Business Regulation but which are not in compliance with this Part may be issued or delivered provided that such forms are amended by appropriate riders or endorsements designed to bring them into compliance. Such amendment forms must be approved by the Director of Business Regulation prior to use.

4.Forms filed and approved under R.I. Gen. Laws Chapter 27-18 or otherwise approved in writing by the Director of Business Regulation may be issued or delivered for up to three hundred sixty (360) days after promulgation of this Part provided that appropriate riders endorsements or revisions designed to bring such forms into compliance have been submitted to the Director for approval within two hundred seventy (270) days after promulgation of this Part.

5.Rates not previously submitted for approval and rates "received for filing" and not affirmatively approved by the Director may not be used in connection with contracts issued or delivered and placed in force in the state more than two hundred seventy (270) days after promulgation of this Part.

6.Rates affirmatively approved by the Director under R.I. Gen. Laws §§ 27-2-10, 27-19-6, 27-20-6, 27-20.1-3 or 42-16-13 remain approved without re-filing, subject to the terms and conditions of such approval.

1.11.2 Filing and Approval

No such contract shall be issued, nor shall any application, rider, endorsement, individual certificate, subscriber contract, or group master contract be used in connection therewith, until the expiration of sixty (60) days after it has been so filed unless the Director of Business Regulation shall sooner give his written approval thereto, except that with respect to forms submitted within two hundred seventy (270) days after promulgation of this Part, no such forms shall be issued until the expiration of ninety (90) days unless the Director shall sooner give his written approval.

1.11.3 Hearing

A.The Director of Business Regulation may, with or without a public hearing as provided for in R.I. Gen. Laws § 42-62-13, within sixty (60) days, except that ninety (90) days shall apply to forms submitted for approval within two hundred seventy (270) days after promulgation of this Part, after filing of any such form disapprove such form:

1.if the benefits provided therein are unreasonable in relation to the premium charged, or

2.if it contains a provision or provisions which are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of such contract. If the Director of Business Regulation shall notify the insurer which has filed any such form that it does not comply with all applicable laws and regulations, it shall be unlawful thereafter for such insurer to issue such form or use it in connection with any contract. In such notice the Director of Business Regulation shall specify the reasons for his disapproval.

1.11.4 Withdrawal of Approval

The director of Business Regulation may at any time, after a hearing of which not less than twenty (20) days written notice shall have been given to the insurer, withdraw his approval of any such form on any of the grounds stated § 1.11 of this Part. The insurer may not issue such form or use it in connection with any contract after the effective date of such withdrawal of approval.

1.11.5Form of Contracts

A.The style, arrangement and over-all appearance of the contract shall give no undue prominence to any portion of the text, and every printed portion of the text of the contract and of any endorsements or attached papers shall be plainly printed in light-faced type of a style in general use, the size of which shall be uniform and not less than ten-point with a lower-case unspaced alphabet length not less than one hundred and twenty (120) point (the "text" shall include all printed matter except the name and address of the insurer, name or title of the contract, the brief description if any, and captions and subcaptions); and

B.The exceptions and reductions of indemnity shall be set forth in the contract and, except those which are set forth in R.I. Gen. Laws §§ 27-18-3 to 27-18-10 inclusive, if such sections are applicable to such contract, are printed at the insurer's option, either included with the benefit provisions to which they apply, or under an appropriate caption such as "EXCEPTIONS," or "EXCEPTIONS AND REDUCTIONS," provided that if an exception or reduction specifically applies only to a particular benefit of the contract, a statement of such exception or reduction shall be included with the benefit provision to which it applies; and

C.Each form shall bear a unique form number printed in the lower left-hand corner of such form. All numbers, letters and other symbols appearing in the lower left-hand corner shall together constitute the entire form number, and any change in that number shall require filing as a separate form.

D.Each form shall contain no provision purporting to make any portion of the charter, rules, constitution, or by-laws of the insurer a part of the contract unless such portion is set forth in full in the contract, except in the case of the incorporation of, or reference to a statement of rates or classification of risks, or short-rate table filed with the insurance commissioner.

1.11.6Submission Instructions

A.Forms submitted for approval in accordance with § 1.11 of this Part must be submitted as follows:

1.A letter in triplicate must be included with each submission which:

a.specifies the form number and title of each form being submitted;

b.generally describes the purpose of each form;

c.states whether the form is new or a replacement of any existing form and describes by title and form number any forms being replaced;

d.with respect to applications and other forms which have been previously approved and are submitted in support of such filing, states the date(s) of approval of such form(s).

2.One specimen copy of each form in final printed form including a specimen of the application, if any, to be used with such form, whether or not such application has been previously approved (two copies if the insurer wishes to have a stamped copy returned for its records) with all blanks in the printed form filled in with hypothetical information, except that no hypothetical information is required on application forms. With respect to rider, endorsement or other amendment forms for use with individual health benefit contracts, one specimen copy of each contract form to which it will be attached, whether or not such contract form has been previously approved.

3.One specimen copy of each rate schedule or rating formula together with all required actuarial data as outlined in § 1.11.7(A)(1) and (2) of this Part.

4.A stamped, self-addressed envelope.

1.11.7Rates

A.To the extent appropriate, rates submitted in accordance with § 1.11 of this Part should be submitted in duplicate, including complete rate schedules accompanied by the following supporting data:

1.For rates applied to new individual contract forms - A signed statement from an actuary giving the methods and assumptions used to determine the proposed premium rates including the formulas used to calculate gross premiums. The statement as to the assumptions used should give the exact source of the claim costs or other experience data on which the premium calculations are based and the source of any multipliers or other factors used to adjust such claim costs or other experience data to reflect the benefits provided.

a.If published experience is used, state the page and table number of the source. Unless published, the basic experience data (for example, claim costs) and adjustment factors should be included with such description. When the basic claim costs or other data are shown for age groupings, for example, quinquennial or decennial ages, state the method used to obtain the required values at intermediate ages.

b.Indicate where judgment is used to determine any adjustment factors applied to basic experience data.

c.Indicate any modifications used to reflect the effect of selection or to allow for future increases in claim costs.

d.A statement as to the contract termination rates used.

e.A statement of the methods used to incorporate margins for profit and contingencies in the premium rates.

f.If the contract is participating, give a statement as to the methods used to determine anticipated dividends.

g.A detailed statement of all expense assumptions including commissions, taxes, claims handling, and administrative expenses made in the premium calculations, and indicating allowances for future increase in expenses.

h.A statement of the expected benefit loss ratios at representative issue ages and an estimated composite benefit loss ratio indicating the distribution of issue ages for both males and females used to determine such composite loss ratio.

i.A statement summarizing the type of benefit provided, the range of benefits offered, and the average size of the benefits assumed.

j.A statement as to how gross premiums were calculated including the formula used.

2.For changes in rates that apply to presently-approved individual contract forms;

a.A statement of all premiums (both received and earned), and claims (both paid and incurred) and expenses incurred for each of the previous five (5) years;

b.A statement of the actual benefit loss ratio on both a cash basis and on an incurred claim to earned premium basis;

c.A statement of the approval date of the rate currently in use and the anticipated benefit loss ratio at the time the rate was approved;

d.A statement of the total number of contracts in force, to which the above rates will apply;

e.A statement of the total number of contracts in force, to which the above rates will apply, in Rhode Island.

f.A copy of the contract, rider, and/or endorsements for which the rates apply.

g.A copy of the rate schedule now in use and the rate schedule which reflects the proposed rate increase.

3.For rates that apply to new group and blanket contract forms and changes in rates that apply to presently-approved group and blanket contract forms;

a.One copy of each rate schedule, rating formula or formulas, or manual must be submitted. Upon receipt of manuals, formulas, or rate schedules, the Director of Business Regulation may request actuarial data and other pertinent information.

b.An outline of the essential benefits, coverages, limitations and exclusions to which such rates shall apply.

4.The Director may approve, disapprove or modify rates, with or without a public hearing, as provided in R.I. Gen. Laws § 42-62-13.

5.With respect to insurers, as defined in R.I. Gen. Laws § 42-62-4(c) that are not insurance companies subject to R.I. Gen. Laws Chapter 27-1 and R.I. Gen. Laws Chapter 27-2 the Director may waive any or all of the requirements of § 1.11.7 of this Part and establish, through written correspondence or in the course of the review of filings and the conduct of public hearings, other statements or exhibits which he deems more appropriate to the review of rates proposed by such insurers.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.12 Advertising Rules and Guidelines for Interpretation

1.12.1Purpose

A.The purpose of § 1.12 of this Part is to assure truthful and adequate disclosure of all material and relevant information in the advertising of health benefits. This purpose is to be accomplished by the establishment of, and adherence to, certain minimum standards and guidelines of conduct in the advertising of health benefits in a manner which prevents unfair competition among insurers and is conducive to the accurate presentation and description to the public of such benefits offered through various advertising media.

B.Guideline 1

1.Disclosure is one of the principal objectives of these rules and § 1.12.1 of this Part states specifically that the rules shall assure "truthful and adequate disclosure of all material and relevant information". These rules specifically prohibit some previous advertising techniques.

1.12.2Applicability

A.§ 1.12 of this Part shall apply to any health benefits "advertisement," as that term is hereinafter defined in § 1.12.3(A), (F), (G), (H) of this Part unless otherwise specified in § 1.12 of this Part, intended for presentation, distribution or dissemination in the State of Rhode Island where such presentation, distribution or dissemination is made either directly or indirectly by or on behalf of an insurer or agent, as defined in this Part.

B.Guideline 2-A

1.These rules apply to any "advertisement" as that term is defined in § 1.12.3(A), (F), (G), (H) of this Part unless otherwise specified in the rules.

2.These rules apply to group and blanket as well as individual health benefit contracts. Certain distinctions, however, are applicable to these categories.

3.Among them is the level of conversance with insurance, a factor which is covered by § 1.12.5(A) of this Part.

C.Every insurer shall establish and at all times maintain a system of control over the content, form and method of dissemination of all advertisements of its health benefit contracts. All such advertisements, regardless of by whom written, created, designed, or presented, shall be the responsibility of the insurer whose health benefit contracts are so advertised.

D.Guideline 2-B

1.Advertising materials which are reproduced in quantity shall be identified by form numbers or other identifying means in the case of advertisements not subject to the requirements of § 1.12.13 of this Part. Such identification shall be sufficient to distinguish an advertisement from other advertising materials, health benefit contracts, applications or other materials used by the insurer.

1.12.3Definitions

A.An advertisement for the purpose of § 1.12 of this Part shall include:

1.printed and published material, audio visual material, and descriptive literature of an insurer used in direct mail, newspapers, magazines, radio scripts, TV scripts, billboards, and similar displays;

2.descriptive literature and sales aids of all kinds issued by an insurer or agent, as defined in this Part for presentation to members of the insurance buying public, including but not limited to circulars, leaflets, booklets, depictions, illustrations, and form letters; and

3.prepared sales talks, presentations, and material for use by agents and other sales representatives.

B.Guideline 3-A

1.The scope of the term "advertisement" extends to the use of all media for communication to the general public § 1.12.3(A)(1) of this Part to the use of all media for communication to specific members of the general public § 1.12.3(A)(2) of this Part and to the use of all media for communication by agents, brokers, and solicitors.

2.The definition of "advertisement" includes advertising material included with a contract when the contract is delivered and material used in the solicitation of renewals and reinstatements.

3.The definition of "advertisement" does not include:

a.material to be used solely for the training and education of an insurer's employees, agents, or brokers;

b.material in house organs or insurers;

c.communications within an insurer's own organization not intended for dissemination to the public;

d.individual communications of a personal nature with current contract holders other than material urging such contract holders to increase or expand coverages;

e.correspondence between a prospective group or blanket contractholder and an insurer in the course of negotiating a group or blanket contract;

f.court approved material ordered by a court to be disseminated to contract holders; or

g.a general announcement from a group or blanket contractholder to eligible individuals on an employment or membership list that a contract or program has been written or arranged; provided, the announcement clearly indicates that it is preliminary to the issuance of a booklet.

C."Exception" for the purpose of § 1.12 of this Part means any provision in a contract whereby coverage for a specified hazard is entirely eliminated; it is a statement of a risk not assumed under the contract.

D."Reduction" for the purpose of § 1.12 of this Part means any provision which reduces the amount of the benefit; a risk of loss is assumed but payment upon the occurrence of such loss is limited to some amount or period less than would be otherwise payable had such reduction not been used.

E."Limitation" for the purpose of § 1.12 of this Part means any provision which restricts coverage under the contract other than an exception or a reduction.

F."Institutional Advertisement" for the purpose of § 1.12 of this Part means an advertisement having as its sole purpose the promotion of the Reader's or viewer's interest in the concept of health benefits, or the promotion of the insurer.

G."Invitation to Inquire" for the purpose of § 1.12 of this Part means an advertisement having as its objective the creation of a desire to inquire further about the product and which is limited to a brief description of the loss for which the benefit is payable, and which may contain:

1.The dollar amount of benefit payable, and/or

2.The period of time during which the benefit is payable, provided the advertisement does not refer to cost. An advertisement which specifies either the dollar amount of benefit payable or the period of time during which the benefit is payable shall contain a provision in effect as follows:

a."For costs and further details of the coverage, including exclusions, any reductions or limitations and the terms under which the health benefit contract may be continued in force, see your agent or write to the company."

H."Invitation to Contract" for the purpose of § 1.12 of this Part means an advertisement which is neither an invitation to inquire nor an institutional advertisement.

1.12.4Method of Disclosure of Required Information

A.All information required to be disclosed by § 1.12 of this Part shall be set out conspicuously and in close conjunction with the statements to which such information relates or under appropriate captions of such prominence that it shall not be minimized, rendered obscure or presented in an ambiguous fashion or intermingled with the context of the advertisement so as to be confusing or misleading.

B.Guideline 4

1.This rule permits the use of either of the following alternative methods of disclosure:

a.The first alternative provides for the disclosure of exceptions, limitations, reductions and other restrictions conspicuously and in close conjunction with the statements to which such information relates. This may be accomplished by disclosure in the description of the related benefits or in a paragraph set out in close conjunction with the description of contract benefits.

b.The second alternative provides for the disclosure of exceptions, limitations, reductions and other restrictions not in conjunction with the provisions describing contract benefits but under appropriate captions of such prominence that the information shall not be minimized, rendered obscure or otherwise made to appear unimportant. The phrase "under appropriate captions" means that the title must be accurately descriptive of the captioned material. Appropriate captions include the following: "Exceptions," "Conditions Not Covered," and "Exceptions and Reductions." The use of captions such as, or similar to, the following are not acceptable because they do not provide adequate notice of the significance of the material: "Extent of Coverage," "Only These Exclusions," or "Minimum Limitations".

c.In considering whether an advertisement complies with the disclosure requirements of this rule, the rule must be applied in conjunction with the form and content standards contained in § 1.12.5 of this Part.

1.12.5Form and Content of Advertisements

A.The format and content of an advertisement of a health benefit contract shall be sufficiently complete and clear to avoid deception or the capacity or tendency to mislead or deceive. Whether an advertisement has a capacity or tendency to mislead or deceive shall be determined by the Director of Business Regulation or his designee from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence, within the segment of the public to which it is directed.

1.Guideline 5-A

a.This rule must be applied in conjunction with §§ 1.12.1 and 1.12.4 of the rules. This rule refers specifically to "format and content" of the advertisement and the "overall" impression created by the advertisement. This involves factors such as, but not limited to, the size, color and prominence of type used to describe benefits. The word "format" means the arrangement of the text and the captions.

b.This rule requires distinctly different advertisements for publication in newspapers or magazines of general circulation as compared to scholarly, technical or business journals or newspapers. Where an advertisement consists of more than one piece of material, each piece of material must, independent of all other pieces of material, conform to the disclosure requirements applicable to the appropriate form of advertisement as defined in § 1.12.3(F) through (H) of this Part.

B.Advertisements shall be truthful and not misleading in fact or in implication. Words or phrases, the meaning of which is clear only by implication or by familiarity with insurance terminology, shall not be used.

1.Guideline 5-B

a.This rule prohibits the use of incomplete statements and words or phrases which have the tendency or capacity to mislead or deceive because of the reader's unfamiliarity with insurance terminology. Therefore, words, phrases and illustrations used in an advertisement must be clear and unambiguous and, if the advertisement uses insurance terminology, sufficient description of a word, phrase or illustration shall be provided by definition or description in the context of the advertisement. As implied in § 1.12.5(A) of this Part, distinctly different levels of comprehension may be anticipated of the subscribers of various publications.

1.12.6Advertisements of Benefits Payable, Losses Covered or Premiums Payable

A.Deceptive Words, Phrases, or Illustrations Prohibited.

1.No advertisement shall omit information or use words, phrases, statements, references or illustrations if the omission of such information or use of such words, phrases, statements, references, or illustrations has the capacity, tendency, or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any health benefit payable, loss covered or premium payable. The fact that the health benefit contract is made available to a prospective insured for inspection prior to consummation of the sale or an offer is made to refund the premium if the purchaser is not satisfied, does not remedy misleading statements.

2.Guideline 6-A(1)

a.This rule prohibits words, phrases or illustrations which create deception to the reader by omission or commission. The following examples are illustrations of the prohibitions created by the rule.

(1)An advertisement which describes any benefits that vary by age must disclose that fact.

(2)An advertisement which uses a phrase such as "no age limit," if benefits or premiums vary by age or if age is an underwriting factor, must disclose that fact.

(3)Advertisements, applications, requests for additional information and similar material are unacceptable if they state or imply that the recipient has been individually selected to be offered insurance or has had his eligibility for such insurance individually determined in advance when the advertisement is directed to all persons in a group or to all persons whose names appear on a mailing list.

(4)Advertisements which indicate that a particular coverage or health benefit contract is exclusively for "preferred risks" or a particular segment of the population are acceptable risks, when such distinctions are not maintained in the issuance of health benefit contracts, are not acceptable.

(5)Advertisements for group and franchise group plans which provide a common benefit or a common combination of benefits shall not imply that the insurance coverage is tailored or designed specifically for that group, unless such is the fact.

(6)It is unacceptable to use terms such as "enroll" or "join" to imply group or blanket insurance coverage when such is not the fact.

(7)Any advertisement which contains statements such as "anyone can apply," or "anyone can join" other than with respect to a guaranteed issue health benefit contract for which administrative procedures exist to assure that the health benefit contract is issued within a reasonable period of time after the application is received by the insurer is unacceptable.

(8)An advertisement which states or implies immediate coverage or guaranteed issuance of a health benefit contract is unacceptable unless suitable administrative procedures exists so that the health benefit contract is issued within a reasonable period of time after the application is received by the insurer.

(9)Any advertisement which uses any phrase or term such as "here is all you do to apply," "simply" or "merely" to refer to the act of applying for a health benefit contract which is not a guaranteed issue health benefit contract is unacceptable, unless it refers to the fact that the application is subject to acceptance or approval by the insurer.

(10)Applications, request forms for additional information and similar related materials are unacceptable if they resemble paper currency, checks, bonds, stock certificates, etc.

(11)No advertisement shall employ devices which are designed to create undue fear or anxiety in the minds of those to whom they are directed. Unacceptable examples of such devices are:

(AA)The use of phrases such as "cancer kills somebody every two minutes" and "total number of accidents" without reference to the total population from which such statistics are drawn. (As an example of a permissible device, data prepared by the American Cancer Society are acceptable provided their source is noted and they are not overemphasized),

(BB)The use of phrases such as "the finest kind of treatment," implying that such treatment would be unavailable without insurance;

(CC)The reproduction of newspaper articles, etc., containing irrelevant facts and figures;

(DD)The use of illustrations which unduly emphasize automobile accidents, crippled persons or persons confined in beds who are in obvious distress or receiving hospital or medical bills or persons being evicted from their homes due to their inability to pay hospital bills;

(EE)The use of phrases such as "financial disaster," "financial distress," "financial shock," or other phrases implying that financial ruin is likely without insurance, where used in an advertisement which comes within § 1.12.6(A)(2)(a)(7) of this Part relating to contracts covering specified illnesses or specified accidents only.

(12)An advertisement which uses the word "plan" without identifying it as an "insurance plan" is not permissible unless such plan is in fact, not an insurance plan or unless specific provisions in the General Laws of Rhode Island declare that it is not an insurance plan.

(13)An advertisement which implies in any manner that the prospective insured may realize a profit from obtaining hospital, medical, or surgical coverage is not acceptable.

(14)An advertisement shall not state or imply by word, phrase, or illustration that the benefits being offered will supplement any other insurance policy, insurance-type concept, or governmental plan if such is not the fact.

(15)An advertisement of a hospital or other similar facility confinement benefit that makes reference to the benefit being paid directly to the insured is misleading unless, in making such a reference, the advertisement includes a statement that the benefits may be paid directly to the hospital or other health care facility if an assignment of benefits is made by the insured. An advertisement of medical and surgical expense benefits shall comply with this § 1.12 of Part in regard to the disclosure of assignments of benefits to providers of services. Phrases such as "you collect," "you get paid," "pays you," or other words or phrases of similar import are acceptable so long as the advertisement indicates that it is payable to the insured or someone designated by the insured.

(16)An advertisement which refers to "hospitalization for injury or sickness" omitting the word "covered" when the health benefit contract excludes certain sicknesses or injuries is unacceptable. Continued reference to "covered injury or sickness" is not necessary where this fact has been prominently disclosed in the advertisement and where the descriptions of sicknesses or injuries not covered are prominently set forth.

(17)An advertisement which refers to "whenever you are hospitalized" or "while you are confined in the hospital" omitting the phrase "for covered injury or sickness," if the health benefit contract excludes certain injuries or sickness, is unacceptable. Continued reference to "covered injury or sickness" is not necessary where this fact has been prominently disclosed in the advertisement and where the description of sicknesses or injuries not covered are prominently set forth.

(18)Advertisements which state that benefits are provided when "you go to the hospital" are unacceptable unless the advertisement clearly sets forth the extent of the coverage.

(19)An advertisement which fails to disclose any waiting or elimination periods for specific benefits is unacceptable.

(20)An advertisement for a limited health benefit contract, or hospital indemnity contract, or a plan of insurance which covers only certain causes of loss (such as dread disease) or which covers only a certain type of loss (such as hospital confinement) is unacceptable if:

(AA)the advertisement refers to a total benefit maximum limit payable under the health benefit contract in any headline, lead-in or caption without also in the same headline, lead-in or caption specifying the applicable daily limits and other internal limits;

(BB)the advertisement states any total benefit limits without stating the periodic benefit payment, if any, and the length of time the periodic benefit would be payable to reach the total benefit limit;

(CC)the advertisement prominently displays a total benefit limit which would not, as a general rule, be payable under an average claim.

(21)Advertisements which emphasize total amounts payable under hospital, medical, or surgical coverage or other benefits in a health benefit contract, such as benefits for private duty nursing, are unacceptable unless the actual amounts payable per day for such indemnity or benefits are stated.

(22)Examples of what benefits may be paid under the health benefit contract shall not disclose only maximum benefits unless such maximum benefits are paid for loss from common and probable illnesses or accidents rather than exceptional or rare illnesses or accidents or periods of confinement for such exceptional or rare accidents or illnesses.

(23)When a range of benefit levels is set forth in an advertisement, it must be made clear that the insured will receive only the benefit level written or printed in the health contract selected and issued. Language which implies that the insured may select the benefit level at the time of filing claims is unacceptable.

(24)Advertisements for health benefit contracts whose premiums are modest because of their limited coverage or limited amount of benefits shall not describe premiums as "low," "low cost," "budget," or use qualifying words of similar import. § 1.12 of this Part also prohibits the use of words such as "only" and "just" in conjunction with statements of premium amounts when used to imply a bargain.

(25)Advertisements which state or imply that premiums will not be changed in the future are not acceptable unless the advertised health benefit contracts so provide.

(26)An advertisement which does not require the premium to accompany the application must not over-emphasize that fact and must make the effective date of the coverage clear.

(27)An advertisement which exaggerates the effect of statutorily mandated benefits or required health benefit contract provisions or which implies that such provisions are unique to the advertised health benefit contract is unacceptable. For example, the phrase, "Money Back Guarantee" is an exaggerated description of the ten-day right to examine the health benefit contract and is not acceptable.

(28)An advertisement which implies that a common type of health benefit contract or a combination of common benefits is "new," "unique," "a bonus," "a break- through," or is otherwise unusual is unacceptable. Also, the addition of a novel method of premium payment to an otherwise common plan of insurance does not render it "new."

(29)An advertisement which is an invitation to contract which fails to disclose the amount of any deductible and/or the percentage of any coinsurance factor is unacceptable.

(30)An advertisement which fails to state clearly the type of coverage being offered is not acceptable.

(31)Language which states or implies that each member under a "family" contract is covered as to the maximum benefits advertised, where such is not the fact, is unacceptable.

(32)The importance of diseases rarely or seldom found in the class of person to whom the health benefit contract is offered shall not be exaggerated in an advertisement.

(33)A television, radio, mail, or newspaper advertisement which is designed to produce leads either by use of a coupon or a request to write to the company or a subsequent advertisement prior to contact must include information disclosing that an agent may contact the applicant if such is the fact.

(34)Advertisements for health benefit contracts designed to supplement Medicare or which are otherwise designed for issue to the elderly shall not employ devices which are designed to create undue anxiety in the minds of such persons. Such phrases as "here is where most people over 65 learn about the gaps in Medicare," or "Medicare is great, but…" or which otherwise exaggerate the gaps in Medicare coverage are unacceptable. Phrases or devices which unduly excite fear of dependence upon relatives or charity are unacceptable. Phrases or devices which imply that long sicknesses or hospital stays are common among the elderly are unacceptable.

(35)An advertisement implying that the coverage is supplemental to Medicare, if it does not explain the manner in which it is supplemental to Medicare coverage, is not acceptable.

(36)An advertisement for a health benefit contract designed to supplement benefits under Medicare is unacceptable if the advertisement:

(AA)fails to disclose in clear language which of the Medicare benefits the health benefit contract is designed to supplement and which of the Medicare benefits the health benefit contract is not designed to supplement or if it otherwise implies that Medicare provides only those benefits which the health benefit contract is designed to supplement;

(BB)describes the in-patient hospital coverage of Medicare as "hospital Medicare" or "Medicare Part AA" when the health benefit contract does not supplement the non-hospital or the psychiatric hospital benefits of Medicare Part A (phrases to the effect of "the in-hospital portion of Medicare Part A" are acceptable);

(CC)fails to clearly describe the operation of the Part of Parts of Medicare which the health benefit contract is designed to supplement;

(DD)describes those Medicare benefits not supplemented by the health benefit contract in such a way as to minimize their importance relative to the Medicare benefits which are supplemented.

3.No advertisement shall contain or use words or phrases such as "all;" "full;" "complete;" "comprehensive;" "unlimited;" "up to;" "as high as;" "this policy will help fill some of the gaps that Medicare and your present insurance leave out;" or similar words and phrases, in a manner which exaggerates any benefits beyond the terms of the health benefit contract

4.Guideline 6-A(2)

a.This rule recognizes that certain words and phrases in advertising may have a tendency to mislead the public as to the extent of benefits under an advertised contract. Consequently, such terms (and those specified in the rule do not represent a comprehensive list but only examples) must be used with caution to avoid any tendency to exaggerate benefits and must not be used unless the statement is literally true in every instance. The use of the following phrases based on such terms or having the same effect must be similarly restricted: "pays hospital, surgical, etc., bills," "pays dollars to offset the cost of medical care," "safeguards your standard of living," "pays full coverage," "pays complete coverage," or "pays for financial needs." Other phrases may or may not be acceptable depending upon the nature of the coverage being advertised. For example, the phrase "this policy will help to replace your income" is unacceptable in advertising for hospital confinement (including "hospital indemnity") coverage.

b.This rule also prohibits words or phrases which exaggerate the effect of benefit payment on the insured's general well-being, such as "worryfree savings plan," "guaranteed savings," "financial peace of mind," and "you will never have to worry about hospital bills again".

c.Advertisements for contracts designed to supplement Medicare benefits are unacceptable if they fail to disclose that no hospital confinement benefits will be payable for that portion of a Medicare benefit period for which Medicare pays all hospital confinement expenses, currently sixty (60) days, other than the initial deductible if the contract so provides. The length of said period must be stated in days.

5.An advertisement shall not contain descriptions of a health benefit contract limitation, exception, or reduction, worded in a positive manner to imply that it is a benefit, such as, describing a waiting period as a "benefit builder," or stating "even pre-existing conditions are covered after two years." Words and phrases used in an advertisement to describe such health benefit contract limitations, exceptions and reductions shall fairly and accurately describe the negative features of such limitations, exceptions, and reductions of the health benefit contract offered.

6.Guideline 6-A(3)

a.Explanations must not minimize nor describe restrictive provisions in a positive manner. Negative features must be accurately set forth. Any limitations on benefits precluding pre-existing conditions must also be restated under a caption concerning exclusions or limitations, notwithstanding that the pre-existing condition exclusion has been disclosed elsewhere in the advertisement. (See Guideline 6-C(1) for additional comments on pre-existing conditions.)

b.No advertisement of a benefit for which payment is conditional upon confinement in a hospital or similar facility shall use words or phrases such as "tax free," "extra cash," "extra income," "extra pay," or substantially similar words or phrases because such words and phrases have the capacity, tendency or effect of misleading the public into believing that the health benefit contract advertised will, in some way, enable them to make a profit from being hospitalized.

7.Guideline 6-A(4)

a.The words, phrases, illustrations and concepts listed are illustrations of the words, phrases, illustrations, and concepts prohibited by the rule which create the impression of a profit or gain to be realized by the insured when hospitalized.

b.Illustrations which depict paper currency or checks showing an amount payable are deceptive and misleading and are not permissible.

c.A hospital indemnity advertisement shall not include language such as "pay for a trip to Florida," "buy a new television," or otherwise imply that the insured will make a profit on hospitalization.

d.An advertisement which uses words such as "extra," "special," or "added" to describe any benefit in the contract is unacceptable.

e.Although the rule prohibits the use of the phrase "tax free," it does not prohibit the use of complete and accurate terminology explaining the Internal Revenue Service rules applicable to the taxation of accident and sickness benefits. The IRS rules provide that the premiums paid for and the benefits received from hospital indemnity policies are subject to the same rules as loss of time premiums and benefits and are not afforded the same favorable tax treatment as premiums for expense incurred hospital, medical, and surgical benefit coverages. (Rev. Rule. 68-451 and Rev. Rule. 69-154.) Prominence either to caption, lead-in, boldface, or large type shall not be given in any manner to any statements relating to the tax status of such benefits.

8.No advertisement of a hospital or other similar facility confinement benefit shall advertise that the amount of the benefit is payable on a monthly or weekly basis when, in fact, the amount of the benefit payable is based upon a daily pro rata basis relating to the number of days of confinement. When the health benefit contract contains a limit on the number of days of coverage provided, such limit must appear in the advertisement.

9.Guideline 6-A(5)

a.This rule requires that benefits payable on a daily basis be stated as such and not on the basis of weekly or monthly equivalents. The rule also requires disclosure of the period of coverage provided by the contract.

(1)No advertisement of a health benefit contract covering only one disease or a list of specified diseases shall imply coverage beyond the terms of the health benefit contract. Synonymous terms shall not be used to refer to any disease so as to imply broader coverage than is the fact.

(2)An advertisement for a health benefit contract providing benefits for specified illnesses only, such as cancer, or for specified accidents only, such as automobile accidents, shall clearly and conspicuously, in prominent type, state the limited nature of the health benefit contract. The statement shall be worded in language identical to or substantially similar to the following: "THIS IS A LIMITED CONTRACT;" "THIS IS A CANCER ONLY CONTRACT;" "THIS IS AN AUTOMOBILE ACCIDENT ONLY CONTRACT."

(3)An advertisement of a direct response insurance product shall not imply that because "no insurance agent will call and no commissions will be paid to agents that it is "a low cost plan," or use other similar words or phrases.

10.Guideline 6-A(8)

a.This rule should be applied in conjunction with § 1.12.11 of this Part. Phrases such as "we cut cost to the bone" or "we deal direct with you so our costs are lower" shall not be used.

B.Exceptions, Reductions, and Limitations.

1.When an advertisement which is an invitation to contract refers to either a dollar amount, or a period of time for which any benefit is payable, or the cost of the health benefit contract, or specific health benefit, or the loss for which such benefit is payable, it shall also disclose those exceptions, reductions, and limitations affecting the basic provisions of the health benefit contract without which the advertisement would have the capacity or tendency to mislead or deceive.

2.Guideline 6-B(1)

a.The extent of disclosure required by this rule depends upon the type of advertisement. An institutional advertisement as defined in § 1.12.3(F) of this Part is not subject to this rule. An advertisement which is an invitation to inquire as defined in § 1.12.3(G) of this Part which mentions either the dollar amount of benefit payable or the period of time during which the benefit is payable must include a reference to the existence of exceptions, reductions, and limitations in the manner required by § 1.12.3(G) of this Part. An advertisement which is an invitation to contract as defined in § 1.12.3(H) of this Part must recite the exceptions, reductions, and limitations as required by the rule and in a manner consistent with § 1.12.4 of this Part.

b.If an exception, reduction, or limitation is important enough to use in a contract, it is of sufficient importance that its existence in the contract should be referred to in the advertisement regardless of whether it may also be subject matter of a provision of the Uniform Individual Accident and Sickness Policy Provision Law.

c.Some Advertisements disclose exceptions, reductions, and limitations as required, but the advertisement is so lengthy as to obscure the disclosure. Where the length of an advertisement has this effect, special emphasis must be given by changing the format to show the restrictions in a manner which does not minimize, render obscure or otherwise make them appear unimportant.

3.When a health benefit contract contains a waiting, elimination, probationary, or similar time period between the effective date of the health benefit contract and the effective date of coverage under the health benefit contract or a time period between the date loss occurs and the date benefits begin to accrue for such loss, an advertisement which is subject to the requirements of the preceding paragraph shall disclose the existence of such periods.

4.Guideline 6-B(2)

a.This rule imposes the same disclosure standards as the preceding with respect to contract provision providing for waiting, elimination, probationary, or similar time periods, between the effective date of the contract and the effective date of coverage under the contract or a time period between the date a loss occurs and the date benefits begin to accrue from such loss. The comments under § 1.12.6(B)(1) of this Part are equally applicable to this Subsection. Where a contract has waiting, elimination, probationary, or other such time periods, such provisions must be stated in negative terms. This requirement is comparable to that contemplated in § 1.12.6(A)(5) of this Part as to exceptions, reductions, and limitations.

b.An advertisement for a contract designed to supplement Medicare benefits is unacceptable if it fails to disclose that no hospital confinement benefits will be payable for that portion of a Medicare benefit period, currently 60 days, for which Medicare pays all hospital confinement expenses other than the initial deductible, if the contract so provides. The length of said period must be stated in days.

5.An advertisement shall not use the words "only;" "just;" "merely;" "minimum;" or similar words or phrases to describe the applicability of any exceptions and reductions, such as: "This contract is subject to the following minimum exceptions and reductions”

6.Guideline 6-B (3)

a.This rule is similar to § 1.12.6(A)(5) of this Part and requires a fair and accurate description of exceptions, limitations, and reductions in a manner which does not minimize, render obscure or otherwise make them appear unimportant.

b.Advertisements must state exceptions, limitations, and reductions in the negative and must not understate any exception, limitation, or reduction or qualify any exception, limitation, or reduction to emphasize coverage described elsewhere (e.g., "Does not pay for__________, however, Medicare pays this" is not acceptable, nor is "Does not pay for the first four days in hospital for sickness, but pays for accident from first day"). (Underscoring indicates the manner in which statements are sometimes emphasized.)

c.This rule prohibits the use of any term, such as "just," "only," "merely," "necessary," or "minimum" to describe any exclusion, limitation, reduction, or exception.

C.Pre-Existing Conditions.

1.An advertisement which is subject to the requirements of Section 6(B) shall, in negative terms, disclose the extent to which any loss is not covered if the cause of such loss is traceable to a condition existing prior to the effective date of the health benefit contract. The use of the term "pre-existing condition" without an appropriate definition or description shall not be used.

2.Guideline 6-C (1)

a.This rule imposes the same disclosure standards with respect to pre-existing conditions provisions as noted in § 1.12.6(B)(2) of this Part. The comments under that Guideline are equally applicable to this subsection of the rules since the pre- existing conditions provision is an exception under the rules.

b.This rule implements the objective of § 1.12.6(A)(3) of this Part by requiring in negative terms a description of the effect of a pre-existing condition exclusion because such an exclusion is a restriction on coverage. The subdivision also prohibits the use of the phrase "pre-existing condition" without an appropriate definition or description of the term and prohibits stating a reduction in the statutory time limit (such as a reduction from three years to two years or to one year) as an affirmative benefit. The words "appropriate definition or description" mean that the term "pre-existing condition" must be defined as it is used by the company's claims department.

3.When a health benefit contract does not cover losses resulting from pre- existing conditions, no advertisement of the health benefit contract shall state or imply that the applicant's physical condition or medical history will not affect the issuance of the health benefit contract or payment of a claim thereunder. § 1.12 of this Part prohibits the use of the phrase "no medical examination required" and phrases of similar import, but does not prohibit explaining "automatic issue." If an insurer requires a medical examination for a specified health benefit contract, the advertisement, if it is an invitation to contract, shall disclose that a medical examination is required.

4.Guideline 6-C (2)

a.The phrase "no health questions" or words of similar import shall not be used if the contract excludes pre-existing conditions.

b.Use of a phrase such as "guaranteed issue" or "automatic issue," if the contract excludes pre-existing conditions for a certain period, must be accompanied by a statement disclosing that fact in a manner which does not minimize, render, obscure, or otherwise make it appear unimportant and is otherwise consistent with § 1.12.4 of this Part.

5.When an advertisement contains an application form to be completed by the applicant and returned by mail for a direct response insurance product, such application form shall contain a question or statement which reflects the pre-existing condition provisions of the health benefit contract immediately preceding the blank space for applicant's signature. For example, such an application form shall contain a question or statement substantially as follows:

a.Do you understand that this health benefit contract will not pay benefits for any loss incurred during the first ____ year(s) after the issue date for a disease or physical condition which you now have or have had in the past? ____ YES.

b.Or substantially the following statement:

(1)I understand that the health benefit contract applied for will not pay benefits for any loss incurred during the first ____ year(s) after the issue date on account of disease or physical condition which I now have or have had in the past.

1.12.7Necessity for Disclosing Health Benefit Contract Provisions Relating to Renewability, Cancellability, and Termination

A.When an advertisement which is an invitation to contract refers to either a dollar amount or a period of time for which any benefit is payable, or the cost of the health benefit contract, or specific health benefit contract benefit, or the loss for which such benefit is payable, it shall disclose the provisions relating to renewability, cancellability, and termination and any modification of benefits, losses covered, or premiums because of age or for other reasons, in a manner which shall not minimize or render obscure the qualifying conditions.

1.Guideline 7

a.This rule imposes the same disclosure standards with respect to contract provisions relating to renewability, cancellability, and termination, modification of benefits, losses or premiums because of age or otherwise as stated in § 1.12.6(B)(2) of this Part. The comments in that Guideline are equally applicable to § 1.12.7 of this Part.

b.Advertisements of cancelable contracts must state that the contract is cancelable or renewable at the option of the company as the case may be. For example, the following represent illustrations: A contract which is cancelable shall be advertised in a manner similar to "This contract can be cancelled by the company at any time"; A contract which is renewable at the option of the insurance company shall be advertised in a manner similar to "This contract is renewable at the option of the company" or "The company has the right to refuse renewal of this contract" or "Renewable at the option of the insurer". Advertisements of such contracts must indicate that the insurer has the right to increase premium rates.

c.With respect to non-cancelable contracts and guaranteed renewable contracts, the rule requires that a summary of the contract provisions with respect to renewability must be set forth and defined where appropriate. The disclosure of provisions relating to renewability requires the use of language such as "non- cancelable", "non-cancelable and guaranteed renewable", or "guaranteed renewable". Unless otherwise modified by law or regulation, the use of those terms and the definitions provided shall be consistent with the definitions of those terms adopted by the National Association of Insurance Commissioners (1960 Proc. Vol. 1, P. 153).

d.The rule also requires a statement of the qualifying conditions which constitute limitations on the permanent nature of the coverage. These customarily fall into three categories:

(1)age limits,

(2)reservation of a right to increase premiums, and

(3)the establishment of aggregate limits. For example, "non-cancelable and guaranteed renewable" does not fulfill the requirement of the rule if the contract contains a terminal age of 65. In such a case, a proper statement would be "Non- cancelable and guaranteed renewable to age 65". If a guaranteed renewable contract reserves the right to increase premiums, the statement must be expanded into language similar to "guaranteed renewable to age 65 but the company reserves the right to increase premium rates on a class basis". If the contract contains an aggregate limit after which no further benefits are payable, the above statement must be amplified with the phrase "subject to a maximum aggregate amount of $50,000" or similar language. A contract may have one or more or the three basic limitations and an advertisement must describe each of those which the contract contains. The fact that a contract is guaranteed renewable shall not be exaggerated.

e.This rule also requires the disclosure of any modification of benefits or losses covered because of age or for other reasons. Provisions for reduction of benefits at stated ages must be set forth. For example, a contract may contain a provision which reduces benefits fifty percent (50%) after age sixty (60) although it is renewable to age sixty-five (65). Such a reduction would have to be set forth.

f.Also, a provision for the elimination of certain hazards at any specific ages or after the contract has been in force for a specified time would have to be set forth.

g.An advertisement for a contract which provides for step-rated premium rates based upon the contract year or the insured's attained age must disclose such rate increases and the time or ages at which such premiums increase.

h.This rule requires that the qualifying conditions of renewability must be disclosed in a manner which does not minimize or render obscure the qualifying conditions of renewal.

1.12.8Testimonials or Endorsements by Third Parties

A.Testimonials used in advertisements must be genuine, represent the current opinion of the author, be applicable to the health benefit contract advertised and be accurately reproduced. The insurer, in using a testimonial, makes as its own all of the statements contained therein, and the advertisement, including such statement, is subject to all the provisions of § 1.12 of this Part.

1.Guideline 8-A

a.This rule must be applied in conjunction with § 1.12.9 of this Part and requires that all such statements must be genuine and not fictitious. Under this rule, the manufacturing, substantive editing or "doctoring up" of a testimonial is clearly prohibited as being false and misleading to the insurance-buying public. However, language which would be unacceptable under these rules must be edited out of a testimonial.

b.A testimonial must also represent the current opinion of the author. While an insurer is not required in each instance to check with the author each time the testimonial is used to ascertain that the views expressed have not altered, a testimonial should be checked before use in those instances when a change in views might be probable or reasonable to assume. When a testimonial is used more than one year after it was originally given, a confirmation must be obtained. The rule does not prohibit testimonials of a general nature in which the author expresses appreciation for courteous treatment received or prompt payment of claims.

B.If the person making a testimonial, an endorsement or an appraisal has a financial interest in the insurer or a related entity, as a stockholder, director, officer, employee, or otherwise, such fact shall be disclosed in the advertisement. If a person is compensated for making a testimonial, endorsement or appraisal, such fact shall be disclosed in the advertisement by language substantially as follows: "Paid Endorsement." This rule does not require disclosure of union "scale" for TV or radio performances. The payment of substantial amounts, directly or indirectly, for "travel and entertainment" for filming or recording of TV or radio advertisements removes the filming or recording from the category of an unsolicited testimonial and requires disclosure of such compensation. This rule does not apply to an institutional advertisement which has as its sole purpose the promotion of the insurer.

1.Guideline 8-B

a.This rule requires the disclosure of any financial interest of a person making a testimonial, endorsement, or appraisal. Any payment, direct or indirect, whether specifically for the testimonial or endorsement or for any other services or relationship, is required to be disclosed. Reimbursement for substantial travel and entertainment expenses is also required to be disclosed; however, union scale wages required by union rules are not required to be disclosed. Travel away from the home of the person giving the testimonial or endorsement to a distant location involving transportation expenses, lodging expenses or expenses for meals constitutes payment and must be reflected as a paid endorsement. The requirement of disclosure may be fulfilled by use of the phrase "Paid Endorsement" or words of similar import in a type style and size that is identical to the endorser's name. In the case of television or radio advertising, the paid nature of the advertisement must be given prominence.

C.An advertisement shall not state or imply that an insurer or a health benefit contract has been approved or endorsed by any individual group of individuals, society, association or other organizations, unless such is the fact, and unless any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial has been formed by the insurer or is owned or controlled by the insurer or the person or persons who own or control the insurer, such fact shall be disclosed in the advertisement.

1.Guideline 8-C

a.This rule requires both that approval or endorsement of a contract by an individual, group of individuals, society, association, or other organization be factual and that any proprietary relationship between the sponsoring or endorsing organization and the insurer be disclosed. For example, if the dividend under an association group case is payable to the association, disclosure of that fact is required. Also, if the insurer or an officer of the insurer formed or controls the association, that fact must be disclosed.

D.When a testimonial refers to benefits received under a health benefit contract, the specific claim data, including claim number, date of loss, and other pertinent information shall be retained by the insurer for inspection for a period of four years or until the filing of the next regular report on examination of the insurer, whichever is the longer period of time.

1.Guideline 8-D

a.This rule provides the means to verify the authenticity of testimonials used in advertising efforts.

b.The use of testimonials which do not correctly reflect the present practices of the insurer or which are not applicable to the contract or benefit being advertised is not permissible.

1.12.9Use of Statistics

A.An advertisement relating to the dollar amount of claims paid, the number of persons insured, or similar statistical information relating to any insurer or health benefit contract shall not use irrelevant facts, and shall not be used unless it accurately reflects all of the relevant facts. Such an advertisement shall not imply that such statistics are derived from the health benefit contract advertised unless such is the fact, and when applicable to other health benefit contracts or plans, shall specifically so state.

1.Guideline 9-A

a.This rule prohibits the use of statistics in a manner which is misleading and deceptive. It requires the disclosure of all relevant facts and prohibits the use of irrelevant facts. An advertisement shall specifically identify the contract to which statistics relate and, where statistics are given which are applicable to a different contract; it must be stated clearly that the data do not relate to the contract being advertised.

b.Statistics which describe the insurer, such as assets, corporate structure, financial standing, age, product lines or relative position in the insurance business, may be irrelevant and, if used at all, must be used with extreme caution because of their potential for misleading the public. As a specific example, an advertisement for a health benefit contract which refers to the amount of life insurance which the company has in force or the amounts paid out in life insurance benefits is not permissible unless the advertisement clearly indicates the amount paid out for each line of insurance.

c.An advertisement which states the dollar amount of claims paid must also indicate the period over which such claims have been paid.

d.If the term "loss ratio" is used, it shall be properly explained in the context of the advertisement and, it shall be calculated on the basis of premiums earned to losses incurred and shall not be on a yearly run-off basis.

B.An advertisement shall not represent or imply that claim settlements by the insurer are "liberal" or "generous," or use words of similar import, or that claim settlements are or will be beyond the actual terms of the contract. An unusual amount paid for a unique claim for the health benefit contract advertised is misleading and shall not be used.

1.Guideline 9-B

a.This rule prohibits deceptive or misleading statements in an advertisement regarding an insurer's claim settlement practices. It also prohibits the use of an unusual amount paid for a unique claim or an unusual claim whether actual or hypothetical.

C.The source of any statistics used in an advertisement shall be identified in such advertisement.

1.Guideline 9-C

a.This rule requires any advertisement which uses statistics to cite the source. The rule does not require that statistics for a state be used since such statistics as hospital charges and average stays may vary from state to state. When nationwide statistics are used such fact should be noted unless the statistics on the particular point are substantially the same in a state to which the advertisement is directed. Statistics may be used only if they are credible.

1.12.10Identification of Plan or Number of Health Benefit Contracts

A.When a choice of the amount of benefits is referred to, an advertisement which is an invitation to contract shall disclose that the amount of benefits provided depends upon the plan selected and that the premium will vary with the amount of the benefits selected.

B.When an advertisement which is an invitation to contract refers to various benefits which may be contained in two or more health benefit contracts, other than group master health benefit contracts, the advertisement shall disclose that such benefits are provided only through a combination of such health benefit contracts.

1.Guideline 10

a.This rule imposes the same disclosure standards as stated in § 1.12.6(B)(2) of this Part. The comments in that Guideline are equally applicable to § 1.12.10 of this Part.

1.12.11Disparaging Comparisons and Statements

A.An advertisement shall not directly or indirectly make unfair or incomplete comparisons of health benefit contracts or benefits or comparisons of noncomparable health benefit contracts of other insurers, and shall not disparage competitors, their health benefit contracts, services or business methods, and shall not disparage or unfairly minimize competing methods of marketing insurance.

1.Guideline 11

a.This rule prohibits unfair or incomplete comparisons of products, insurers or business methods. It specifically prohibits comparisons of noncomparable contracts and provides that advertisements shall not unfairly minimize nor disparage competing types of health benefit coverages or competing methods of marketing health benefits.

b.An advertisement should not contain statements such as "no red tape" or "here is all you do to receive benefits".

c.Advertisements which state or imply competing insurance contracts customarily contain certain exceptions, reductions, or limitations not contained in the advertised contracts are unacceptable unless such exceptions, reductions, or limitations are contained in a substantial majority of such competing contracts.

d.Advertisements which state or imply that an insurer's premiums are lower or that its loss ratios are higher because of its organizational structure differs from that of competing insurers are unacceptable.

1.12.12Jurisdictional Licensing and Status of Insurer

A.An advertisement which is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed shall not imply licensing beyond those limits.

1.Guideline 12-A

a.This rule prohibits advertisements which imply that an insurer is licensed beyond the limits of those jurisdictions where it is actually licensed. An advertisement which contains testimonials from persons who reside in a state in which the insurer is not licensed or which refers to claims of persons residing in states in which the insurer is not licensed implies licensing in those states and therefore is in violation of this rule unless the advertisement states that the insurer is not licensed in those states.

B.An advertisement shall not create the impression directly or indirectly that the insurer, its financial condition or status, or the payment of its claims, or the merits, desirability, or advisability of its contract forms or kinds or plans of insurance are approved, endorsed, or accredited by any division or agency of this State or the United States Government.

1.Guideline 12-B

a.This rule prohibits advertisements implying that approval, endorsement, or accreditation of contract forms or advertising has been granted by any division or agency of the state or federal government. "Approval" of either contract forms or advertising shall not be used by an insurer to imply or state that a governmental agency has endorsed or recommended the insurer, its contracts, advertising or its financial condition.

b.Although the rule permits a reference to an insurer being licensed in a state when the advertisement appears, it does not allow exaggeration of the fact of such licensing nor does it permit the suggestion that competing insurers may not be so licensed because, in most states, an insurer must be licensed in the state to which it directs its advertising.

c.Terms such as "official," or words of similar import, used to describe any contract or application form are not permissible because of the potential for deceiving or misleading the public.

1.12.13Identity of Insurer

A.The name of the actual insurer shall be stated in all of its advertisements. The form number or numbers of the health benefit contract advertised shall be stated in an advertisement which is an invitation to contract. An advertisement shall not use a trade name, any insurance group designation, name of the parent company of the insurer, name of the particular division of the insurer, service mark, slogan, symbol or other device which, without disclosing the name of the actual insurer, would have the capacity and tendency to mislead or deceive as to the true identity of the insurer.

B.No advertisement shall use any combination of words, symbols, or physical materials which by their content, phraseology, shape, color or characteristics are so similar to any combination of words, symbols, or physical materials used by agencies of the federal government or of this State, or otherwise appear to be of such a nature that it tends to confuse or mislead prospective insureds into believing that the solicitation is in some manner connected with an agency of the municipal, state, or federal government.

1.Guideline 13

a.This rule prohibits the use of an advertisement which has the capacity or tendency to mislead or deceive as to the true identity of the insurer. The rule recognizes the existence of holding companies. The requirement that the advertisement refer to the contract form number is applicable to individual and franchise contracts only. However, the requirement of the contract form number is not applicable to those advertisements for individual and franchise contracts not required to disclose information under §§1.12.6(B)(1) and 1.12.7 of this Part. § 1.12.13(A) and (B) of this Part prohibit misleading practices of insurers in connection with the sale of insurance to supplement federal Medicare benefits and confusion of insurance companies with advertising material used by hospital service corporations or pre-paid health plans.

b.This rule prohibits advertisements, envelopes, or stationery which employ words, letters, initials, symbols, or other devices which are so similar to those used by governmental agencies or other insurers, including hospital service corporations and pre-paid health plans, that the public may be confused into believing:

(1)that the advertised coverages are somehow provided by or are endorsed by such governmental agencies or such other insurers;

(2)that the advertised coverages are the same as those provided by such governmental agencies or such other insurers;

(3)that the advertiser is the same as, is connected with or is endorsed by such governmental agencies or such other insurers.

c.It is unacceptable for an advertisement to use the name of a state or a political subdivision thereof in a contract name or description. For example, "XYZ insurance company's (name of state) hospital confinement contract" is unacceptable.

d.This rule prohibits an insurer from using envelopes or stationery which have printed thereon any name, service mark, slogan, symbol, or using any device in such a manner that it implies that the insurer or the contract advertised is connected with a governmental agency such as the Social Security Administration or the Veterans Administration.

e.Contracts advertised to supplement Medicare benefits are unacceptable if they incorporate the word "Medicare" in the title of the contract being advertised unless, wherever it appears, said word is qualified by language differentiating it from Medicare. Such phrases as "Medicare Insurance Supplement" or "insurance to supplement Medicare" are acceptable. Such an advertisement, however, shall not use the phrase "Medicare Department of the XYZ Insurance Company," or language of similar import.

f.Advertisements for contracts designed to supplement Medicare benefits are unacceptable if they fail to contain a disclaimer to the effect of "Not connected with or endorsed by the U.S. Government or the federal Medicare program".

g.This rule prohibits an advertisement which implies that the reader may lose a right, privilege or benefit under federal, state or local law if he fails to respond to the advertisement.

h.If the use of letters, initials, or symbols of the corporate name or trademark would have the capacity or tendency to mislead or deceive the public as to the true identity of the insurer, § 1.12.13 of this Part prohibits the use of such letters, initials, or symbols without disclosing in a close conjunction the true and correct complete name of the insurer which will issue the contract.

i.This rule prohibits the use of the name of an agency or "_______ Underwriters" or "______ Plan" in type, size, and location so as to have the capacity and tendency to mislead or deceive as to the true identity of the insurer and also prohibits an insurer from using an address so as to mislead or deceive as to its true identity, location, or licensing status.

1.12.14Group or Quasi-Group Implications

A.An advertisement of a particular health benefit contract shall not state or imply that prospective insureds become group or quasi-group members covered under a group health benefit contract and as such enjoy special rates or underwriting privileges, unless such is the fact.

1.Guideline 14

a.This rule prohibits the use of representations to any segment of the population that a particular contract or coverage is available only to that or similar segments of the population as preferred risks when actually such contract or coverage is available to members of the public at large at the same rates. This rule prohibits an advertisement labeled "Now for Readers of X Magazine".

b.This rule prohibits the solicitation of a particular class, such as governmental employees, by use of advertisements which state or imply that their occupational status entitles them to reduced rates on a group or other basis when, in fact, the contract being advertised is sold only on an individual basis at regular rates.

1.12.15Introductory, Initial, or Special Offers

A.An advertisement of an individual health benefit contract shall not directly or by implication represent that a contract or combination of contracts is an introductory, initial, or special offer, or that applicants will receive substantial advantages not available at a later date, or that the offer is available only to a specified group of individuals, unless such is the fact. An advertisement shall not contain phrases describing an enrollment period as "special," "limited," or similar words or phrases when the insurer uses such enrollment periods as the usual method of advertising health benefits.

1.Guideline 15-A (1)

a.This rule prohibits advertising representing that a product is offered on an introductory, initial, special offer basis or otherwise which:

(1)will not be available later; or

(2)is available only to certain individuals unless such is the fact.

b.This rule prohibits repetitive use of such advertisements. Where an insurer uses enrollment periods as the usual method of advertising these contracts, the rule prohibits describing an enrollment period as a special opportunity or offer for the applicant.

B.An enrollment period during which a particular insurance product may be purchased on an individual basis shall not be offered within this State unless there has been a lapse of not less than 6 months between the close of the immediately preceding enrollment for the same product and the opening of the new enrollment period. The advertisement shall indicate the date by which the applicant must mail the application, which shall not be less than ten days and not more than forty days from the date that such enrollment period is advertised for the first time. This rule applies to all advertising media, i.e., mail, newspapers, radio, television, magazines, and periodicals, by any one insurer. The phrase "any one insurer" includes all the affiliated companies of a group of insurers under common management or control.

1.Guideline 15-A (2)

a.This rule restricts the repetitive use of enrollment periods. The requirement of reasonable closing dates and waiting periods between enrollment periods was adopted to eliminate the abuses which formerly existed. This rule does not limit just the use of enrollment periods. It requires that a particular insurance product offered in an enrollment period through any advertising media, including the prepared presentations of agents, cannot be offered again in the entire state until 6 months from the close of the enrollment period have expired. Thus, an insurer must choose whether to use enrollment period or open enrollment for a product. (See § 1.12.15(D) of this Part for definition of "a particular insurance product".)

b.This rule does not prohibit multiple advertising during an enrollment period through any and all media published or transmitted within this state as long as the enrollment periods for all such advertisements have the same expiration date.

c.This rule does not prohibit the solicitation of members of a group or association for the same product even though there has not been a lapse of 6 months since the close of a preceding enrollment period which was open to the general public for the same product.

d.This rule does not require separation by 6 months of enrollment periods for the same insurance product in this state if the advertising material is directed by an admitted insurer to persons by direct mail on the basis that a common relationship exists with an entity, such as a bank and its depositors, a department store to its charge account customers or an oil company to its credit card holders, and more than one of such organizations is sponsoring such insurance product at different times if providing such insurance under such a method is not otherwise prohibited by law; provided, however, the 6 month rule does not apply to one specific sponsor to the same persons in this state on the basis of their status as customers of that one specific entity only.

C.§ 1.12 of this Part prohibits any statement or implication to the effect that only a specific number of health benefit contracts will be sold or that a time is fixed for the discontinuance of the sale of the particular health benefit contract advertised because of the special advantages available in the health benefit contract, unless such is the fact.

D.The phrase "a particular insurance product" in § 1.12.15(B) of this Part means a health benefit contract which provides substantially different benefits than those contained in any other health benefit contract. Different terms of renewability; an increase or decrease in the dollar amounts of benefits; an increase or decrease in any elimination period or waiting period from those available during an enrollment period for another health benefit contract shall not be sufficient to constitute the product being offered as a different product eligible for concurrent or overlapping enrollment periods.

1.Guideline 15-A (4)

a.This rule defines the meaning of "a particular insurance product" in § 1.12.15(B) of this Part and prohibits advertising of products having minor variations, such as different elimination periods or different amounts of daily hospital indemnity benefits, in a succession of enrollment periods.

E.An advertisement shall not offer a health benefit contract which utilizes a reduced initial premium rate in a manner which overemphasizes the availability and the amounts of the initial reduced premium. When an insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, the advertisement shall not display the amount of the reduced initial premium either more frequently or more prominently than the renewal premium, and both the initial reduced premium and the renewal premium must be stated in juxtaposition in each portion of the advertisement where the initial reduced premium appears.

1.Guideline 15-B

a.This rule prohibits advertising which over-emphasizes an initial premium. The rule requires the renewal premium to appear as frequently as, as prominently as and in juxtaposition with the initial reduced premium wherever and as often as it appears. The term "juxtaposition" means side by side or immediately above or below.

F.Special awards, such as a "safe drivers' award" shall not be used in connection with advertisements of health benefits.

1.Guideline 15-C

a.This rule prohibits the use in advertisements of so-called awards as an inducement to the purchase of insurance.

1.12.16Statements About an Insurer

A.An advertisement shall not contain statements which are untrue in fact, or by implication misleading, with respect to the assets, corporate structure, financial standing, age or relative position of the insurer in the insurance business. An advertisement shall not contain a recommendation by any commercial rating system unless it clearly indicates the purpose of the recommendation and the limitations of the scope and extent of the recommendations.

1.Guideline 16

a.This rule is closely related to the requirements of § 1.12.9 of this Part concerning the use of statistics. The rule prohibits insurers which have been organized for only a brief period of time advertising that they are "old" and also prohibits the use of illustrations of a "home office" building in a manner which is misleading with respect to the actual size and magnitude of the insurer. Also, the occupations of the persons comprising the insurer's board of directors or the public's familiarity with their names or reputations is irrelevant and must not be emphasized. The preponderance of a particular occupation or profession among the board of directors of an insurer does not justify the advertisement of a plan of insurance offered to the general public as insurance designed or recommended by members of that occupation or profession. For example, it is unacceptable for an insurance company to advertise a policy offered to the general public as "the physicians' policy" or "the doctors' plan" simply because there is a preponderance of physicians or doctors on the board of directors of the insurer. The rule prohibits the use of a recommendation of a commercial rating system unless the purpose, meaning and limitations of the recommendation are clearly indicated.

1.12.17Enforcement Procedures

A.Advertising File. Each insurer shall maintain at its home or principal office a complete file containing every printed, published, or prepared advertisement of its individual health benefit contracts and typical printed, published, or prepared advertisements of its blanket and group contracts and contracts on a "group-type" basis as defined in § 1.3 of this Part thereafter disseminated in this or any other state, whether or not licensed in such other state, with a notation attached to each such advertisement which shall indicate the manner and extent of distribution and the form number of any health benefit contract advertised. Such file shall be subject to regular and periodical inspection by the Director. All such advertisements shall be maintained in said file for a period of either four years or until the filing of the next regular report on examination of the insurer, whichever is the longer period of time.

B.Certificate of Compliance. Each insurer required to file an Annual Statement which is now or which hereafter becomes subject to the provisions of § 1.12 of this Part must file with the Director, with its Annual Statement, a Certificate of Compliance executed by an authorized officer of the insurer wherein it is stated that, to the best of his knowledge, information and belief, the advertisements which were disseminated by the insurer during the preceding statement year complied or were made to comply in all respects with the provisions of § 1.12 of this Part and the Laws of this State as implemented and interpreted by § 1.12 of this Part. With respect to the year in which this Part is promulgated, such certification shall cover only that portion of the year during which this Part is effective.

1.12.18Filing for Prior Review

The Director of Business Regulation may, at his or her discretion, require the filing by any insurer with this Department, for review prior to use, of all of its advertisements or all of a class of its advertisements which the Director shall describe which are printed or published "Invitations to Contract" and all prepared sales presentations to be used by agents, brokers and solicitors. Such advertising material must be filed by the insurer with this Department not less than ninety (90) days prior to the date the insurer desires to use the advertisement.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.13 Review of Approvals or Disapprovals

Notwithstanding anything to the contrary in R.I. Gen. Laws Chapter 27-18 any request for a review of any approval or disapproval by the Director under this Part shall be treated as a contested case and shall be subject to the rules and procedures set forth in R.I. Gen. Laws Chapter 42-35 for the handling of contested cases and to all other rules and regulations appropriate thereto.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.14 Severability

If any provisions of this Part, or the application thereof to any person or circumstance, is held invalid, such invalidity shall not affect other provisions or applications of this Part which can be given effect without the invalid provision or application, and to that end the provisions of this Part are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-1 § 1.15 Insurance Coverage for Serious Mental Illness

1.15.1Statutory Authority

This addition of § 1.15 of this Part is promulgated pursuant to RI. Gen. Laws §§ 42-14-17 and 42-62-12 to implement R.I. Gen. Laws Chapter 27-38.2 (“Insurance Coverage for Serious Mental Illness” referred to herein as the "Act").

1.15.2Definitions

A.Unless otherwise defined in the Act, for purposes of the Act and this § 1.15 of this Part, the following terms shall have the following meanings:

1."Director" means the Director of the Department.

2."ERISA" means the Employee Retirement Income Security Act of 1974 (including but not limited to Section 514 thereof, 29 U.S.C. § 1144), as amended from time to time.

3."Health care insurers" shall have the meaning given to "Health insurers" in R.I. Gen. Laws § 27-38.2-2(a).

4."Plan" means a health benefits plan as defined in R.I. Gen. Laws § 42-62- 4(d) provided, however, that the term does not include federal employee health benefit programs or services provided to self-insured employers subject to ERISA.

5."Serious Mental Illness" shall have the meaning given to "Serious Mental Illness" in R.I. Gen. Laws § 27-38.2-2(b).

1.15.3Department's Jurisdiction -- Limits on Applicability

A.Certain Plans may:

1.be governed by contracts formed under laws of other states or of the United States and may, therefore, not be subject to the provisions of the Act or this § 1.15 of this Part; and

2.not be subject to the Act or this § 1.15 of this Part because of the pre-exemption of all or a portion of the Act and this § 1.15 of this Part by ERISA.

1.15.4Time Limitation of Coverage

R.I. Gen. Laws § 27-38.2-4 requires that "inpatient coverage in cases where continuous hospitalization is medically necessary shall be limited to ninety (90) consecutive days." As used in the Act, the phrase "ninety (90) consecutive days" shall constitute a reference to a time limit per hospitalization of the patient, and not to a lifetime or annual time limit.

1.15.5Enforcement and Penalties

The Director shall have all of the enforcement powers granted or described in R.I. Gen. Laws § 27-42-14 and this Part to enforce the provisions of the Act and this § 1.15 of this Part. The Director may consider as part of the exercise of such enforcement powers any information the Director deems relevant, including but not limited to, decisions, rulings or orders of any agency of the State of Rhode Island.

1.15.6Severability

If any section, term or provision of this § 1.15 of this Part shall be adjudged invalid for any reason, that judgment shall not affect, impair, or invalidate any remaining section, term or provision, which shall remain in full force and effect.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-2 Coordination of Benefits (formerly Insurance Regulation 48)

230-RICR-20-30-2 § 2.1 Authority

This Part is adopted and promulgated pursuant to R.I. Gen. Laws § 27-20.6-6.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-2 § 2.2 Purpose

A.This Part applies to all plans that are issued on or after the effective date of this part. The purpose of this Part is to:

1.Establish a uniform order of benefit determination under which plans pay their claims;

2.Reduce duplication of benefits by permitting a reduction of the benefits to be paid by plans that, pursuant to rules established by this Part, do not have to pay their benefits first; and

3.Provide greater efficiency in the processing of claims when a person is covered under more than one plan

B.In order to accomplish the goals of this Part the Department or the Office of Health Insurance Commissioner may require licensees to use a standardized process and form, including manual and electronic formats, to increase the accuracy of coverage information when multiple carriers are involved.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-2 § 2.3 Definitions

A.The following words and terms, when used in this Part, shall have the following meanings unless the context clearly indicates otherwise.

1.“Allowable expense”

a."Allowable expense" except as set forth below or where a statute requires a different definition, means any health care expense, including coinsurance or co-payments and without reduction for any applicable deductible, that is covered in full or in part by any of the plans covering the person.

b.If a plan is advised by a covered person that all plans covering the person are high-deductible health plans and the person intends to contribute to a health savings account established in accordance with Section 223 of the Internal Revenue Code of 1986, the primary high-deductible health plan’s deductible is not an allowable expense, except for any health care expense incurred that may not be subject to the deductible as described in Section 223(c)(2)(C) of the Internal Revenue Code of 1986.

c.An expense or a portion of an expense that is not covered by any of the plans is not an allowable expense

d.Any expense that a provider by law or in accordance with a contractual agreement is prohibited from charging a covered person is not an allowable expense

e.The following are examples of expenses that are not allowable expenses:

(1)If a person is confined in a private hospital room, the difference between the cost of a semi-private room in the hospital and the private room is not an allowable expense, unless one of the plans provides coverage for private hospital room expenses.

(2)If a person is covered by two (2) or more plans that compute their benefit payments on the basis of usual and customary fees or relative value schedule reimbursement or other similar reimbursement methodology, any amount charged by the provider in excess of the highest of the negotiated fees is not an allowable expense

(3)If a person is covered by two (2) or more plans that provide benefits or services on the basis of negotiated fees, any amount in excess of the highest of the negotiated fees is not an allowable expense.

(4)If a person is covered by one plan that calculates its benefits or services on the basis of usual and customary fees or relative value schedule reimbursement or other similar reimbursement methodology and another plan that provides its benefits or services on the basis of negotiated fees, the primary plan’s payment arrangement shall be the allowable expense for all plans. However, if the provider has contracted with the secondary plan to provide the benefit or service for a specific negotiated fee or payment amount that is different than the primary plan’s payment arrangement and if the provider’s contract permits, that negotiated fee or payment shall be the allowable expense used by the secondary plan to determine its benefits.

f.The definition of “allowable expense” may exclude certain types of coverage or benefits such as dental care, vision care, prescription drug or hearing aids. A plan that limits the application of COB to certain coverages or benefits may limit the definition of allowable expense in its contract to expenses that are similar to the expenses that it provides. When COB is restricted to specific coverages or benefits in a contract, the definition of allowable expense shall include similar expenses to which COB applies

g.When a plan provides benefits in the form of services, the reasonable cash value of each service will be considered an allowable expense and a benefit paid.

h.The amount of the reduction may be excluded from allowable expense when a covered person’s benefits are reduced under a primary plan:

(1)Because the covered person does not comply with the plan provisions concerning second surgical opinions or precertification of admissions or services: or

(2)Because the covered person has a lower benefit because the covered person did not use a preferred provider.

B.“Birthday” refers only to month and day in a calendar year and does not include the year in which the individual is born.

C.“Claim” means a request that benefits of a plan be provided or paid. The benefits claimed may be in the form of:

1.Services (including supplies);

2.Payment for all or a portion of the expenses incurred.

3.A combination of (1) and (2) above; or.

4.An indemnification.

D.“Closed panel plan” means a plan that provides health benefits to covered persons primarily in the form of services through a panel of providers that have contracted with or are employed by the plan, and that excludes benefits for services provided by other providers, except in cases of emergency or referral by a panel member.

E.“Consolidated Omnibus Budget Reconciliation Act of 1985” or “COBRA” means coverage provided under a right of continuation pursuant to federal law.

F.“Coordination of benefits” or “COB” means a provision establishing an order in which plans pay their claims, and permitting secondary plans to reduce their benefits so that the combined benefits of all plans do not exceed total allowable expenses.

G.“Custodial parent” means:

1.The parent awarded custody of a child by a court decree: or.

2.In the absence of a court decree, the parent with whom the child resides more than one half of the calendar year without regard to any temporary visitation.

H.“Group-type contract” means a contract that is not available to the general public and is obtained and maintained only because of membership in or a connection with a particular organization or group, including blanket coverage. “Group-type contract” does not include an individually underwritten and issued guaranteed renewable policy even if the policy is purchased through payroll deduction at a premium savings to the insured since the insured would have the right to maintain or renew the policy independently of continued employment with the employer.

I.“High-deductible health plan” has the meaning given the term under Section 223 of the Internal Revenue Code of 1986, as amended by the Medicare Prescription Drug, Improvement and Modernization Act of 2003

J. “Hospital indemnity benefits” means benefits not related to expenses incurred. “Hospital indemnity benefits” does not include reimbursement-type benefits even if they are designed or administered to give the insured the right to elect indemnity-type benefits at the time of claim.

K."Plan" means a form of coverage with which coordination is allowed. Separate parts of a plan for members of a group that are provided through alternative contracts that are intended to be part of a coordinated package of benefits are considered one plan and there is no COB among the separate parts of the plan. If a plan coordinates benefits, its contract shall state the types of coverage that will be considered in applying the COB provision of that contract. Whether the contract uses the term “plan” or some other term such as “program,” the contractual definition may be no broader than the definition of “plan” in this subsection. The definition shown in the Model COB Provision, in Appendix A, provided in a bulletin issued for that purpose, is an example.

1.“Plan” includes:

a.Group insurance and subscriber contracts;

b.Uninsured arrangements of group or group-type coverage

c.Group or group-type coverage through closed panel plans

d.Group-type contracts

e.The medical care components of long-term care contracts, such as skilled nursing care

f.The medical benefits coverage in automobile "no fault" and traditional automobile "fault" type contracts

g.Medicare or other governmental benefits, as permitted by law, except as provided in § 2.3(K)(4)(h) of this Part. That part of the definition of plan may be limited to the hospital, medical and surgical benefits of the governmental program; and

h.Group and nongroup insurance contracts and subscriber contracts that pay or reimburse for the cost of dental care

2.“Plan” does not include:

a.Hospital indemnity benefits or other group or group-type fixed indemnity coverage

b.Accident only coverage

c.Specified disease or specified accident coverage

d.Limited benefit health coverage

e.School accident-type coverages. These contracts cover students for accidents only, including athletic injuries, either on a twenty four (24) hour basis or on a "to and from school" basis; and

f.Benefits provided in long-term care insurance policies for non-medical services, for example, personal care, adult day care, homemaker services, assistance with activities of daily living, respite care and custodial care or for contracts that pay a fixed daily benefit without regard to expenses incurred or the receipt of services

g.Medicare supplement policies

h.A State plan under Medicaid, and shall not include a plan (such as the Catastrophic Health Insurance Plan benefits provided pursuant to R.I. Gen. Laws §§ 42-62-5 through 42-62-8) when, by law, its benefits are in excess of those of any private insurance plan or other non-governmental plan

i.A governmental plan, which, by law, provides benefits that are in excess of those of any private insurance plan or other non-governmental plan

L.“Policyholder” means the primary insured named in a nongroup insurance policy

M.“Primary plan” means a plan whose benefits for a person's health care coverage must be determined without taking the existence of any other plan into consideration. A plan is a Primary Plan if

1.The Plan either has no order of benefit determination rules, or it’s rules differ from those permitted by this Part; or

2.All plans that cover the person use the order of benefit determination rules required by this Part, and under those rules the plan determines its benefits first.

N.“Secondary plan” means a plan which is not a Primary Plan.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-2 § 2.4 Applicability and Scope

This Part applies to all plans that are issued on or after the effective date of this Part which is October 1, 1990.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-2 § 2.5 Model COB Contract Provisions

A.Appendix A provided in a bulletin issued for that purpose, contains a model COB provision for use in Secondary Plan contracts. That use is subject to the provisions of §§ 2.5(B), (C) and (D) of this Part and to the provisions of § 2.6 of this Part.

B.Appendix B provided in a bulletin issued for that purpose, is a plain language description of the COB process that explains to the covered person how Secondary Plans will implement coordination of benefits. It is not intended to replace or change the provisions that are set forth in the contract. Its purpose is to explain the process by which the two (2) or more plans will pay for or provide benefits.

C.The COB provision contained in Appendix A provided in a bulletin issued for that purpose, and the plan language explanation in Appendix B provided in a bulletin issued for that purpose, do not have to use the specific words and format shown in Appendix A provided in a bulletin issued for that purpose. Changes may be made to fit the language and style of the rest of the group contract or to reflect the differences among plans that provide services, that pay benefits for expenses incurred, and that indemnify. No substantive changes are permitted.

D.A COB provision may not be used that permits a plan to reduce its benefits on the basis that:

1.Another plan exists and the covered person did not enroll in that plan;

2.A person is or could have been covered under another plan, except with respect to Part B of Medicare; or

3.A person has elected an option under another plan providing a lower level of benefits than another option that could have been elected.

E.No plan may contain a provision that its benefits are "always -excess" or "always secondary" to any plan as defined in this Part., except in accordance with the rules permitted by this Part.

F.Under the terms of a closed panel plan, benefits are not payable if the covered person does not use the services of a closed panel provider. In most instances, COB does not occur if a covered person is enrolled in two (2) or more closed panel plans and obtains services from a provider in one of the closed panel plans because the other closed panel plan (the one whose providers were not used) has no liability. However, COB may occur during the plan year when the covered person receives emergency services that would have been covered by both plans. Then the secondary plan shall use the provision of § 2.7 of this Part to determine the amount it should pay for the benefit.

G.No plan may use a COB provision, or any other provision that allows it to reduce its benefits with respect to any other coverage its insured may have that does not meet the definition of plan under § 2.3(K) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-2 § 2.6 Rules for Coordination of Benefits

A.When a person is covered by two (2) or more plans, the rules for determining the order of benefit payments are as follows:

1.The Primary Plan shall pay or provide its benefits as if the Secondary Plan or Plans did not exist;

2.If the primary plan is a closed panel plan and the secondary plan is not a closed panel plan, the secondary plan shall pay or provide benefits as if it were the primary plan when a covered person uses a non-panel provider, except for emergency services or authorized referrals that are paid or provided by the primary plan

3.When multiple contracts providing coordinated coverage are treated as a single plan under this of this Part, this section applies only to the plan as a whole, and coordination among the component contracts is governed by the terms of the contracts. If more than one carrier pays or provides benefits under the plan, the carrier designated as primary within the plan shall be responsible for the plan’s compliance with this of this Part.

4.If a person is covered by more than one secondary plan, the order of benefit determination rules of this of this Part decide the order in which secondary plans benefits are determined in relation to each other. Each secondary plan shall take into consideration the benefits of the primary plan or plans and the benefits of any other plan, which, under the rules of this of this Part, has its benefits determined before those of that secondary plan.

B.Except as provided in § 2.6(B)(1) of this Part below, a plan that does not contain order of benefit determination provisions that are consistent with this of this Part is always the primary plan unless the provisions of both plans, regardless of the provisions of this paragraph, state that the complying plan is primary.

1.Coverage that is obtained by virtue of membership in a group and designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance type coverages that are written in connection with a closed panel plan to provide out-of-network benefits.

C.A plan may take into consideration the benefits paid or provided by another plan only when, under the rules of this of this Part, it is secondary to that other plan.

D.Order of Benefit Determination. Each Plan determines its order of benefits using the first of the following rules that applies:

1.Non-Dependent or Dependent.

a.Subject to § 2.6(D)(1)(b) of this Part, the plan that covers the person other than as a dependent, for example as an employee, member, subscriber, policyholder or retiree, is the primary plan and the plan that covers the person as a dependent is the secondary plan.

b.If the person is a Medicare beneficiary, and, as a result of the provisions of Title XVIII of the Social Security Act and implementing regulations, Medicare is:

(1)Secondary to the plan covering the person as a dependent; and

(2)Primary to the plan covering the person as other than a dependent (e.g. a retired employee),

(3)Then the order of benefits is reversed so that the plan covering the person as an employee, member, subscriber, policyholder or retiree is the secondary plan and the other plan covering the person as a dependent is the primary plan

2.Dependent Child Covered Under More Than One Plan. Unless there is a court decree stating otherwise, plans covering a dependent child shall determine the order of benefits as follows:

a.For a dependent child whose parents are married or are living together, whether or not they have ever been married-:

(1)The plan of the parent whose birthday falls earlier in the calendar year is the primary plan; or

(2)If both parents have the same birthday the plan that has covered the parent longest is the primary plan.

b.For a dependent child whose parents are separated or divorced or are not living together, whether or not they have ever been married:

(1)If there is no court decree allocating responsibility for the child’s health care expenses or health care coverage, the order of benefits for the child are as follows:

(AA)The plan covering the custodial parent;

(BB)The plan covering the custodial parent’s spouse;

(CC)The plan covering the non-custodial parent; and then

(DD)The plan covering the non-custodial parent’s spouse.

(2)If a court decree states that one of the parents is responsible for the health care expenses or health care coverage of the child, and the entity obligated to pay or provide the benefits of the plan of that parent has actual knowledge of those terms, that plan is primary. If the parent with responsibility has no health care coverage for the dependent child’s health care expenses, but that parent’s spouse does, that parent’s spouse’s plan is the primary plan. This paragraph does not apply with respect to any plan year during which benefits are paid or provided before the entity has knowledge of the court decree provision;

(3)If a court decree states that both parents are responsible for the dependent child’s health care expenses or health care coverage, the provisions of § 2.6(D)(2)(a) of this Part shall determine the order of benefits;

(4)If a court decree states that the parents have joint custody, without stating that one of the parents is responsible for the health care expenses or health care coverage of the dependent child, the provisions of § 2.6(D)(2)(a) of this Part shall determine the order of benefits.

c.For a dependent child covered under more than one plan of individuals who are not the parents of the child, the order of benefits shall be determined, as applicable, under § 2.6(D)(2)(a) of this Part as if those individuals were parents of the child.

d.For a dependent child who has coverage under either or both parents’ plans and also has his or her own coverage as a dependent under a spouse’s plan, the rule in § 2.6(D)(5) of this Part applies. In the event the dependent child’s coverage under the spouse’s plan began on the same date as the dependent child’s coverage under either or both parents’ plans, the order of benefits shall be determined by applying the birthday rule in § 2.6(D)(2)(a) of this Part to the dependent child’s parent(s) and the dependent’s spouse.

3.Active Employee or Retired or Laid-Off Employee.

a.The plan that covers a person as an active employee who is, neither laid off nor retired (or as that employee's dependent) is the primary plan. The plan covering that same person as a retired or laid-off employee or as a dependent of a retired or laid-off employee is the secondary plan.

b.If the other plan does not have this rule, and as a result, the plans do not agree on the order of benefits, this rule is ignored.

c.This rule does not apply if the rule in § 2.6(D)(1) of this Part can determine the order of benefits.

4.COBRA or State Continuation Coverage

a.If a person whose coverage is provided pursuant to COBRA or under a right of continuation pursuant to state or other federal law is covered under another plan, the plan covering the person as an employee, member, subscriber or retiree or covering the person as a dependent of an employee, member, subscriber or retiree is the primary plan and the plan covering that same person pursuant to COBRA or under a right of continuation pursuant to state or other federal law is the secondary plan.

b.If the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, this rule is ignored.

c.This rule does not apply if the rule in § 2.6(D)(1) of this Part can determine the order of benefits.

5.Longer or Shorter Length of Coverage.

a.If the preceding rules do not determine the order of benefits, the plan that covered the person longer is the primary plan and the plan that covered the person for the shorter period of time is the secondary plan.

b.To determine the length of time a person has been covered under a plan, two successive plans shall be treated as one if the covered person was eligible under the second plan within twenty four (24) hours after coverage from the first plan ended.

c.The start of a new plan does not include:

(1)A change in the amount or scope of a plan's benefits;

(2)A change in the entity which pays, provides or administers the plan's benefits; or

(3)A change from one type of plan to another (such as, from a single employer plan to that of a multiple employer plan).

d.The person’s length of time covered under a plan is measured from the person’s first date of coverage under that plan. If that date is not readily available, the date the person first became a member of the group shall be used as the date from which to determine the length of time the person’s coverage under the present plan has been in force.

6.If none of the preceding rules determines the order of benefits, the allowable expenses shall be shared equally between the plans.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-2 § 2.7 Procedure to be followed by Secondary Plan to Calculate Benefits and Pay a Claim

In determining the amount to be paid by the secondary plan on a claim, should the plan wish to coordinate benefits, the secondary plan shall calculate the benefits it would have paid on the claim in the absence of other health care coverage and apply that calculated amount to any allowable expense under its plan that is unpaid by the primary plan. The secondary plan may reduce its payment by the amount so that, when combined with the amount paid by the primary plan, the total benefits paid or provided by all plans for the claim do not exceed 100 percent of the total allowable expense for that claim. In addition, the secondary plan shall credit to its plan deductible any amounts it would have credited to its deductible in the absence of other health care coverage.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-2 § 2.8 Notice to Covered Persons

A plan, other than automobile contracts, shall, in its explanation of benefits provided to covered persons, include the following language: “If you are covered by more than one health benefit plan, you should file all your claims with each plan.”.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-2 § 2.9 Miscellaneous Provisions

A.A Secondary Plan which provides benefits in the form of services may recover the reasonable cash value of the services from the Primary Plan, to the extent that benefits for the services are covered by the Primary Plan and have not already been paid or provided by the Primary Plan. Nothing in this provision shall be interpreted to require a plan to reimburse a covered person in cash for the value of services provided by a plan which provides benefits in the form of services.

B.Compliant and Non-Compliant Plans

1.A plan with order of benefit determination rules that comply with this of this Part. (Complying Plan) may coordinate its benefits with a plan which is "excess" or "always secondary" or that uses order of benefit determination rules that are inconsistent with those contained in this of this Part. (Noncomplying Plan) on the following basis:

a.If the Complying Plan is the Primary Plan, it shall pay or provide its benefits first;

b.If the Complying Plan is the Secondary Plan, it shall pay or provide its benefits first, but the amount of the benefits payable shall be determined as if the Complying Plan were the Secondary Plan. In such a situation, the payment shall be the limit of the Complying Plan's liability; and

c.If the Noncomplying Plan does not provide the information needed by the Complying Plan to determine its benefits within a reasonable time after it is requested to do so, the Complying Plan shall assume that the benefits of the Noncomplying Plan are identical to its own, and shall pay its benefits accordingly. If, within two (2) years of payment, the complying plan receives information as to the actual benefits of the non-complying plan, it shall adjust payments accordingly.

2.If the Noncomplying Plan reduces its benefits so that the covered person receives less in benefits than he or she would have received had the Complying Plan paid or provided its benefits as the Secondary Plan and the Noncomplying Plan paid or provided its benefits as the Primary Plan, and governing State law allows the right of subrogation set forth below, then the Complying Plan shall advance to or on behalf of the covered person an amount equal to the difference.

3.In no event shall the Complying Plan advance more than the Complying Plan would have paid had it been the Primary Plan less any amount it previously paid for the same expense or service. In consideration of such advance, the Complying Plan shall be subrogated to all rights of covered person against the Noncomplying Plan. Such advance by the Complying Plan shall also be without prejudice to any claim it may have against the Noncomplying Plan in the absence of subrogation.

C.COB differs from subrogation. Provisions for one may be included in health care benefits contracts without compelling the inclusion or exclusion of the other.

D.If the plans cannot agree on the order of benefits within thirty (30) calendar days after the plans have received all of the information needed to pay the claim, the plans shall immediately pay the claim in equal shares and determine their relative liabilities following payment, except that no plan shall be required to pay more than it would have paid had it been the primary plan.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-2 § 2.10 Effective Date for Existing Contracts

A.A contract that provides health care benefits and that was issued before the effective date of this of this Part shall be brought into compliance with this Part by

1.The later of:

a.The next anniversary date or renewal date of the contract; or

b.Twelve months (12) following June 1, 2014; or

2.The expiration of any applicable collectively bargained contract pursuant to which it was written.

B.For the transition period between the adoption of this of this Part and the timeframe for which plans are to be in compliance pursuant to § 2.10(A) of this Part, a plan that is subject to the prior COB requirements shall not be considered a non-complying plan by a plan subject to the new COB requirements and if there is a conflict between the prior COB requirements under the prior regulation and the new COB requirements under the amended of this Part, the prior COB requirements shall apply.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2014-08-12 to 08/25/2018
Periodic Refile — effective from 2001-12-19 to 08/12/2014

230-RICR-20-30-3 Health Insurance Reserves

230-RICR-20-30-3 § 3.1 Introduction

A.Scope.

1.These standards apply to all individual and group accident and sickness insurance coverages credit insurance.

2.When an insurer determines that adequacy of its health insurance reserves requires reserves in excess of the minimum standards specified herein, such increased reserves shall be held and shall be considered the minimum reserves for that insurer.

3.With respect to any block of contracts, or with respect to an insurer's health business as a whole, a prospective gross premium valuation is the ultimate test of reserve adequacy as of a given valuation date. Such a gross premium valuation will take into account, for contracts in force, in a claims status, or in a continuation of benefits status on the valuation date, the present value as of the valuation date of: all expected benefits unpaid, all expected expenses unpaid, and all unearned or expected premiums, adjusted for future premium increases reasonably expected to be put into effect.

4.Such a gross premium valuation is to be performed whenever a significant doubt exists as to reserve adequacy with respect to any major block of contracts, or with respect to the insurer's health business as a whole. In the event inadequacy is found to exist, immediate loss recognition shall be made and the reserves restored to adequacy. Adequate reserves (inclusive of claim, premium and contract reserves, if any) shall be held with respect to all contracts, regardless of whether contract reserves are required for such contracts under these standards.

5.Whenever minimum reserves, as defined in these standards, exceed reserve requirements as determined by a prospective gross premium valuation, such minimum reserves remain the minimum requirement under these standards.

B.Categories of Reserves.

1.The following sections set forth minimum standards for three categories of health insurance reserves:

a.Claim Reserves

b.Premium Reserves

c.Contract Reserves

2.Adequacy of an insurer's health insurance reserves is to be determined on the basis of all three categories combined. However, these standards emphasize the importance of determining appropriate reserves for each of the three categories separately.

C.Appendices.

1.These standards contain two appendices which are an integral part of the standards, and one additional "supplementary" appendix which is not part of the standards as such, but is included for explanatory and illustrative purposes only.

a.Appendix A. Specific minimum standards with respect to morbidity, mortality and interest, which apply to claim reserves according to year of incurral and to contract reserves according to year of issue.

b.Appendix B. Glossary of Technical Terms used.

c.Appendix C. (Supplementary) Waiver of Premium Reserves.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-3 § 3.2 Claim Reserves

A.General

1.Claim reserves are required for all incurred but unpaid claims on all health insurance policies.

2.Appropriate claim expense reserves are required with respect to the estimated expense of settlement of all incurred but unpaid claims.

3.All such reserves for prior valuation years are to be tested for adequacy and reasonableness along the lines of claim runoff schedules in accordance with the statutory financial statement including consideration of any residual unpaid liability.

B.Minimum Standards for Claim Reserves

1.Disability Income.

a.Interest. The maximum interest rate for claim reserves is specified in Appendix A

b.Morbidity. Minimum standards with respect to morbidity are those specified in Appendix A, except that, at the option of the insurer:

(1)For claims with a duration from date of disablement of less than two years, reserves may be based on the insurer's experience, if such experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities.

(2)For group disability income claims with a duration from date of disablement of more than two (2) years but less than five (5) years, reserves may, with the approval of the commissioner, be based on the insurer's experience for which the insurer maintains underwriting and claim administration control. The request for such approval of a plan of modification to the reserve basis must include:

(AA)An analysis of the credibility of the experience;

(BB)A description of how all of the insurer's experience is proposed to be used in setting reserves;

(CC)A description and quantification of the margins to be included;

(DD)A summary of the financial impact that the proposed plan of modification would have had on the insurer's last filed annual statement;

(EE)A copy of the approval of the proposed plan of modification by the commissioner of the state of domicile; and

(FF)Any other information deemed necessary by the commissioner.

c.Duration of Disablement. For contracts with an elimination period, the duration of disablement should be measured as dating from the time that benefits would have begun to accrue had there been no elimination period.

2.All Other Benefits

a.Interest. The maximum interest rate for claim reserves is specified in Appendix A.

b.Morbidity or other Contingency. The reserve should be based on the insurer's experience, if such experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities.

C.Claim Reserve Methods Generally.

1.Any generally accepted or reasonable actuarial method or combination of methods may be used to estimate all claim liabilities. The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued. Approximations based on groupings and averages may also be employed. Adequacy of the claim reserves, however, shall be determined in the aggregate.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-3 § 3.3 Premium Reserves

A.General

1.Unearned premium reserves are required for all contracts with respect to the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation.

2.If premiums due and unpaid are carried as an asset, such premiums must be treated as premiums in force, subject to unearned premium reserve determination. The value of unpaid commissions, premium taxes, and the cost of collection associated with due and unpaid premiums must be carried as an offsetting liability.

3.The gross premiums paid in advance for a period of coverage commencing after the next premium due date which follows the date of valuation may be appropriately discounted to the valuation date and shall be held either as a separate liability or as an addition to the unearned premium reserve which would otherwise be required as a minimum.

B.Minimum Standards for Unearned Premium Reserves

1.The minimum unearned premium reserve with respect to any contract is the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with such premium determined on the basis of:

a.The valuation net modal premium on the contract reserve basis applying to the contract; or

b.The gross modal premium for the contract if no contract reserve applies.

2.However, in no event may the sum of the unearned premium and contract reserves for all contracts of the insurer subject to contract reserve requirements be less than the gross modal unearned premium reserve on all such contracts, as of the date of valuation. Such reserve shall never be less than the expected claims for the period beyond the valuation date represented by such unearned premium reserve, to the extent not provided for elsewhere.

C.Premium Reserve Methods Generally. The insurer may employ suitable approximations and estimates; including, but not limited to groupings, averages and aggregate estimation; in computing premium reserves. Such Approximations or estimates should be tested periodically to determine their continuing adequacy and reliability.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-3 § 3.4 Contract Reserves

A.General

1.Contract reserves are required, unless otherwise specified in § 3.4(A)(2) of this Part for:

a.All individual and group contracts with which level premiums are used; or

b.All individual and group contracts with respect to which, due to the gross premium pricing structure at issue, the value of the future benefits at any time exceeds the value of any appropriate future valuation net premiums at that time. The values specified in this Subparagraph (b) shall be determined on the basis specified in § 3.4(B) of this Part.

2.Contracts not requiring a contract reserve are:

a.Contracts which cannot be continued after one (1) year from issue; or

b.Contracts already in force on the effective date of these standards for which no contract reserve was required under the immediately preceding standards.

3.The contract reserve is in addition to claim reserves and premium reserves.

4.The methods and procedures for contract reserves should be consistent with those for claim reserves for any contract, or else appropriate adjustment must be made when necessary to assure provision for the aggregate liability. The definition of the date of incurral must be the same in both determinations.

B.Minimum Standards for Contract Reserves

1.Basis

a.Morbidity or other Contingency. Minimum standards with respect to morbidity are those set forth in Appendix A. Valuation net premiums used under each contract must have a structure consistent with the gross premium structure at issue of the contract as this relates to advancing age of insured, contract duration and period for which gross premiums have been calculated. Contracts for which tabular morbidity standards are not specified in Appendix A shall be valued using tables established for reserve purposes by a qualified actuary and acceptable to the Commissioner.

b.Interest. The maximum interest rate is specified in Appendix A.

c.Termination Rates. Termination rates used in the computation of reserves shall be on the basis of a mortality table as specified in Appendix A except as noted in the following paragraph:

(1)Under contracts for which premium rates are not guaranteed, and where the effects of insurer underwriting are specifically used by policy duration in the valuation morbidity standard or for return of premium or other deferred cash benefits, total termination rates may be used at ages and durations where these exceed specified mortality table rates, but not in excess of the lesser of:

(AA)Eighty percent (80%) of the total termination rate used in the calculation of the gross premiums, or

(BB)Eight percent (8%). Where a morbidity standard specified in Appendix A is on an aggregate basis, such morbidity standard may be adjusted to reflect the effect of insurer underwriting by policy duration. The adjustments must be appropriate to the underwriting and be acceptable to the Commissioner.

d.Reserve Method.

(1)For insurance except long-term care and return of premium or other deferred cash benefits, the minimum reserve is the reserve calculated on the two-year full preliminary term method; that is, under which the terminal reserve is zero at the first and also the second contract anniversary.

(2)For long-term care insurance, the minimum reserve is the reserve calculated on the one (1) year full preliminary term method.

(3)For return of premium or other deferred cash benefits, the minimum reserve is the reserve calculated as follows:

(AA)On the one year preliminary term method if such benefits are provided at any time before the twentieth anniversary;

(BB)On the two year preliminary term method if such benefits are only provided on or after the twentieth anniversary.

(CC)The preliminary term method may be applied only in relation to the date of issue of a contract. Reserve adjustments introduced later, as a result of rate increases, revisions in assumptions (e.g., projected inflation rates) or for other reasons, are to be applied immediately as of the effective date of adoption of the adjusted basis.

e.Negative Reserves. Negative reserves on any benefit may be offset against positive reserves for other benefits in the same contract, but the total contract reserve with respect to all benefits combined may not be less than zero.

C.Alternative Valuation Methods and Assumptions Generally. Provided the contract reserve on all contracts to which an alternative method or basis is applied is not less in the aggregate than the amount determined according to the applicable standards specified above; an insurer may use any reasonable assumptions as to interest rates, termination and/or mortality rates, and rates of morbidity or other contingency. Also, subject to the preceding condition, the insurer may employ methods other than the methods stated above in determining a sound value of its liabilities under such contracts, including, but not limited to the following: the net level premium method; the one-year full preliminary term method; prospective valuation on the basis of actual gross premiums with reasonable allowance for future expenses; the use of approximations such as those involving age groupings, groupings of several years of issue, average amounts of indemnity, grouping of similar contract forms; the computation of the reserve for one contract benefit as a percentage of, or by other relation to, the aggregate contract reserves exclusive of the benefit or benefits so valued; and the use of a composite annual claim cost for all or any combination of the benefits included in the contracts valued.

D.Tests for Adequacy and Reasonableness of Contract Reserves. Annually, an appropriate review shall be made of the insurer's prospective contract liabilities on contracts valued by tabular reserves, to determine the continuing adequacy and reasonableness of the tabular reserves giving consideration to future gross premiums. The insurer shall make appropriate increments to such tabular reserves if such tests indicate that the basis of such reserves is no longer adequate; subject, however, to the minimum standards of § 3.4(B) of this Part. In the event a company has a contract or a group of related similar contracts, for which future gross premiums will be restricted by contract, insurance department regulations, or for other reasons, such that the future gross premiums reduced by expenses for administration, commissions, and taxes will be insufficient to cover future claims, the company shall establish contract reserves for such shortfall in the aggregate.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-3 § 3.5 Reinsurance

Increases to, or credits against reserves carried, arising because of reinsurance assumed or reinsurance ceded, must be determined in a manner consistent with these minimum reserve standards and with all applicable provisions of the reinsurance contracts which affect the insurer's liabilities.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-3 § 3.6 Severability

If any provision of this Part or the application thereof to any person or circumstances are for any reason held to be invalid, the remainder of the Part and the application of its provisions to other persons or circumstances shall not be affected thereby.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-3 § 3.7 Applicability

This Part is effective on August 1, 1996 and shall apply to all quarterly and annual statements due on or after January 1, 1997.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-3 § 3.8 Appendix A: Specific Standards for Morbidity, Interest and Mortality

A.MORBIDITY

1.Minimum morbidity standards for valuation of specified individual contract health insurance benefits are as follows:

a.Disability Income Benefits Due to Accident or Sickness.

(1)Contract Reserves: Contracts issued on or after January 1, 1995

(AA)The 1985 Commissioners Individual Disability Tables A (85CIDA); or

(BB)The 1985 Commissioners Individual Disability Tables B (85CIDB).

(CC)Each insurer shall elect, with respect to all individual contracts issued in any one statement year, whether it will use Tables A or Tables B as the minimum standard. The insurer may, however, elect to use the other tables with respect to any subsequent statement year.

(2)Claim Reserves: The minimum morbidity standard in effect for contract reserves on currently issued contracts, as of the date the claim is incurred.

b.Hospital Benefits, Surgical Benefits and Maternity Benefits (Scheduled benefits or fixed time period benefits only).

(1)Contract Reserves: Contracts issued on or after January 1, 1995:

(AA)The 1974 Medical Expense Tables, Table A, Transactions of the Society of Actuaries, Volume XXX, pg. 63. Refer to the paper (in the same volume, pg. 9) to which this table is appended, including its discussions, for methods of adjustment for benefits not directly valued in Table A: "Development of the 1974 Medical Expense Benefits," Houghton and Wolf.

(2)Claim Reserves: No specific standard. See (5).

c.Cancer Expense Benefits (Scheduled benefits or fixed time period benefits only).

(1)Contract Reserves:

(AA)Contracts issued on or after January 1, 1995: The 1985 NAIC Cancer Claim Cost Tables

(2)Claim Reserves: No specific standard. See (5).

d.Accidental Death Benefits.

(1)Contract Reserves: Contracts issued on or after January 1, 1995: The 1959 Accidental Death Benefits Table.

(2)Claim Reserves: Actual amount incurred.

e.Other Individual Contract Benefits.

(1)Contract Reserves: For all other individual contract benefits, morbidity assumptions are to be determined as provided in the reserve standards.

(2)Claim Reserves: For all benefits other than disability, claim reserves are to be determined as provided in the standards.

2.Minimum morbidity standards for valuation of specified group contract health insurance benefits are as follows:

a.Disability Income Benefits Due to Accident or Sickness.

(1)Contract Reserves:

(2)Claim Reserves:

b.Other Group Contract Benefits.

(1)Contract Reserves: For all other group contract benefits, morbidity assumptions are to be determined as provided in the reserve standards.

(2)Claim Reserves: For all benefits other than disability, claim reserves are to be determined as provided in the standards.

B.INTEREST

1.For contract reserves the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the health insurance contract.

2.For claim reserves on policies that require contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the claim incurral date.

3.For claim reserves on policies not requiring contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of single premium immediate annuities issued on the same date as the claim incurral date, reduced by one hundred basis points.

C.MORTALITY

1.Except as provided in § 3.8(B) of this Part, the mortality basis used shall be according to a table (but without use of selection factors) permitted by law for the valuation of whole life insurance issued on the same date as the health insurance contract.

2.Other mortality tables adopted by the NAIC and promulgated by the commissioner may be used in the calculation of the minimum reserves if appropriate for the type of benefits and if approved by the commissioner. The request for such approval must include the proposed mortality table and the reason that the standard specified in § 3.8(A) of this Part is inappropriate.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-3 § 3.9 Appendix B: Glossary of Technical Terms Used

A.As used in this valuation standard, the following terms have the following meaning:

1.ANNUAL-CLAIM COST. The net annual cost per unit of benefit before the addition of expenses, including claim settlement expenses, and a margin for profit or contingencies. For example, the annual claim cost for a $100 monthly disability benefit, for a maximum disability benefit period of one year, with an elimination period of one week, with respect to a male at age 35, in a certain occupation might be $12, while the gross premium for this benefit might be $18. The additional $6 would cover expenses and profit or contingencies.

2.CLAIMS ACCRUED. That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services which have been rendered on or prior to the valuation date, and for the payment of benefits for days of hospitalization and days of disability which have occurred on or prior to the valuation date, which the insurer has not paid as of the valuation date, but for which it is liable, and will have to pay after the valuation date. This liability is sometimes referred to as a liability for "accrued" benefits. A claim reserve, which represents an estimate of this accrued claim liability, must be established.

3.CLAIMS REPORTED. When an insurer has been informed that a claim has been incurred, if the date reported is on or prior to the valuation date, the claim is considered as a reported claim for annual statement purposes.

4.CLAIMS UNACCRUED. That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services expected to be rendered after the valuation date, and for benefits expected to be payable for days of hospitalization and days of disability occurring after the valuation date. This liability is sometimes referred to as a liability for unaccrued benefits. A claim reserve, which represents an estimate of the unaccrued claim payments expected to be made (which may or may not be discounted with interest), must be established.

5.CLAIMS UNREPORTED. When an insurer has not been informed, on or before the valuation date, concerning a claim that has been incurred on or prior to the valuation date, the claim is considered as an unreported claim for annual statement purposes.

6.DATE OF DISABLEMENT. The earliest date the insured is considered as being disabled under the definition of disability in the contract, based on a doctor's evaluation or other evidence. Normally this date will coincide with the start of any elimination period.

7.ELIMINATION PERIOD. A specified number of days, weeks, or months starting at the beginning of each period of loss, during which no benefits are payable.

8.GROSS PREMIUM. The amount of premium charged by the insurer. It includes the net premium (based on claim-cost) for the risk, together with any loading for expenses, profit or contingencies.

9.GROUP INSURANCE. The term group insurance includes blanket insurance and franchise insurance and any other forms of group insurance.

10.LEVEL PREMIUM.

a.premium calculated to remain unchanged throughout either the lifetime of the policy, or for some shorter projected period of years. The premium need not be guaranteed; in which case, although it is calculated to remain level, it may be changed if any of the assumptions on which it was based are revised at a later time.

b.Generally, the annual claim costs are expected to increase each year and the insurer, instead of charging premiums that correspondingly increase each year, charges a premium calculated to remain level for a period of years or for the lifetime of the contract. In this case the benefit portion of the premium is more than needed to provide for the cost of benefits during the earlier years of the policy and less than the actual cost in the later years. The building of a prospective contract reserve is a natural result of level premiums.

11.LONG-TERM CARE INSURANCE. Any insurance policy or rider advertised, marketed, offered or designed to provide coverage for not less than twelve (12) consecutive months for each covered person on an expense incurred, indemnity, prepaid or other basis; for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance or personal care services, provided in a setting other than an acute care unit of a hospital. Such term also includes a policy or rider which provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long-term care insurance may be issued by insurers; fraternal benefit societies; nonprofit health, hospital, and medical service corporations; prepaid health plans; health maintenance organizations or any similar organization to the extent they are otherwise authorized to issue life or health insurance. Long-term care insurance shall not include any insurance policy which is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage.

12.MODAL PREMIUM. This refers to the premium paid on a contract based on a premium term which could be annual, semi-annual, quarterly, monthly, or weekly. Thus if the annual premium is $100 and if, instead, monthly premiums of $9 are paid then the modal premium is $9.

13.NEGATIVE RESERVE. Normally the terminal reserve is a positive value. However, if the values of the benefits are decreasing with advancing age or duration it could be a negative value, called a negative reserve.

14.PRELIMINARY TERM RESERVE METHOD. Under this method of valuation the valuation net premium for each year falling within the preliminary term period is exactly sufficient to cover the expected incurred claims of that year, so that the terminal reserves will be zero at the end of the year. As of the end of the preliminary term period, a new constant valuation net premium (or stream of changing valuation premiums) becomes applicable such that the present value of all such premiums is equal to the present value of all claims expected to be incurred following the end of the preliminary term period.

15.PRESENT VALUE OF AMOUNTS NOT YET DUE ON CLAIMS. The reserve for "claims unaccrued" (see definition), which may be discounted at interest.

16.RESERVE. The term "reserve" is used to include all items of benefit liability, whether in the nature of incurred claim liability or in the nature of contract liability relating to future periods of coverage, and whether the liability is accrued or unaccrued.

a.An insurer under its contracts promises benefits which result in:

(1)Claims which have been incurred, that is, for which the insurer has become obligated to make payment, on or prior to the valuation date. On these claims, payments expected to be made after the valuation date for accrued and unaccrued benefits are liabilities of the insurer which should be provided for by establishing claim reserves; or

(2)Claims which are expected to be incurred after the valuation date. Any present liability of the insurer for these future claims should be provided for by the establishment of contract reserves and unearned premium reserves.

17.TERMINAL RESERVE. This is the reserve at the end of a contract year, and is defined as the present value of benefits expected to be incurred after that contract year minus the present value of future valuation net premiums.

18.UNEARNED PREMIUM RESERVE. This reserve values that portion of the premium paid or due to the insurer which is applicable to the period of coverage extending beyond the valuation date. Thus if an annual premium of $120 was paid on November 1, $20 would be earned as of December 31 and the remaining $100 would be unearned. The unearned premium reserve could be on a gross basis as in this example, or on a valuation net premium basis.

19.VALUATION NET MODAL PREMIUM. This is the modal fraction of the valuation net annual premium that corresponds to the gross modal premium in effect on any contract to which contract reserves apply. Thus if the mode of payment in effect is quarterly, the valuation net modal premium is the quarterly equivalent of the valuation net annual premium.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-3 § 3.10 Appendix C: Reserves for Waiver of Premium (Supplementary explanatory material)

A.Waiver of premium reserves involve several special considerations. First, the disability valuation tables promulgated by the NAIC are based on exposures that include contracts on premium waiver as in-force contracts. Hence, contract reserves based on these tables are NOT reserves on "active lives" but rather reserves on contracts "in force." This is true for the 1964 CDT and for both the 1985 CIDA and CIDB tables.

B.Accordingly, tabular reserves using any of these tables should value reserves on the following basis:

1.Claim reserves should include reserves for premiums expected to be waived, valuing as a minimum the valuation net premium being waived.

2.Premium reserves should include contracts on premium waiver as in-force contracts, valuing as a minimum the unearned modal valuation net premium being waived.

3.Contract reserves should include recognition of the waiver of premium benefit in addition to other contract benefits provided for, valuing as a minimum the valuation net premium to be waived.

C.If an insurer is, instead, valuing reserves on what is truly an active life table, or if a specific valuation table is not being used but the insurer's gross premiums are calculated on a basis that includes in the projected exposure only those contracts for which premiums are being paid, then it may not be necessary to provide specifically for waiver of premium reserves. Any insurer using such a true "active life" basis should carefully consider, however, whether or not additional liability should be recognized on account of premiums waived during periods of disability or during claim continuation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-30-5 Standards for Readability of Health Insurance Forms

230-RICR-20-30-5 § 5.1 Authority

This regulation is promulgated pursuant to R.I. Gen Laws §§ 42-62-1, et seq.; 42-14.5-1, et seq.; 42- 14-5; and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-31 to 01/04/2022
Technical Revision — effective from 2010-08-31 to 08/31/2010
Adoption — effective from 2010-08-31 to 08/31/2010

230-RICR-20-30-5 § 5.2 Purpose

This regulation is intended to make health insurance forms easier to read.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-31 to 01/04/2022
Technical Revision — effective from 2010-08-31 to 08/31/2010
Adoption — effective from 2010-08-31 to 08/31/2010

230-RICR-20-30-5 § 5.3 Definitions

A.As used in this regulation:

“Policy” or “policy form” means all health insurance forms required to be submitted to OHIC for approval. These forms include, but are not limited to, certificates of coverage, subscriber agreements, endorsements and modifications to contracts, policies, benefits booklets, and summary plan descriptions.
"Carrier” or “insurer” or “health insurance carrier” means any entity subject to the insurance laws and regulations of this state, or subject to the jurisdiction of the health insurance commissioner, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including, without limitation, an insurance company offering accident and sickness insurance, health insurer, dental insurer, nonprofit hospital service corporation, nonprofit medical service corporation, nonprofit dental service corporation, nonprofit optometric service corporation, association, fraternal benefit society, health maintenance organization or similar entity subject to the provisions of R.I. Gen. Laws Title 27, or any other entity providing a plan of health insurance or health benefits by which health care services are paid or financed for an eligible individual or his or her dependents by such entity on the basis of a periodic premium, paid directly or through an association, trust, or other intermediary, and is either issued, renewed, or delivered within Rhode Island, including a certificate issued that evidences coverage under a policy or contract issued to a trust or association.
“Health insurance” means any policy, contract, certificate, or agreement offered by a health insurance carrier to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services. It also includes “health insurance coverage,” as defined in R.I. Gen Laws §§ 27-18.5-2 and 27-18.6-2; “health benefit plan,” as defined in R.I. Gen Laws § 27-50-3; and a “medical supplement policy,” as defined in R.I. Gen Laws § 27- 18.2-1 or coverage similar to a Medicare supplement policy that is issued to an employer to cover retirees.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-31 to 01/04/2022
Technical Revision — effective from 2010-08-31 to 08/31/2010
Adoption — effective from 2010-08-31 to 08/31/2010

230-RICR-20-30-5 § 5.4 Applicability

A. This regulation applies to the policy forms of every individual or group health insurance policy, contract, certificate or agreement delivered, issued for delivery, or renewed in Rhode Island on or after August 31, 2010.

B. Any non-English language policy form delivered or issued for delivery in Rhode Island on or after August 31, 2010 shall be deemed to be in compliance with this regulation if the insurer certifies that the policy is translated from an English language policy that does comply with this regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-31 to 01/04/2022
Technical Revision — effective from 2010-08-31 to 08/31/2010
Adoption — effective from 2010-08-31 to 08/31/2010

230-RICR-20-30-5 § 5.5 Minimum Policy Language Simplification Standards

A. In addition to any other requirements of law, no policy form may be approved under this regulation, unless:

The text of the policy form does not exceed the eighth-grade reading level as measured by the Flesch-Kincaid formula;
The policy form is printed in not less than twelve-point type, except for type used for specification pages, schedules, tables and minor instructions concerning the preparation of forms by the consumer (e.g., instructions indicating where a consumer should provide his or her name, address or other information);
The style, arrangement and overall appearance of the policy form gives no undue prominence to any portion of the text of the policy or to any endorsements or riders; and
The policy form contains a table of contents or an index of the principal sections of the policy form, if the policy has more than 3,000 words or than three pages regardless of the number of words.

B. An insurer may use an alternate method or formula for evaluating the readability of a policy form instead of the Flesch-Kincaid formula as long as the insurer can demonstrate that the alternate method or formula can be used to determine a reading level at or below the eighth-grade reading level.

C. If a policy form contains 10,000 or fewer words of text, the entire form shall be analyzed by the health insurer for compliance with subsection (1) of this section. If a policy form contains more than 10,000 words of text, two 200-word samples per page may be analyzed by the health insurer for compliance with subsection (1) of this section instead. The samples shall be separated by at least 10 printed lines.

D. The term “text” as used in this section shall include all printed matter except the following:

The name and address of the insurer; the name, number or title of the policy; the table of contents or index; captions and sub captions; specification pages, schedules or tables; and

2.Any policy language which is drafted to conform to the requirements of any federal law, regulation or agency interpretation; any policy language required by any collectively bargained agreement; any medical terminology; any words which are defined in the policy; and any policy language required by law or regulation; provided, however, the insurer identifies the language or terminology excepted by this paragraph and certifies, in writing, that the language or terminology is entitled to be excepted by this paragraph.

E. At the option of the insurer, riders, endorsements, applications and other forms may be scored as separate forms or as part of the policy with which they may be used.

F. Policy forms subject to this regulation shall be accompanied by a certificate signed by an officer of the insurer, or someone else who has specific authority to sign on behalf of and bind the insurer, that provides a Flesch-Kincaid grade score (to the closest tenth of a point) for the policy form and

1.A certification that the policy form meets the minimum reading level requirement and other standards set out by this section; or

A statement that the policy form does not meet the minimum reading level requirement and/or other standards set out by this section, but requests approval of the policy form pursuant to § 5.6 of this Part.

G.To confirm any certification, the health insurance commissioner may require the submission of further information to verify the certification in question.

H. A failure to comply with the requirements of either § 5.5(F) of this Part will result in rejection of the policy form.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-31 to 01/04/2022
Technical Revision — effective from 2010-08-31 to 08/31/2010
Adoption — effective from 2010-08-31 to 08/31/2010

230-RICR-20-30-5 § 5.6 Power of the Commissioner to Approve a Higher Reading Level

A. Every request by a carrier for approval pursuant to this shall include a statement explaining why the request is being sought and shall provide documentation and information to support the request.

B. The commissioner may authorize a level higher than an eighth-grade reading level required by § 5.5 of this Part or a waiver or modification of the other standards established by § 5.5 of this Part whenever, in his sole discretion, he finds that a higher level or a waiver or modification of the other standards:

Will provide a more accurate reflection of the readability of a policy form;
Is warranted by the nature of a particular policy form or type or class of policy forms; or
Is caused by certain policy language that is drafted to conform to the requirements of any state law, regulation or agency interpretation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-31 to 01/04/2022
Technical Revision — effective from 2010-08-31 to 08/31/2010
Adoption — effective from 2010-08-31 to 08/31/2010

230-RICR-20-30-5 § 5.7 Approval of Forms

A policy form meeting the requirements of § 5.5(A) of this Part shall be approved notwithstanding the provisions of any other laws which specify the content of policies, if the policy form provides the policyholders and claimants protection not less favorable than they would be entitled to under such laws.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-31 to 01/04/2022
Technical Revision — effective from 2010-08-31 to 08/31/2010
Adoption — effective from 2010-08-31 to 08/31/2010

230-RICR-20-30-5 § 5.8 Severability

If any provision of this regulation or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this regulation which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this regulation are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-08-31 to 01/04/2022
Technical Revision — effective from 2010-08-31 to 08/31/2010
Adoption — effective from 2010-08-31 to 08/31/2010

230-RICR-20-30-8 Advertisements of Medicare Supplement Insurance (formerly OHIC Regulation 9)

230-RICR-20-30-8 § 8.1 Authority

This Part is issued pursuant to R.I. Gen. Laws Chapters 27-18.2, 27-29 and R.I. Gen. Laws §§ 42-62-12.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.2 Purpose

The purpose of this Part is to provide prospective purchasers with clear and unambiguous statements in the advertisement of Medicare supplement insurance; to assure the clear and truthful disclosure of the benefits, limitations and exclusions of policies sold as Medicare supplement insurance. This purpose is intended to be accomplished by the establishment of guidelines and permissible and impermissible standards of conduct in the advertising of Medicare supplement insurance in a manner which prevents unfair, deceptive and misleading advertising and is conducive to accurate presentation and description to the insurance-buying public through the advertising media and material used by insurance agents and companies.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.3 Applicability

A.These rules shall apply to any “advertisement” of Medicare supplement insurance as that term is defined herein, unless otherwise specified in these rules, that the insurer knows or reasonably should know is intended for presentation, distribution or dissemination in this state when the presentation, distribution or dissemination is made either directly or indirectly by or on behalf of an insurer, agent, broker, producer or solicitor, as those terms are defined in Title 27 and in this Part.

B.Every insurer shall establish and at all times maintain a system of control over the content, form and method of dissemination of all of its Medicare supplement insurance advertisements. All such advertisements, regardless of by whom written, created, designed or presented, shall be the responsibility of the insurers benefiting directly or indirectly from their dissemination.

C.Advertising materials that are reproduced in quantity shall be identified by form numbers or other identifying means. The identification shall be sufficient to distinguish an advertisement from any other advertising materials, policies, applications or other materials used by the insurer.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.4 Definitions

A."Advertisement":

1.An advertisement for the purpose of these rules shall include:

a.Printed and published material, audio visual material and‎descriptive literature used by or on behalf of an insurer in direct mail, newspapers, magazines, radio scripts, TV scripts, billboards and similar displays;

b.Descriptive literature and sales aids of all kinds issued by an insurer, agent, producer, broker or solicitor for presentation to members of the insurance-buying public; including but not limited to, circular, leaflets, booklets, depictions, illustrations, form letters and lead generating devices of all kinds as defined in this rule; and

c.Prepared sales talks, presentations and material for use by agents, brokers, producers and solicitors, whether prepared by the insurer or the agent, broker, producer or solicitor.

2.The definition of “advertisement” includes advertising material included with a policy when the policy is delivered and material used in the solicitation of renewals and reinstatements.

3.The definition of "advertisement" does not include:

a.Material to be used solely for the training and education of an insurer’s employees, agents or brokers;

b.Material used in-house by insurers;

c.Communications within an insurer’s own organization not intended for dissemination to the public;

d.Individual communications of a personal nature with current policyholders other than material urging the policyholders to increase or expand coverages;

e.Correspondence between a prospective group or blanket policyholder and an insurer in the course of negotiating a group or blanket contract;

f.Court approved material ordered by a court to be disseminated to policyholders; or

g.A general announcement from a group or blanket policyholder to eligible individuals on an employment or membership list that a contract or program has been written or arranged; provided, the announcement must clearly indicate that is preliminary to the issuance of a booklet.

B.“Medicare supplement insurance” means a group or individual policy of accident and sickness insurance or a subscriber contract of hospital and medical service associations or health maintenance organizations that is advertised, marketed or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare by reason of age.

C."Certificate" means, for the purposes of these rules, any certificate issued under a group Medicare supplement policy, which certificate has been delivered or issued for delivery in this state.

D."Insurer", for the purpose of these rules, shall include any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds, fraternal benefit society, health maintenance organization, hospital service corporation, medical service corporation, prepaid health plan and any other legal entity which is defined as an “insurer” in R.I. Gen. Laws Title 27 and is engaged in the advertisement of itself, or Medicare supplement insurance.

E."Exception" for the purpose of these rules, means any provision in a policy whereby coverage for a specified hazard is entirely eliminated; it is a statement of a risk not assumed under the policy.

F."Reduction" for the purpose of these rules, means any provision that reduces the amount of the benefit; a risk of loss is assumed but payment upon the occurrence of the loss is limited to some amount or period less than would be otherwise payable had the reduction not been used.

G."Limitation" for the purpose of these rules, means any provision that restricts coverage under the policy other than an exception or a reduction.

H. "Institutional advertisement,” for the purpose of these rules, means an advertisement having as its sole purpose the promotion of the reader’s, viewer’s or listener’s interest in the concept of Medicare supplement insurance, or the promotion of the insurer as a seller of Medicare supplement insurance.

I."Invitation to inquire,” for the purpose of these rules, means an advertisement having as its objective the creation of a desire to inquire further about Medicare supplement insurance that is limited to a brief description of coverage, and that shall contain a provision in the following or substantially similar form:

1.“This policy has [exclusions] [limitations] [reductions of benefits] [terms under which the policy may be continued in force or discontinued]. For costs and complete details of the coverage, call [or write] your insurance agent or the company [whichever is applicable].”

J."Invitation to contract", for the purpose of these rules, means a natural person, association, organization, partnership, trust, group, discretionary group, corporation or any other entity.

K."Person" for the purpose of these rules, means a natural person, association, organization, partnership, trust, group, discretionary group, corporation or any other entity.

L."Medicare” means “The Health Insurance for the Aged Act, Title XVIII of The Social Security Amendments of 1965 as Then Constituted or Later Amended,” or Title I, Part I, of Public Law 89-97, as enacted by the Eighty-Ninth Congress of the United States of America, and popularly known as the “Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof,” or words of similar import.

M."Lead-generating device,” for the purpose of these rules, means any communication directed to the public that, regardless of form, content or stated purpose, is intended to result in the compilation or qualification of a list containing names and other personal information to be used to solicit residents of this state for the purchase of Medicare supplement insurance.

N."Commissioner” means the health insurance commissioner.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.5 Method of Disclosure of Required Information

All information required to be disclosed by these rules shall be set out conspicuously and in close conjunction with the statements to which the information relates or under appropriate captions of such prominence that it shall not be minimized, rendered obscure or presented in an ambiguous manner or fashion or intermingled with the context of the advertisement so as to be confusing or misleading.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.6 Form and Content of Advertisements

A.The format and content of a Medicare supplement insurance advertisement shall be sufficiently complete and clear to avoid deception or the capacity or tendency to mislead or deceive. Whether an advertisement has a capacity or tendency to mislead or deceive shall be determined by the commissioner of insurance from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence, within the segment of the public to which it is directed.

B.Advertisements shall be truthful and not misleading in fact or in implication words or phrases whose meanings are clear only by implication or by the consumer's familiarity with insurance terminology shall not be used.

C.An insurer must clearly identify its Medicare supplement insurance policy as an insurance policy (or a subscriber contract, certificate or other term appropriate to the insurer). A policy trade name must be followed by the words...“Insurance Policy” (or other appropriate term) or similar words clearly identifying the fact that an insurance policy or health benefits product (in the case of health maintenance organizations, prepaid health plans and other direct service organizations) is being offered.

D.No insurer, agent, broker producer, solicitor or other person shall solicit a resident of this state for the purchase of Medicare supplement insurance in connection with or as the result of the use of any advertisement by such person or any other person, where the advertisement:

Contains any misleading representations or misrepresentations, or is otherwise untrue, deceptive or misleading with regard to the information imparted, the status, character or representative capacity of such person or the true purpose of the advertisement; or

2.Otherwise violates the provisions of these rules

E.No insurer, agent, broker, solicitor or other person shall solicit residents of this state for the purchase of Medicare supplement insurance through the use of a true or fictitious name that is deceptive or misleading with regard to the status, character, or proprietary or representative capacity of the person or the true purpose of the advertisement.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.7 Advertisements of Benefits, Losses Covered or Premiums Payable

A. Deceptive Words, Phrases or Illustrations Prohibited

1.No advertisement shall omit information or use words, phrases, statements, references or illustrations if the omission of the information or use of such words, phrases, statements, references or illustrations has the capacity, tendency or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered or premium payable. The fact that the policy offered is made available to a prospective insured for inspection prior to consummation of the sale or an offer is made to refund the premium if the purchaser is not satisfied, does not remedy misleading statements.

2.No advertisement shall contain or use words or phrases such as “all,” “full,” “complete,” “comprehensive,” “unlimited,” “up to,” “as high as,” “this policy will help fill some of the gaps that Medicare and your present insurance leave out,” “this policy pays all that Medicare doesn’t” or similar words and phrases, in a manner which exaggerates any benefit beyond the terms of the policy.

3.An advertisement that also is an invitation to join an association, trust or discretionary group shall solicit insurance coverage on a separate and distinct application that requires separate signatures for each application. The separate and distinct application required for an advertisement which is also an invitation to join an association, trust or discretionary group need not be on a separate document or contained in a separate mailing. The insurance program shall be presented so as not to mislead or deceive the prospective members that they are purchasing insurance as well as applying for membership, if that is the case.

4.An advertisement shall not contain descriptions of policy limitations, exceptions or reductions, worded in a positive manner to imply that it is a benefit, such as describing a waiting period as a “benefit builder” or stating “even preexisting conditions are covered after six (6) months.” Words and phrases used in an advertisement to describe the policy limitations, exceptions and reductions shall fairly and accurately describe the negative features of the limitations, exceptions and reductions of the policy offered.

5.An advertisement of Medicare supplement insurance sold by direct response shall not state or imply that “because no insurance agent will call and no commissions will be paid to ‘agents’” that it is a “low cost plan” or use other similar words or phrases because the cost of advertising and servicing the policies is a substantial cost in marketing by direct response.

B.Preexisting Conditions

1.An advertisement that is an invitation to contract shall, in negative terms, disclose the extent to which any loss is not covered if the cause of the loss is traceable to a condition existing prior to the effective date of the policy. The use of the term “preexisting condition” without an appropriate definition or description shall not be used.

2.When a Medicare supplement insurance policy does not cover losses resulting from preexisting conditions, no advertisement of the policy shall state or imply that the applicant’s physical condition or medical history will not affect the issuance of the policy or payment of a claim under the policy. This rule prohibits the use of the phrase “no medical examination required” and phrases of similar import, but does not prohibit explaining “automatic issue.” If an insurer requires a medical examination for a specified policy, the advertisement shall disclose that a medical examination is required.

3.When an advertisement contains an application form to be completed by the applicant and returned by mail, the application form shall contain a question or statement that reflects the preexisting condition provisions of the policy immediately preceding the blank space for the applicant’s signature. For example, such an application form shall contain a question or statement substantially as follows:

Do you understand that this policy will not pay benefits during the first six (6) months after the issue date for a disease or physical condition for which medical advice was given or treatment was recommended by or received from physician within six (6) months before the policy issue date?

YES

Or substantially the following statement:

I understand that the policy applied for will not pay benefits for any loss incurred during the first six (6) months after the issue date due to a disease or physical condition for which I received medical advice or for which treatment was recommended by or received from a physician within six (6) months before the issue date.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.8 Necessity for Disclosing Policy Provisions Relating to Renewability, Cancelability and Termination

An advertisement that is an invitation to contract shall disclose the provisions relating to renewability, cancelability and termination and any modification of benefits, losses covered or premiums because of age or for other reasons, in a manner which shall not minimize or render obscure the qualifying conditions.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.9 Testimonials or Endorsements by Third Parties

A.Testimonials and endorsements used in advertisements must be genuine, represent the current opinion of the author, be applicable to the policy advertised and be accurately reproduced. The insurer, in using a testimonial or endorsement, makes as its own all of the statements contained therein, and the advertisement, including the statement, is subject to all the provisions of these rules. When a testimonial or endorsement is used more than one year after it was originally given, a confirmation must be obtained.

B.A person shall be deemed a “spokesperson” if the person making the testimonial or endorsement:

1.Has a financial interest in the insurer or a related entity as a stockholder, director, officer, employee or otherwise;

2.Has been formed by the insurer, is owned or controlled by the insurer, its employees, or the person or persons who own or control the insurer;

3.Has any person in a policy-making position who is affiliated with the insurer in any of the above described capacities; or

4.Is in any way directly or indirectly compensated for making a testimonial or endorsement

C.The fact of a financial interest or the proprietary or representative capacity of a spokesperson shall be disclosed in an advertisement and shall be accomplished in the introductory portion of the testimonial or endorsement in the same form and with equal prominence thereto. If a spokesperson is directly or indirectly compensated for making a testimonial or endorsement, that fact shall be disclosed in the advertisement by language substantially as follows: “Paid Endorsement.” The requirement of this disclosure may be fulfilled by use of the phrase “Paid Endorsement” or words of similar import in a type style and size at least equal to that used for the spokesperson’s name or the body of the testimonial or endorsement; whichever is larger. In the case of television or radio advertising, the required disclosure must be accomplished in the introductory portion of the advertisement and must be given prominence.

D.The disclosure requirements of this rule shall not apply where the sole financial interest or compensation of a spokesperson, for all testimonials or endorsements made on behalf of the insurer, consists of the payment of union scale wages required by union rules, and if the payment is actually for the scale for TV or radio performances.

E.An advertisement shall not state or imply that an insurer or a Medicare supplement insurance policy has been approved or endorsed by any individual, group of individuals, society, association or other organization, unless such is the fact, and unless any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial has been formed by the insurer or is owned or controlled by the insurer or the person or persons who own or control the insurer, that fact shall be disclosed in the advertisement. If the insurer or an officer of the insurer formed or controls the association, or holds any policy-making position in the association, that fact shall be disclosed.

F.When a testimonial refers to benefits received under a Medicare supplement insurance policy, the specific claim data, including claim number, date of loss, and other pertinent information shall be retained by the insurer for inspection for a period of four (4) years or until the filing of the next regular report of examination of the insurer, whichever is the longer period of time. The use of testimonials that do not correctly reflect the present practices of the insurer or that are not applicable to the policy or benefit being advertised is not permissible.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.10 Use of Statistics

A.An advertisement relating to the dollar amounts of claims paid, the number of persons insured, or similar statistical information relating to any insurer or policy shall not use irrelevant facts, and shall not be used unless it accurately reflects all of the relevant facts. Such an advertisement shall not imply that the statistics are derived from a policy advertised unless such is the fact, and when applicable to other policies or plans shall specifically so state

An advertisement shall specifically identify the Medicare supplement insurance policy to which statistics relate and, where statistics are given which are applicable to a different policy, it shall be stated clearly that the data do not relate to the policy being advertised.

2.An advertisement using statistics that describe an insurer, such as assets, corporate structure, financial standing, age, product lines or relative position in the insurance business, may be irrelevant and, if used at all, must be used with extreme caution because of the potential for misleading the public. As a specific example, an advertisement for Medicare supplement insurance that refers to the amount of life insurance that the company has in force or the amounts paid out in life insurance benefits is not permissible unless the advertisement clearly indicates the amount paid out for each line of insurance.

B.An advertisement shall not represent or imply that claim settlements by the insurer are “liberal” or “generous,” or use words of similar import, or state or imply that claim settlements are or will be beyond the actual terms of the contract. An unusual amount paid for a unique claim for the policy advertised is misleading and shall not be used.

C.The source of any statistics used in an advertisement shall be identified in the advertisement.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.11 Disparage Comparisons and Statements

A.An advertisement shall not directly or indirectly make unfair or incomplete comparisons of policies or benefits or comparisons of non-comparable policies of other insurers, and shall not disparage competitors, their policies, services or business methods, and shall not disparage or unfairly minimize competing methods of marketing insurance.

B.An advertisement shall not contain statements such as “no red tape” or “here is all you do to receive benefits.”

C.Advertisements that state or imply that competing insurance coverages customarily contain certain exceptions, reductions or limitations not contained in the advertised policies are unacceptable unless the exceptions, reductions or limitations are contained in a substantial majority of the competing coverages.

D.Advertisements that state or imply that an insurer’s premiums are lower or that its loss ratios are higher because its organizational structure differs from that of competing insurers are unacceptable.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.12 Jurisdictional Licensing and Status of Insurer

A.An advertisement that is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed shall not imply licensing beyond those limits.

B.An advertisement shall not create the impression directly or indirectly that the insurer, its financial condition or status; or the payment of its claims; or the merits, desirability or advisability of its policy forms or kinds of plans of insurance are approved, endorsed or accredited by any division or agency of this state or the United States government.

C.An advertisement shall not imply that approval, endorsement or accreditation of policy forms or advertising has been granted by any division or agency of the state or federal government. “Approval” of either policy forms or advertising shall not be used by an insurer to imply or state that a governmental agency has endorsed or recommended the insurer, its policies, advertising or its financial conditions.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.13 Identity of Insurer

A. The name of the actual insurer shall be stated in all of its advertisements. The form number or numbers of the policy advertised shall be stated in an advertisement that is an invitation to contract. An advertisement shall not use a trade name, an insurance group designation, name of the parent company of the insurer, name of a particular division of the insurer, service mark, slogan, symbol or other device that with or without disclosing the name of the actual insurer would have the capacity and tendency to mislead or deceive as to the true identity of the insurer.

B.No advertisement shall use any combination of words, symbols or physical materials that by their content, phraseology, shape, color or other characteristics are so similar to combination of words, symbols or physical materials used by agencies of the federal government or of this state, or otherwise appear to be of such a nature that is tends to confuse or mislead prospective insureds into believing that the solicitation is in some manner connected with an agency of the municipal, state or federal government.

C.Advertisements, envelopes or stationery that employ words, letters, initials, symbols or other devices that are so similar to those used by governmental agencies or other insurers are not permitted if they may lead the public to believe:

1.That the advertised coverages are somehow provided by or are endorsed by the governmental agencies or the other insurers;

2.That the advertiser is the same as, is connected with or is endorsed by the governmental agencies or the other insurers.

D.No advertisement shall use the name of a state or political subdivision thereof in a policy name or description.

E.No advertisement in the form of envelopes or stationary of any kind may use any name, service mark, slogan, symbol or any device in such a manner that implies that the insurer or the policy advertised, or that any agent who may call upon the consumer in response to the advertisement is connected with a governmental agency, such as the Social Security Administration.

F.No advertisement may incorporate the word “Medicare” in the title of the plan or policy being advertised unless, wherever it appears, the word is qualified by language differentiating it from Medicare. Such an advertisement, however shall not use the phrase "[INSERT NAME] Medicare Department of the [INSERT NAME] Insurance Company,” or language of similar import.

G.No advertisement shall be used that fails to include the disclaimer to the effect of “Not Connected with or endorsed by the U.S. government or the federal Medicare program.”

H.No advertisement may imply that the reader may lose a right or privilege or benefit under federal, state or local law if he fails to respond to the advertisement.

I. The use of letters, initials or symbols of the corporate name or trademark that would have the tendency or capacity to mislead or deceive the public as to the true identity of the insurer is prohibited unless the true, correct and complete name of the insurer is in close conjunction and in the same size type as the letters, initials or symbols of the corporate name or trademark.

J.The use of the name of an agency or “[INSERT NAME] Underwriters” or "[INSERT NAME] Plan” in type, size and location so as to have the capacity and tendency to mislead or deceive as to the true identity of the insurer is prohibited.

K.The use of an address so as to mislead or deceive as a true identity of the insurer its location status is prohibited.

L.No insurer may use, in the trade name of its insurance policy, any terminology or words so similar to the name of a governmental agency or governmental program as to have the tendency to confuse, deceive or mislead the prospective purchaser.

M.All advertisements used by agents, producers, brokers or solicitors of an insurer shall have prior written approval of the insurer before they may be used.

N.An agent who makes contact with a consumer, as a result of acquiring that consumer’s name from a lead generating device, shall disclose that fact in the initial contact with the consumer.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.14 Group or Quasi-Group Implications

A.An advertisement of a particular policy shall not state or imply that prospective insureds become group or quasi-group members covered under a group policy and as such enjoy special rates or underwriting privileges, unless that is the fact.

B.This rule prohibits the solicitation of a particular class, such as governmental employees, by use of advertisements that state or imply that their occupational status entitles them to reduced rates on a group or other basis when, in fact, the policy being advertised is sold only on an individual basis at regular rates.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.15 Introductory, Initial or Special Offers

A.Standards

1.An advertisement of an individual policy shall not directly or by implication represent that a contract or combination of contracts is an introductory, initial or special offer, or that applicants will receive substantial advantages not available at a later date, or that the offer is available only to a specified group of individuals, unless such is the fact. An advertisement shall not contain phrases describing an enrollment period as “special,” “limited,” or similar words or phrases when the insurer uses such enrollment periods as the usual method of advertising Medicare supplement insurance.

2.An enrollment period during which a particular insurance product may be purchased on an individual basis shall not be offered within this state unless there has been a lapse of not less than six (6) months between the close of the immediately preceding enrollment period for the same product and the opening of the new enrollment period. The advertisement shall indicate the date by which the applicant must mail the application, which shall be not less than ten (10) days and not more than forty (40) days from the date that the enrollment period is advertised for the first time. This rule applies to all advertising media, i.e., mail, newspapers, radio, television, magazines and periodicals, by any one insurer. It is not applicable to solicitations of employees or members of a particular group or association that otherwise would be eligible under specific provisions of the Insurance Code for group, blanket or franchise insurance. The phrase “any one insurer” includes all the affiliated companies of a group of insurance companies under common management or control.

3.This rule prohibits any statement or implication to the effect that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of the particular policy advertised because of special advantages available in the policy, unless that is the fact.

4.The phrase “a particular insurance product” in Paragraph (2) of this subsection means an insurance policy that provides substantially different benefits than those contained in any other policy. Different terms of renewability, an increase or decrease in the dollar amounts of benefits, or an increase or decrease in any elimination period or waiting period from those available during an enrollment period for another policy shall not be sufficient to constitute the product being offered as a different product eligible for concurrent or overlapping enrollment periods.

B.An advertisement shall not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and the amount of the initial reduced premium. When an insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, the advertisement shall not display the amount of the reduced initial premium either more frequently or more prominently than the renewal premium, and both the initial reduced premium and the renewal premium shall be stated in juxtaposition in each portion of the advertisement where the initial reduced premium appears. The term “juxtaposition” means side by side or immediately above or below.

C.Special awards, such as a “safe driver's award” shall not be used in connection with advertisements of Medicare supplement insurance.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.16 Statements about an Insurer

An advertisement shall not contain statements that are untrue in fact, or by implication misleading, with respect to the assets, corporate structure, financial standing, age or relative position of the insurer in the insurance business. An advertisement shall not contain a recommendation by any commercial rating system unless it clearly indicates the purpose of the recommendation and the limitations of the scope and extent of the recommendation.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.17 Enforcement Procedures

A. Advertising File. Each insurer shall maintain at its home or principal office a complete file containing every printed, published or prepared advertisement of its individual policies and typical printed, published or prepared advertisements of its blanket, franchise and group policies hereafter disseminated in this or any other state, whether or not licensed in such other state, with a notation attached to each advertisement that shall indicate the manner and extent of distribution and the form number of any policy advertised. The file shall be available for inspection by the commissioner. All such advertisements shall be maintained in the file for a period of either four (4) years or until the filing of the next regular report of examination of the insurer, whichever is the longer period of time.

B.Certificate of Compliance. Each insurer required to file an Annual Statement which is now or which hereafter becomes subject to the provisions of these rules must file with the commissioner, with its Annual Statement, a Certificate of Compliance executed by an authorized officer of the insurer wherein it is stated that, to the best of his knowledge, information and belief, the advertisements that were disseminated by the insurer during the preceding statement year complied or were made to comply in all respects with the provisions of these rules and the Insurance Laws of this state as implemented and interpreted by these rules.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.18 Severability Provision

If any section or portion of a section of these rules, or its applicability to any person or circumstance is held invalid by a court, the remainder of the rules, or the applicability of the provision to other persons or circumstances, shall not be affected.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-8 § 8.19 Filing for Prior Review

Every insurer, health care service plan or other entity providing Medicare supplement insurance or benefits in this State shall provide a copy of any Medicare supplement advertisement intended for use in this state whether through written, radio or television medium to the commissioner for review or approval by the commissioner to the extent it may be required under state law.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2010-05-01 to 08/25/2018

230-RICR-20-30-11 Multiple Employer Welfare Arrangements

230-RICR-20-30-11 § 11.1 Purpose

The Health Insurance Commissioner has determined that certain multiple employer welfare arrangements may be transacting the business of insurance in the State of Rhode Island; that certain multiple employer welfare arrangements and their actions are hazardous to the public; that in order to protect the interests of the public concerning multiple employer welfare arrangements that provide employee benefits, it is necessary to regulate such activities.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-06-24 to 01/04/2022
Adoption — effective from 2009-06-24 to 06/24/2009

230-RICR-20-30-11 § 11.2 Definitions

A. Multiple Employer Welfare Arrangements ("MEWA") shall have the meaning as defined in Section 3 of Title I of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(40) as amended, which states that a MEWA:

1.Means an employee welfare benefit plan, or any other arrangement (other than an employee welfare benefit plan), which is established or maintained for the purpose of offering or providing any benefit as described in 29 U.S.C. § 1002(1) to the employees of two (2) or more employers (including one or more self-employed individuals), or to their beneficiaries, except that such term does not include any such plan or other arrangement which is established or maintained --

a. Under or pursuant to one or more agreements which the United States Secretary of Labor ("Secretary") finds to be collective bargaining agreements,

b.By a rural electric cooperative, or

c.By a rural telephone cooperative association.

B.For purposes of § 11.2(A) of this Part;

1.Two (2) or more trades or businesses, whether or not incorporated, shall be deemed a single employer if such trades or businesses are within the same control group,

The term "control group" means a group of trades or businesses under common control,

3.The determination of whether a trade or business is under "common control" with another trade or business shall be determined under regulations of the Secretary applying principles similar to the principles applied in determining whether employees of two or more trades or businesses are treated as employed by a single employer under 29 U.S.C. § 1301(b), except that, for purposes of this paragraph, common control shall not be based on an interest of less than twenty five percent (25%),

C.The term "rural electric cooperative" and "rural telephone cooperative association" shall have the meaning as described in 29 U.S.C. § 1002(40)(B)(iv) and (v).

D."Fully insured" shall have the meaning as defined in the Employee Retirement Security Act of 1974, 29 U.S.C. § 1144(b)(6)(D) as amended, which states:

1.A MEWA shall be considered fully insured only if the terms of the arrangement provide for benefits the amount of all of which the Secretary determines are guaranteed under a contract, or policy of insurance, issued by an insurance company, insurance service, or insurance organization, qualified to conduct business in a State.

C."State" shall mean the State of Rhode Island.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-06-24 to 01/04/2022
Adoption — effective from 2009-06-24 to 06/24/2009

230-RICR-20-30-11 § 11.3 Certificate of Compliance Required

A.A MEWA which meets either or both of the following criteria:

One or more of the employer members in the MEWA is either domiciled in the State of Rhode Island or has its principal headquarters or principal administrative office in this State;
The MEWA solicits an employer that is domiciled in the State of Rhode Island or has its principal headquarters or principal administrative office in this State;

3.shall not do business as, hold itself out as, establish, or maintain a MEWA which is an employee welfare benefit plan or any other arrangement other than an employee benefit plan, (as those terms are defined in Section 3 of Title I of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002) in this State unless the MEWA obtains and maintains a certificate of compliance or license to provide insurance in Rhode Island pursuant to R.I. Gen. Laws Title 27.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-06-24 to 01/04/2022
Adoption — effective from 2009-06-24 to 06/24/2009

230-RICR-20-30-11 § 11.4 Certificate of Compliance Not Required

A MEWA or employee welfare benefit plan which offers or provides benefits which are fully insured by a carrier authorized to transact insurance in the State of Rhode Island or are insured by an entity otherwise specifically exempt from insurance regulation by State law or a MEWA which is exempt under the Federal Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1144(b)(6)(B), shall not be required to obtain a certificate of compliance or license and shall not be subject to this regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-06-24 to 01/04/2022
Adoption — effective from 2009-06-24 to 06/24/2009

230-RICR-20-30-11 § 11.5 Fully Insured Requirement

A MEWA shall not be deemed fully insured if the insurance benefits are payable to the MEWA or MEWA administrator or would not be directly payable to the full extent of contract benefits to beneficiaries of the MEWA in the event of the insolvency of the MEWA.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-06-24 to 01/04/2022
Adoption — effective from 2009-06-24 to 06/24/2009

230-RICR-20-30-12 Tobacco Cessation Treatment Coverage

230-RICR-20-30-12 § 12.1 Preamble

A.According to the Centers for Disease Control, smoking accounts for an estimated 438,000 deaths, or nearly 1 of every 5 deaths, each year in the United States. More deaths are caused each year by tobacco use than by all deaths from human immunodeficiency virus (HIV), illegal drug use, alcohol use, motor vehicle injuries, suicides, and murders combined. (Centers for Disease Control and Prevention, “Smoking and Tobacco Use, Fact Sheet,” available at www.cdc.gov/tobacco/data_statistics/fact_sheets/health_effects/health_effects.htm (last viewed April 21, 2009). In addition, the economic costs of smoking in the United States are estimated at $167 billion annually ($92 billion in productivity losses from premature death and $75.5 billion in health care expenditures). (Centers for Disease Control and Prevention, “Cigarette Smoking Among Adults - United States, 2006,” Morbidity and Mortality Weekly Report, November 9, 2007 / 56(44);1157-1161, available at (last viewed Jan. 16, 2009).) State government can reduce tobacco use, save lives and reduce overall health care expenditures by improving accessibility to smoking cessation programs. This regulation sets out to

1.improve access to smoking cessation by establishing uniform standards for cessation treatment coverage,

2.redefine tobacco cessation treatments consistent with the most recent clinical practice guideline sponsored by United States Department of Health and Human Services and

3.improve transparency of tobacco cessation coverage for Rhode Island’s insured population.

B.Under the initial version of the tobacco cessation benefit statutes, R. I. Gen Laws §§ 27-18-66, 27-19-57, 27-20-53 and 27-41-70, (P.L. 2006, ch. 262, § 1, eff. July 3, 2006; P.L. 2006, ch. 293, § 1, eff. July 3, 2006; P.L. 2008, ch. 475, § 81, eff. July 5, 2008) health insurers in Rhode Island were required to provide coverage for nicotine replacement therapy (NRT) when combined with 8 half-hour tobacco cessation counseling sessions. NRT was the only medication for which coverage was expressly required. However, the statutes also gave the Office of the Health Insurance Commissioner (OHIC) the ability to define additional tobacco cessation treatments that insurers must cover. Based on this express statutory authority, OHIC developed the previous version of this regulation, which required health insurers to provide coverage for all FDA-approved medications when used either in combination with tobacco cessation counseling sessions, or as a stand-alone medication. The regulation was developed based on recommendations set out in a federally sponsored, scientifically validated clinical practice guideline. (Fiore MC, Bailey WC, Cohen SJ, et al. Treating Tobacco Use and Dependence. A Clinical Practice Guideline. US Department of Health and Human Services. Public Health Service, 2008, available at www.ncbi.nlm.nih.gov/books/bv.fcgi?rid=hstat2.chapter.28163 (last visited November 20, 2009).)

C.Subsequent to the promulgation of this regulation, the tobacco cessation benefit statutes, R. I. Gen. Laws §§ 27-18-66, 27-19-57, 27-20-53 and 27-41-70, (P.L. 2009, ch. 187, §§ 1-5, eff. Nov. 4, 2009) were amended to redefine the mandatory coverage requirement for smoking cessation treatment. Under the new laws, smoking cessation treatment includes over-the-counter and prescription FDA-approved smoking cessation medications in cases where the medication is paired with 16 half-hour mandatory counseling sessions. In addition, the statute allows health insurers to limit annual coverage of these drugs to two courses of medication of up to fourteen weeks each. The statute does, however, authorize OHIC to redefine, through regulation, smoking cessation treatment for the purposes of the benefit mandate as long as it is done so in accordance with the most current clinical practice guideline sponsored by the United States Department of Health and Human Services (or its component agencies).

D.Through this amended regulation, OHIC redefines smoking cessation treatment for the purpose of R. I. Gen. Laws §§ 27-18-66, 27-19-57, 27-20-53 and 27-41-70 consistent with the most current clinical practice guideline sponsored by the United States Department of Health and Human Services, “Treating Tobacco Use and Dependence. A Clinical Practice Guideline.” (Available at www.ncbi.nlm.nih.gov/books/bv.fcgi?rid=hstat2.chapter.28163 (last visited November 20, 2009).

E.OHIC has taken this step because the revisions to R. I. Gen. Laws §§ 27-18-66, 27-19-57, 27-20- 53 and 27-41-70 make substantial changes to the prior versions of the tobacco cessation mandate that are not supported by the clinical practice guideline. First, the revisions potentially limit coverage for FDA-approved smoking cessation medications by allowing insurers to restrict coverage to beneficiaries who participate in 16 half-hour counseling sessions. While the combination of counseling and mediations is generally recognized as providing the best chances of a successful quit-attempt, a requirement that someone attend 16 half-hour counseling sessions as a condition for coverage of FDA-approved anti-smoking medications does not appear to be medically justified and could present a significant barrier to coverage for those beneficiaries who cannot attend 16 counseling sessions. (The mandatory pairing of medication with counseling sessions is contrary to the clinical practice guideline (in other words, it not a recommended treatment protocol). Indeed, such restrictions are opposed by the American Lung Association, the nation’s foremost anti-smoking advocacy organization. In addition, while the revised statutes now allow an insurer to require a total 480 minutes of counseling as a condition for coverage of a medication, the guideline found that counseling that exceeds a total of 300 minutes (10 half-hour sessions) has diminishing value and, on average, actually results in lower abstinence rates than counseling sessions of shorter duration. In fact, the guideline notes, “there was a clear trend for abstinence rates to increase across contact time, up to the 90-minute mark. There was no evidence that more than 90 minutes of total contact time substantially increases abstinence rates.” It is also important to note that requiring 16 counseling sessions not only appears to be of little medical value, it may also create a cost-barrier for some people seeking treatment for their tobacco addiction. Since persons trying to quit may have to attend 16 counseling sessions to get coverage for their FDA-approved medication, they may also have to pay 16 separate copayments (one for each session) for the counseling. For some, this may make smoking cessation treatments cost-prohibitive.) Second, the guideline does not limit the number of courses of treatment that should be made available to someone who wants to quit smoking.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-01-01 to 01/04/2022
Amendment — effective from 2011-01-01 to 01/01/2011
Amendment — effective from 2010-01-27 to 01/01/2011
Technical Revision — effective from 2009-08-14 to 01/27/2010
Adoption — effective from 2009-08-14 to 08/14/2009

230-RICR-20-30-12 § 12.2 Authority

This Part is promulgated in accordance with R.I. Gen. Laws §§ 27-18-66, 27-19-57, 27-20- 53, 27-41-70, 42-14-5, 42-14-17, and 42-14.5-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-01-01 to 01/04/2022
Amendment — effective from 2011-01-01 to 01/01/2011
Amendment — effective from 2010-01-27 to 01/01/2011
Technical Revision — effective from 2009-08-14 to 01/27/2010
Adoption — effective from 2009-08-14 to 08/14/2009

230-RICR-20-30-12 § 12.3 Purpose

This Part establishes consistent cessation treatment coverage across health insurance carriers, further defines tobacco cessation treatments to include treatments included in the most recent clinical practice guideline issued by the federal government, and promotes transparency of coverage to enhance access by insureds.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-01-01 to 01/04/2022
Amendment — effective from 2011-01-01 to 01/01/2011
Amendment — effective from 2010-01-27 to 01/01/2011
Technical Revision — effective from 2009-08-14 to 01/27/2010
Adoption — effective from 2009-08-14 to 08/14/2009

230-RICR-20-30-12 § 12.4 Standards for Tobacco Cessation Programs

A.Every individual or group health insurance contract, plan or policy delivered, issued for delivery or renewed in this state that provides medical coverage that includes coverage for physician services in a physician’s office or that provides major medical or similar comprehensive-type coverage shall include coverage for smoking cessation treatment, provided that if such medical coverage does not include prescription drug coverage, such contract, plan or policy shall not be required to include coverage for nicotine replacement therapy or any prescription drugs. Such medical coverage will, however, be required to provide outpatient counseling benefits for smoking cessation.

B.As used in this Part, smoking cessation treatment includes the tobacco dependence treatments identified as effective in the most recent clinical practice guideline published by the United States Department of Health and Human Services for treating tobacco use and dependence. (Fiore MC, Bailey WC, Cohen SJ, et al. Treating Tobacco Use and Dependence. A Clinical Practice Guideline. US Department of Health and Human Services. Public Health Service, 2008. Available at: http://www.surgeongeneral.gov/tobacco/treating_tobacco_use.pdf.)

C.Nicotine replacement therapy includes but is not limited to nicotine gum, patches, lozenges, nasal spray, and inhaler.

D.Health insurance contracts, plans, or policies to which this Part applies, may impose copayments and/or deductibles for smoking cessation treatment mandated by this section consistent with the contracts’, plans’ or policies’ copayments and/or deductibles for physician services and medications. Nothing contained in this regulation shall impact the reimbursement, medical necessity or utilization review, managed care, or case management practices of these health insurance contracts, plans or policies.

E.This section shall not apply to insurance coverage providing benefits for:

1.Hospital confinement indemnity;

2.Disability income;

3.Accident only;

4.Long-term care;

5.Medicare supplement;

6.Limited benefit health;

7.Specified disease indemnity;

8.Sickness or bodily injury or death by accident or both; and

9.Other limited benefit policies.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-01-01 to 01/04/2022
Amendment — effective from 2011-01-01 to 01/01/2011
Amendment — effective from 2010-01-27 to 01/01/2011
Technical Revision — effective from 2009-08-14 to 01/27/2010
Adoption — effective from 2009-08-14 to 08/14/2009

230-RICR-20-30-12 § 12.5 Reporting

A.Each carrier that issues an individual or group health insurance contract, plan or policy subject to this Part shall, no later than March 15 of each year, submit to the Director of the Department of Health a report describing the carrier’s compliance with this regulation during the previous calendar year. Such report shall substantially conform to the model report established by the Department of Health and posted on the Department’s website.

B.Any carrier that fails to submit a report to the Department of Health as required by this Part shall be subject to the administrative penalties provided for in R.I. Gen. Laws § 42-14-16.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-01-01 to 01/04/2022
Amendment — effective from 2011-01-01 to 01/01/2011
Amendment — effective from 2010-01-27 to 01/01/2011
Technical Revision — effective from 2009-08-14 to 01/27/2010
Adoption — effective from 2009-08-14 to 08/14/2009

230-RICR-20-30-12 § 12.6 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-01-01 to 01/04/2022
Amendment — effective from 2011-01-01 to 01/01/2011
Amendment — effective from 2010-01-27 to 01/01/2011
Technical Revision — effective from 2009-08-14 to 01/27/2010
Adoption — effective from 2009-08-14 to 08/14/2009

230-RICR-20-30-13 Discount Medical Plan Organizations (formerly OHIC Regulation 15)

230-RICR-20-30-13 § 13.1 Statement of Authority and Purpose

A.This Part is promulgated pursuant to the authority granted to the Rhode Island Health Insurance Commissioner (“Commissioner”) by R.I. Gen. Laws §§ 27-74-16, 42-14-5 and 42-14-17.

B.This Part is intended to implement the provisions of R.I. Gen. Laws Chapter 27-74, the “Discount Medical Plan Organization Act” (the “Act”). The purpose of the Act and this Part is to promote the public interest by establishing standards for discount medical plan organizations; to protect consumers from unfair or deceptive marketing, sales or enrollment practices of discount medical plans; and to facilitate consumer understanding of the role and function of discount medical plans in providing access to medical or ancillary services.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2011-06-01 to 08/25/2018

230-RICR-20-30-13 § 13.2 Definitions

All words or phrases used in this Part already defined in R.I. Gen. Laws § 27-74-3 shall have the meaning therein.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2011-06-01 to 08/25/2018

230-RICR-20-30-13 § 13.3 Registration Requirements

A.Before doing business in or from this state, a discount medical plan organization shall complete an application for a certificate of registration. The application to operate as a discount medical plan will be as promulgated by the Commissioner. All sections of the application must be completed in order for the application to be accepted by the Commissioner. The application must be accompanied by a non-refundable fee of two hundred and fifty dollars ($250) made payable to the General Treasurer, State of Rhode Island.

B.Once the application has been filed, the Commissioner shall review the application and notify the applicant of any deficiency therein. The ninety (90) day review period shall not commence until the Commissioner has received a completed application.

C.The Commissioner shall renew the certificate of registration of each holder that meets the requirements of the Act and this regulation upon receipt of a completed application and payment of a non-refundable fee of two hundred and fifty dollars ($250) made payable to the General Treasurer, State of Rhode Island. Each registration is issued on a biennial basis. A discount medical plan which registers during the registration term shall be issued a registration for the time period remaining and will have to renew at the expiration of the registration, regardless of the period of time it has been registered. The Commissioner does not prorate license fees. This renewal requirement is separate from the obligation to file an annual report under R.I. Gen. Laws § 27-74-13; however, at the option of the registrant the annual report shall be filed either at the time of the renewal application is filed in accordance with R.I. Gen. Laws § 27-74-5(f) during the calendar year in which the application must be renewed, or on or before September 30 during any calendar year.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2011-06-01 to 08/25/2018

230-RICR-20-30-13 § 13.4 Reporting of Actions

A.The registrant shall report to the Commissioner any administrative action taken against the registrant in another jurisdiction or by another governmental agency in this state immediately in accordance with R.I. Gen. Laws § 27-74-5(l).

B.Within thirty (30) days of the initial pretrial hearing date, the registrant shall report to the Commissioner any criminal prosecution of any of the principals or employees of the registrant taken in any jurisdiction if the prosecution is of a felony of any sort, and if the prosecution is of a misdemeanor alleging facts relating to the business of discount medical plans, or the business of insurance, or of any financial services business. The report shall include a copy of the initial complaint filed, the order resulting from the hearing, and any other relevant legal documents.

C.The registrant shall report the Commissioner any change to the information contained in the original application within thirty (30) days of the change. With regard to the registrant’s name, address or website address, notice must be given thirty (30) days before the change is made in accordance with R.I. Gen. Laws § 27-74-12.

D.Reports required to be filed pursuant to this section may be filed with the Office electronically. Reports shall include the name and address of the registrant, the name of the officer or employee authorized to file the report, and the phone number and email address where such officer or employee can be contacted.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2011-06-01 to 08/25/2018

230-RICR-20-30-13 § 13.5 Denial, Suspension, Revocation or Non-Renewal

A.The Commissioner may place on probation, suspend, revoke or refuse to issue or renew a plan’s registration or may levy a civil penalty in accordance with R.I. Gen. Laws §§ 27-74-14 and 42-14-16. Whenever the Commissioner denies an application to operate as a discount medical plan or suspends, revokes or fails to renew the certificate of registration of a discount medical plan, the Commissioner will set forth the ground(s) for disapproval.

B.In the event that the action by the Commissioner is to deny an application for or not renew a registration, the Commissioner shall notify the Applicant or registrant, in writing, of the reason for the non-renewal or denial of the registration. The Applicant or registrant may make written demand upon the Commissioner within thirty (30) days for a hearing before the Commissioner to determine the reasonableness of the Commissioner’s action. The hearing shall be held pursuant to R.I. Gen. Laws §§ 42-35-9 through 14.

C.The registration of a business entity may be suspended, revoked or refused if the Commissioner finds, after hearing, that the violation was known or should have been known by one or more of the partners, officers or managers acting on behalf of the business entity and the violation was neither reported to the Commissioner nor corrective action taken. Corrective action will not prohibit action by the Commissioner but will be taken into consideration.

D.In addition to or in lieu of any applicable denial, suspension or revocation of a registration, a person may, after hearing, be subject to a fine and/or any other appropriate remedies according to R.I. Gen. Laws §§ 27-74-14 and 42-14-16.

E.The Commissioner shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by R.I. Gen. Laws §§ 27-74-14 and/or 42-14-16 against any registrant who is under investigation for or charged with a violation even if the registration has been surrendered or has lapsed by operation of law.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2011-06-01 to 08/25/2018

230-RICR-20-30-13 § 13.6 Readability of Forms and Advertising

All discount medical plan forms, marketing materials, brochures, discount medical plan cards and any other communications by discount medical plan organizations to members and prospective members shall comply with the standards for readability set forth in Part 5 of this Subchapter.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2011-06-01 to 08/25/2018

230-RICR-20-30-13 § 13.7 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-25 to 01/04/2022
Adoption — effective from 2011-06-01 to 08/25/2018

Subchapter 35 Long Term Care Insurance

230-RICR-20-35-01 Long Term Care Insurance (formerly Insurance Regulation 44)

230-RICR-20-35-01 § 1.1 Purpose

The purpose of this Part is to implement R.I. Gen. Laws Chapter 27-34.2, to promote the public interest, to promote the availability of long-term care insurance coverage, to protect applicants for long-term care insurance, as defined, from unfair or deceptive sales or enrollment practices, to facilitate public understanding and comparison of long-term care insurance coverages, and to facilitate flexibility and innovation in the development of long-term care insurance. This Part is not intended to interfere with the qualification of long-term care policies or certificates as provided for in Chapter 97, SEC. 7702B(b) of the U.S. Internal Revenue Code of 1986 (26 U.S.C. § 7702B(b)), as added by the Health Insurance Portability and Accountability Act of 1996, Pub.L. No. 104-191, as now constituted or later amended.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.2 Authority

This Part is issued pursuant to the authority vested in the Director under R.I. Gen. Laws § 27-34.2-6(a).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.3 Applicability and Scope

A.Except as otherwise specifically provided, this Part applies to all long-term care insurance as defined in R.I. Gen. Laws § 27-34.2-4, including qualified long-term care contracts subject to the requirements of Section 7702B(b) of the Internal Revenue Code of 1986 (26 U.S.C. § 7702B(b)), as amended and life insurance policies that accelerate benefits for long- term care delivered or issued for delivery in this state on or after the effective date of the 2008 amendments to this Part by issuers, as defined in R.I. Gen. Laws § 27-34.2-4.

B.Additionally, this Part is intended to apply to policies having indemnity benefits that are triggered by activities of daily living and sold as disability income insurance, if:

1.The benefits of the disability income policy are dependent upon or vary in amount based on the receipt of long-term care services;

2.The disability income policy is advertised, marketed or offered as insurance for long-term care services; or

3.Benefits under the policy may commence after the policyholder has reached Social Security’s normal retirement age unless benefits are designed to replace lost income or pay for specific expenses other than long-term care services.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.4 Definitions

A.For the purpose of this Part, the terms “long-term care insurance,” “qualified long-term care insurance,” “group long term care insurance,” “applicant,” “policy” and “certificate” shall have the meanings set forth in R.I. Gen. Laws § 27-34.2-4. In addition, the following definitions shall apply:

1.“Benefit trigger,” for the purposes of independent review, means a contractual provision in the insured’s policy of long-term care insurance conditioning the payment of benefits on a determination of the insured’s ability to perform activities of daily living and on cognitive impairment. For purposes of a tax-qualified long-term care insurance contract, as defined in Section 7702B of the Internal Revenue Code of 1986 (26 U.S.C. § 7702B), as amended, “benefit trigger” shall include a determination by a licensed health care practitioner that an insured is a chronically ill individual.

2.“Director” means the Director of the Department of Business Regulation or his or her designee.

3.“Exceptional increase” means

a.only those increases filed by an issuer as exceptional for which the Director determines the need for the premium rate increase is justified:

(1)Due to changes in laws or regulations applicable to long- term care coverage in this state; or

(2)Due to increased and unexpected utilization that affects the majority of issuers of similar products.

b.Except as provided in §§ 1.20 and 1.20.1 of this Part, exceptional increases are subject to the same requirements as other premium rate schedule increase

c.The Director may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase.

d.The Director, in determining that the necessary basis for an exceptional increase exists, shall also determine any potential offsets to higher claims costs.

4.“Incidental,” as used in §§ 1.20(J) and 1.20.1(J) of this Part, means that the value of the long-term care benefits provided is less than ten percent (10%) of the total value of the benefits provided over the life of the policy. These values shall be measured as of the date of issue.

5.“Licensed health care professional” means an individual qualified by education and experience in an appropriate field, to determine, by record review, an insured’s actual functional or cognitive impairment.

6.“Qualified actuary” means a member in good standing of the American Academy of Actuaries.

7.“Similar policy forms” means all of the long-term care insurance policies and certificates issued by an issuer in the same long-term care benefit classification as the policy form being considered. Certificates of groups that meet the definition in R.I. Gen. Laws § 27-34.2-4(4)(i) are not considered similar to certificates or policies otherwise issued as long-term care insurance, but are similar to other comparable certificates with the same long-term care benefit classifications. For purposes of determining similar policy forms, long-term care benefit classifications are defined as follows: institutional long-term care benefits only, non-institutional long- term care benefits only, or comprehensive long-term care benefits.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.5 Policy Definitions

A.No long-term care insurance policy delivered or issued for delivery in this state shall use the terms set forth below, unless the terms are defined in the policy and the definitions satisfy the following requirements, except that, when and if the U.S. Treasury Department may develop additional or different policy definitions intended to satisfy the requirements of Section 7702B(b) of the Internal Revenue Code of 1986 (26 U.S.C. § 7702B(b)), as amended, such definitions may be used in policies and certificates intended to be tax qualified, instead of and/or in addition to the following definitions:

1."Activities of daily living" means at least bathing, continence, dressing, eating, toileting and transferring.

2."Acute condition" means that the individual is medically unstable. Such an individual requires frequent monitoring by medical professionals, such as physicians and registered nurses, in order to maintain his or her health status.

3."Adult day care" means a program for six (6) or more individuals, of social and health-related services provided during the day in a community group setting for the purpose of supporting frail, impaired elderly or other disabled adults who can benefit from care in a group setting outside the home.

4."Bathing" means washing oneself by sponge bath; or in either a tub or shower, including the task of getting into or out of the tub or shower.

5."Cognitive impairment" means a deficiency in a person's short or long- term memory, orientation as to person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness.

6."Continence" means the ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag).

7."Dressing" means putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.

8."Eating" means feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously.

9."Hands-on assistance" means physical assistance (minimal, moderate or maximal) without which the individual would not be able to perform the activity of daily living.

10."Home health care services" means medical and nonmedical services, provided to ill, disabled or infirm persons in their residences. Such services may include homemaker services, assistance with activities of daily living and respite care services.

11."Medicare" shall be defined as "The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended," or "Title I, Part I of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act as then constituted and any later amendments or substitutes thereof," or words of similar import.

12."Mental or nervous disorder" shall not be defined to include more than neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder.

13."Personal care" means the provision of hands-on services to assist an individual with activities of daily living.

14."Skilled nursing care," "personal care," "home care," “specialized care,” “assisted living care” and other services shall be defined in relation to the level of skill required, the nature of the care and the setting in which care must be delivered.

15."Toileting" means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene.

16."Transferring" means moving into or out of a bed, chair or wheelchair.

B.All providers of services, including but not limited to services licensed under R.I. Gen. Laws Chapters 23-17.1, 23-17.3, 23-17.4, and 23-17.7.1, and consumer or self-directed services provided under the same guidelines as R.I. Gen. Laws Chapter 40-8.1 and similar services licensed under the laws of other jurisdictions. Such services shall be defined in relation to the services and facilities required to be available and the licensure, certification, registration or degree status of those providing or supervising the services. When the definition requires that the provider be appropriately licensed, certified or registered, it shall also state what requirements a provider must meet in lieu of licensure, certification or registration when the state in which the service is to be furnished does not require a provider of these services to be licensed, certified or registered, or when the state licenses, certifies or registers the provider of services under another name.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.6 Policy Practices and Provisions

A.Renewability. The terms "guaranteed renewable" and "noncancellable" shall not be used in any individual long-term care insurance policy without further explanatory language in accordance with the disclosure requirements of § 1.8 of this Part.

1.A policy issued to an individual shall not contain renewal provisions other than "guaranteed renewable" or "noncancellable."

2.The term "guaranteed renewable" may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums and when the issuer has no unilateral right to make any change in any provision of the policy or rider while the insurance is in force, and cannot decline to renew, except that rates may be revised by the issuer on a class basis.

3.The term "noncancellable" may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the issuer has no right to unilaterally make any change in any provision of the insurance or in the premium rate.

4.The term “level premium” may only be used when the issuer does not have the right to change the premium.

5.In addition to the other requirements of this subsection, a qualified long-term care insurance contract shall be guaranteed renewable, within the meaning of Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986 (26 U.S.C. § 7702B(b)(1)(C)), as amended.

B.Limitations and Exclusions. A policy may not be delivered or issued for delivery in this state as long-term care insurance if such policy limits or excludes coverage by type of illness, treatment, medical condition or accident, except as follows, and, with respect to tax qualified policies to any additional extent necessary to qualify under federal law:

1.Preexisting conditions or diseases;

2.Mental or nervous disorders; however, this shall not permit exclusion or limitation of benefits on the basis of Alzheimer's disease, other dementias nor organic brain disorder;

3.Alcoholism and drug addiction;

4.Illness, treatment or medical condition arising out of:

a.War or act of war (whether declared or undeclared);

b.Participation in a felony, riot or insurrection;

c.Service in the armed forces or units auxiliary thereto;

d.Suicide (sane or insane), attempted suicide or intentionally self-inflicted injury;

e.Aviation (this exclusion applies only to non-fare-paying passengers).

5.Treatment provided in a government facility (unless otherwise required by law), services for which benefits are available under Medicare or other governmental program (except Medicaid), any state or federal workers' compensation, employer's liability or occupational disease law, or any motor vehicle no-fault law, services provided by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance.

6.Expenses for services or items available or paid under another long-term care insurance or health insurance policy;

7.In the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount.

8.This subsection is not intended to prohibit exclusions and limitations by type of provider. However, no long-term care issuer may deny a claim because services are provided in a state other than the state of policy issued under the following conditions:

a.When the state other than the state of policy issue does not have the provider licensing, certification or registration required in the policy, but where the provider satisfies the policy requirements outlined for providers in lieu of licensure, certification or registration; or ?

b.When the state other than the state of policy issue licenses, certifies or registers the provider under another name.

c.For purposes of this paragraph, “state of policy issue” means the state in which the individual policy or certificate was originally issued.

9.This Subsection is not intended to prohibit territorial limitations.

C.Extension of Benefits. Termination of long-term care insurance shall be without prejudice to any benefits payable for institutionalization if the institutionalization began while the long-term care insurance was in force and continues without interruption after termination. The extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period, if any, or to payment of the maximum benefits and may be subject to any policy waiting period, and all other applicable provisions of the policy.

D.Continuation or Conversion

1.Group long-term care insurance issued in this state shall provide covered individuals with a basis for continuation or conversion of coverage.

2.For the purposes of this section, "a basis for continuation of coverage" means a policy provision that maintains coverage under the existing group policy when the coverage would otherwise terminate and which is subject only to the continued timely payment of premium when due. Group policies that restrict provision of benefits and services to, or contain incentives to use certain providers or facilities may provide continuation benefits that are substantially equivalent to the benefits of the existing group policy. The director shall make a determination as to the substantial equivalency of benefits, and in doing so, shall take into consideration the differences between managed care and non- managed care plans, including, but not limited to, provider system arrangements, service availability, benefit levels and administrative complexity.

3.For the purposes of this section, "a basis for conversion of coverage" means a policy provision that an individual whose coverage under the group policy would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy (and any group policy which it replaced), for at least six months immediately prior to termination, shall be entitled to the issuance of a converted policy by the issuer under whose group policy he or she is covered, without evidence of insurability.

4.For the purposes of this section, "converted policy" means an individual policy of long-term care insurance providing benefits identical to or benefits determined by the director to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made. Where the group policy from which conversion is made restricts provision of benefits and services to, or contains incentives to use certain providers or facilities, the director, in making a determination as to the substantial equivalency of benefits, shall take into consideration the differences between managed care and non-managed care plans, including, but not limited to, provider system arrangements, service availability, benefit levels and administrative complexity.

5.Written application for the converted policy shall be made and the first premium due, if any, shall be paid as directed by the issuer not later than thirty-one (31) days after termination of coverage under the group policy. The converted policy shall be issued effective on the day following the termination of coverage under the group policy, and shall be renewable annually.

6.Unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. Where the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy replaced.

7.Continuation of coverage or issuance of a converted policy shall be mandatory, except where:

a.Termination of group coverage resulted from an individual's failure to make any required payment of premium or contribution when due; or

b.The terminating coverage is replaced not later than thirty-one (31) days after termination, by group coverage effective on the day following the termination of coverage:

(1)Providing benefits identical to or benefits determined by the director to be substantially equivalent to or in excess of those provided by the terminating coverage; and

(2)The premium for which is calculated in a manner consistent with the requirements of § 1.6(D)(6) of this Part.

8.Notwithstanding any other provision of this section, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy that provides benefits on the basis of incurred expenses, may contain a provision that results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100 percent of incurred expenses. The provision shall only be included in the converted policy if the converted policy also provides for a premium decrease or refund which reflects the reduction in benefits payable.

9.The converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, shall not exceed those that would have been payable had the individual's coverage under the group policy remained in force and effect.

10.Notwithstanding any other provision of this section, an insured individual whose eligibility for group long-term care coverage is based upon his or her relationship to another person shall be entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage.

11.For the purposes of this section a "managed-care plan" is a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management or use of specific provider networks.

E.Discontinuance and Replacement

1.If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding issuer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the issuer and premiums charged to persons under the new group policy:

a.Shall not result in an exclusion for preexisting conditions that would have been covered under the group policy being replaced; and

b.Shall not vary or otherwise depend on the individual's health or disability status, claim experience or use of long-term care services.

F.Premium Changes

1.The premium charged to an insured shall not increase due to either:

a.The increasing age of the insured at ages beyond sixty-five (65); or

b.The duration the insured has been covered under the policy.

2.The purchase of additional coverage shall not be considered a premium rate increase, but for purposes of the calculation required under § 1.28 of this Part, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium.

3.A reduction in benefits shall not be considered a premium change, but for purpose of the calculation required under § 1.28 of this Part, the initial annual premium shall be based on the reduced benefits.

G.Electronic Enrollment for Group Policies

1.In the case of a group defined in R.I. Gen. Laws § 27-34.2-4(4)(i), any requirement that a signature of an insured be obtained by a producer or issuer shall be deemed satisfied if:

a.The consent is obtained by telephonic or electronic enrollment by the group policyholder or issuer. A verification of enrollment information shall be provided to the enrollee;

b.The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure the accuracy, retention and prompt retrieval of records; and

c.The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure that confidentiality is maintained with respect to individually identifiable information, including individually identifiable information that relates to a claim for insurance benefits or a civil or criminal proceeding involving an individual and is collected in connection with or in reasonable anticipation of a claim for insurance benefits or civil or criminal proceeding involving an individual.

2.The issuer shall make available, upon request of the director, records that will demonstrate the issuer's ability to confirm enrollment and coverage amounts.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.7 Unintentional Lapse

Provisions regarding Unintentional Lapse are contained in R.I. Gen. Laws § 27-34.2-12.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.8 Required Disclosure Provisions

A.Renewability. Individual long-term care insurance policies shall contain a renewability provision.

1.The provision shall be appropriately captioned, shall appear on the first page of the policy, and shall clearly state that the coverage is guaranteed renewable or noncancellable. This provision shall not apply to policies which do not contain a renewability provision and under which the right to nonrenew is reserved solely to the policyholder.

2.A long-term care insurance policy or certificate, other than one where the issuer does not have the right to change the premium, shall include a statement that premium rates may change.

B.Riders and Endorsements. Except for riders or endorsements by which the issuer effectuates a request made in writing by the insured under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require signed acceptance by the individual insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing signed by the insured, except if the increased benefits or coverage are required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge shall be set forth in the policy, rider or endorsement.

C. Payment of Benefits. A long-term care insurance policy that provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary" or words of similar import shall include a definition of the terms and an explanation of the terms in its accompanying outline of coverage.

D.Limitations. If a long-term care insurance policy or certificate contains any limitations with respect to preexisting conditions, the limitations shall appear as a separate paragraph of the policy or certificate and shall be labeled as "Preexisting Condition Limitations."

E.Other Limitations or Conditions on Eligibility for Benefits. A long-term care insurance policy or certificate containing any limitations or conditions for eligibility, other than those prohibited in R.I. Gen. Laws § 27-34.2-6-(e)(2), shall set forth a description of such limitations or conditions, including any required number of days of confinement, in a separate paragraph of the policy or certificate and shall label such paragraph "Limitations or Conditions on Eligibility for Benefits."

F.Disclosure of Tax Consequences. With regard to life insurance policies that provide an accelerated benefit for long-term care, a disclosure statement is required at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted that receipt of these accelerated benefits may be taxable, and that assistance should be sought from a personal tax advisor. The disclosure statement shall be prominently displayed on the first page of the policy or rider and any other related documents. This subsection shall not apply to qualified long-term care insurance contracts.

G.Benefit Triggers. Activities of daily living and cognitive impairment shall be used to measure an insured's need for long-term care and shall be described in the policy or certificate in a separate paragraph and shall be labeled "Eligibility for the Payment of Benefits." Any additional benefit triggers shall also be explained in this section. If these triggers differ for different benefits, explanation of the trigger shall accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too shall be specified.

H.A qualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage as contained in § 1.31(F)(3) of this Part that the policy is intended to be a qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986 (26 U.S.C. § 7702B(b)), as amended.

I.A nonqualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage as contained in § 1.31(F)(3) of this Part that the policy is not intended to be a qualified long-term care insurance contract.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.9 Required Disclosure of Rating Practices to Consumers

A.This section shall apply as follows:

1.Except as provided in § 1.9(A)(2) of this Part, this section applies to any long-term care policy or certificate issued in this state on or after December 1, 2008.

2.For certificates issued on or after the effective date of this amended Part under a group long-term care insurance policy as defined in R.I. Gen. Laws § 27-34.2-4(4)(i), which policy was in force at the time this amended Part became effective, the provisions of this section shall apply on the policy anniversary following June 1, 2009.

B.Other than policies for which no applicable premium rate or rate schedule increases can be made, issuers shall provide all of the information listed in this subsection to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time. In such a case, an issuer shall provide all of the information listed in this section to the applicant no later than at the time of delivery of the policy or certificate.

1.A statement that the policy may be subject to rate increases in the future;

2.An explanation of potential future premium rate revisions, and the policyholder’s or certificate holder’s option in the event of a premium rate revision;

3.The premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase;

4.A general explanation for applying premium rate or rate schedule adjustments that shall include:

a.A description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.); and

b.The right to a revised premium rate or rate schedule as provided in § 1.9(B)(3) of this Part if the premium rate or rate schedule is changed;

5.Information regarding each premium rate increase on this policy form or similar policy forms over the past ten (10) years for this state or any other state that, at a minimum, identifies:

a.The policy forms for which premium rates have been increased;

b.The calendar years when the form was available for purchase; and

c.The amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics.

6.The issuer may, in a fair manner, provide additional explanatory information related to the rate increases.

7.An issuer shall have the right to exclude from the disclosure premium rate increases that only apply to blocks of business acquired from other nonaffiliated issuers or the long-term care policies acquired from other nonaffiliated issuers when those increases occurred prior to the acquisition.

8.If an acquiring issuer files for a rate increase on a long-term care policy form acquired from nonaffiliated issuers or a block of policy forms acquired from nonaffiliated issuers on or before the later of the effective date of this section or the end of a twenty-four-month period following the acquisition of the block or policies, the acquiring issuer may exclude that rate increase from the disclosure. However, the nonaffiliated selling company shall include the disclosure of that rate increase in accordance with § 1.9(B)(5) of this Part.

9.If the acquiring issuer in § 1.9(B)(8) of this Part files for a subsequent rate increase, even within the twenty-four- month period, on the same policy form acquired from nonaffiliated issuers or block of policy forms acquired from nonaffiliated issuers referenced in § 1.9(B)(8) of this Part, the acquiring issuer shall make all disclosures required by §§ 1.9(B)(5), (6), (7) and (8) of this Part, including disclosure of the earlier rate increase referenced in § 1.9(B)(8) of this Part.

C.An applicant shall sign an acknowledgement at the time of application, unless the method of application does not allow for signature at that time, that the issuer made the disclosure required under §§ 1.9(B)(1), (5), (6), (7), (8) and (9) of this Part. If due to the method of application the applicant cannot sign an acknowledgement at the time of application, the applicant shall sign no later than at the time of delivery of the policy or certificate.

D.An issuer shall use the forms in Appendices B and F provided in Bulletins issued for the purpose of designating the forms required to be used by this Part to comply with the requirements of §§ 1.9(B) and (C) of this Part.

E.An issuer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificate holders, if applicable, at least forty-five (45) days prior to the implementation of the premium rate schedule increase by the issuer. The notice shall include the information required by § 1.9(B) of this Part when the rate increase is implemented.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.10 Initial Filing Requirements

A.This section applies to any long-term care policy issued in this state on or after December 1, 2008 except that §§ 1.10(B)(2)(d) and (B)(3) apply to any long-term care policy issued in this state on or after January 1, 2019.

B.An insurer shall provide the information listed in this subsection to the Director (60) days prior to making a long-term care insurance form available for sale.

1.A copy of the disclosure documents required in § 1.9 of this Part; and

2.An actuarial certification consisting of at least the following:

a.A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;

b.A statement that the policy design and coverage provided have been reviewed and taken into consideration;

c.A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;

d.A statement that the premiums contain at least the minimum margin for moderately adverse experience defined in § 1.10(B)(2)(d)((1)) of this Part or the specification of and justification for a lower margin as required by § 1.10(B)(2)(d)((2)) of this Part.

(1)A composite margin shall not be less than 10% of lifetime claims.

(2)A composite margin that is less than 10% may be justified in uncommon circumstances. The proposed amount, full justification of the proposed amount and methods to monitor developing experience that would be the basis for withdrawal of approval for such lower margins must be submitted.

(3)A composite margin lower than otherwise considered appropriate for the standalone long-term care policy may be justified for long-term care benefits provided through a life policy or an annuity contract. Such lower composite margin, if utilized, shall be justified by appropriate actuarial demonstration addressing margins and volatility when considering the entirety of the product.

(4)A greater margin may be appropriate in circumstances where the company has less credible experience to support its assumptions used to determine the premium rates.

e.A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the issuer except for reasonable differences attributable to benefits; or

f.A comparison of the premium schedules for similar policy forms that are currently available from the issuer with an explanation of the differences.

g.A statement that reserve requirements have been reviewed and considered. Support for this statement shall include:

(1)Sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held; and

(2)A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or if such a statement cannot be made, a complete description of the situations where this does not occur. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship.

3.An actuarial memorandum prepared, dated and signed by the member of the Academy of Actuaries shall be included and shall address and support each specific item required as part of the actuarial certification and provide at least the following information:

a.An explanation of the review performed by the actuary prior to making the statements in §§ 1.10(B)(2)(b) and (c) of this Part,

b.A complete description of pricing assumptions; and

c.Sources and levels of margins incorporated into the gross premiums that are the basis for the statement in § 1.10(B)(2)(a) of this Part the actuarial certification and an explanation of the analysis and testing performed in determining the sufficiency of the margins. Deviations in margins between ages, sexes, plans or states shall be clearly described. Deviations in margins required to be described are other than those produced utilizing generally accepted actuarial methods for smoothing and interpolating gross premium scales.

d.A demonstration that the gross premiums include the minimum composite margin specified in § 1.10(B)(2)(d) of this Part.

C.In any review of the actuarial certification and actuarial memorandum, the commissioner may request review by an actuary with experience in long-term care pricing who is independent of the company. In the event the director asks for additional information as a result of any review, the period in § 1.10(B) of this Part does not include the period during which the insurer is preparing the requested information.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.11 Prohibition Against Post-Claims Underwriting

A.All applications for long-term care insurance policies or certificates except those which are guaranteed issue shall contain clear and unambiguous questions designed to ascertain the health condition of the applicant.

B.If an application for long-term care insurance contains a question which asks whether the applicant has had medication prescribed by a physician, it must also ask the applicant to list the medication that has been prescribed.

1.If the medications listed in such application were known by the issuer, or should have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied, then the policy or certificate shall not be rescinded for that condition.

C.Except for policies or certificates which are guaranteed issue:

1.The following language shall be set out conspicuously and in close conjunction with the applicant's signature block on an application for a long-term care insurance policy or certificate:

a.Caution: If your answers on this application are incorrect or untrue, [company] has the right to deny benefits or rescind your policy.

2.The following language, or language substantially similar to the following, shall be set out conspicuously on the long-term care insurance policy or certificate at the time of delivery:

a.Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your responses to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address]

3.Prior to issuance of a long-term care policy or certificate to an applicant age eighty (80) or older, the issuer shall obtain one of the following:

a.A report of physical examination;

b.An assessment of functional capacity;

c.An attending physician's statement; or

d.Copies of medical records.

D.A copy of the completed application or enrollment form (whichever is applicable) shall be delivered to the insured no later than at the time of delivery of the policy or certificate unless it was retained by the applicant at the time of application.

E.Every issuer selling or issuing long-term care insurance benefits shall maintain a record of all policy or certificate rescissions, both state and countrywide, except those which the insured voluntarily effectuated and shall annually furnish this information to the Director in the format in Appendix A provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.12 Minimum Standards for Home Health Care Benefits in Long-Term Care Insurance Policies

A.A long-term care insurance policy or certificate may not, if it provides benefits for home health care or community services, limit or exclude benefits:

1.By requiring that the insured/claimant would need skilled care in a skilled nursing facility if home health care services were not provided;

2.By requiring that the insured/claimant first or simultaneously receive nursing and/or therapeutic services in a home, community or institutional setting before home health care services are covered;

3.By limiting eligible services to services provided by registered nurses or licensed practical nurses;

4.By requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide, or other licensed or certified home care worker acting within the scope of his or her licensure or certification;

5.By excluding coverage for personal care services provided by a home health aide;

6.By requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the eligible service;

7.By requiring that the insured/claimant have an acute condition before home health care services are covered;

8.By limiting benefits to services provided by Medicare-certified agencies or providers.

9.By excluding coverage for adult day care services.

B.A long-term care insurance policy or certificate, if it provides for home health or community care services, shall provide total home health or community care coverage that is a dollar amount equivalent to at least one-half of one year’s coverage available for nursing home benefits under the policy or certificate, at the time covered home health or community care services are being received. This requirement shall not apply to policies or certificates issued to residents of continuing care retirement communities.

C.Home health care coverage may be applied to the non-home health care benefits provided in the policy or certificate when determining maximum coverage under the terms of the policy or certificate.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.13 Requirement to Offer Inflation Protection

A.No issuer may offer a long-term care insurance policy unless the issuer also offers to the policyholder in addition to any other inflation protection the option to purchase a policy that provides for benefit levels to increase with benefit maximums or reasonable durations which are meaningful to account for reasonably anticipated increases in the costs of long-term care services covered by the policy. Issuers must offer to each policyholder, at the time of purchase, the option to purchase a policy with an inflation protection feature no less favorable than one of the following:

1.Increases benefit levels annually in a manner so that the increases are compounded annually at a rate not less than five percent (5%);

2.Guarantees the insured individual the right to periodically increase benefit levels without providing evidence or insurability or health status so long as the option for the previous period has not been declined. The amount of the additional benefit shall be no less than the difference between the existing policy benefit and that benefit compounded annually at a rate of at least five percent (5%) for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made; or

3.Covers a specified percentage of actual or reasonable charges and does not include a maximum specified indemnity amount or limit.

B.Where the policy is issued to a group, the required offer in § 1.13(A) of this Part shall be made to the group policyholder; except, if the policy is issued to a group defined in R.I. Gen. Laws § 27-34.2-4(4)(v) other than to a continuing care retirement community, the offering shall be made to each proposed certificate-holder.

C.The offer in § 1.13(A) of this Part shall not be required of life insurance policies or riders containing accelerated long-term care benefits.

D.Issuers shall include the following information in or with the outline of coverage:

1.A graphic comparison of the benefit levels of a policy that increases benefits over the policy period with a policy that does not increase benefits. The graphic comparison shall show benefit levels over at least a twenty (20) year period.

2.Any expected premium increases or additional premiums to pay for automatic or optional benefit increases.

3.An issuer may use a reasonable hypothetical, or a graphic demonstration, for the purposes of this disclosure.

E.Inflation protection benefit increases under a policy which contains these benefits shall continue without regard to an insured's age, claim status or claim history, or the length of time the person has been insured under the policy.

F.An offer of inflation protection that provides for automatic benefit increases shall include an offer of a premium which the issuer expects to remain constant. The offer shall disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant.

G.Inflation protection as provided in § 1.13(A)(1) of this Part shall be included in a long-term care insurance policy unless an issuer obtains a rejection of inflation protection signed by the policyholder as required in this subsection. The rejection may be either in the application or on a separate form.

1.The rejection shall be considered a part of the application and shall state:

a.I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this policy with and without inflation protection. Specifically, I have reviewed Plans _____, and I reject inflation protection.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.14 Requirements for Application Forms and Replacement Coverage

A.Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant has another long-term care insurance policy or certificate in force or whether a long-term care policy or certificate is intended to replace any other accident and sickness or long-term care policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and producer, except where the coverage is sold without a producer, containing the questions may be used. With regard to a replacement policy issued to a group defined by R.I. Gen. Laws § 27-34.2-4(4)(i), the following questions may be modified only to the extent necessary to elicit information about health or long-term care insurance policies other than the group policy being replaced, provided that the certificate-holder has been notified of the replacement.

1.Do you have another long-term care insurance policy or certificate in force (including health care service contract, health maintenance organization contract)?

2.Did you have another long-term care insurance policy or certificate in force during the last twelve (12) months?

a.If so, with which company?

b.If that policy lapsed, when did it lapse?

3.Are you covered by Medicaid?

4.Do you intend to replace any of your medical or health insurance coverage with this policy [certificate]?

B.Producers shall list any other health insurance policies they have sold to the applicant.

1.List policies sold that are still in force.

2.List policies sold in the past five (5) years that are no longer in force.

C.Solicitations Other Than Direct Response. Upon determining that a sale will involve replacement, an issuer; other than an issuer using direct response solicitation methods, or its producer; shall furnish the applicant, prior to issuance or delivery of the individual long-term care insurance policy, a notice regarding replacement of accident and sickness or long- term care coverage. One copy of such notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the issuer. The required notice shall be provided in the following manner:

NOTICE TO APPLICANT REGARDING REPLACEMENT OF INDIVIDUAL ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE

[Insurance company’s name and address]

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with an individual long-term care insurance policy to be issued by [company name] Insurance Company. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.

You should review this new coverage carefully, comparing it with all accident and sickness or long-term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision.

STATEMENT TO APPLICANT BY PRODUCER [BROKER OR OTHER REPRESENTATIVE]:

(Use additional sheets, as necessary.)

I have reviewed your current medical or health insurance coverage. I believe the replacement of insurance involved in this transaction materially improves your position. My conclusion has taken into account the following considerations, which I call to your attention:

1.Health conditions that you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.

2.State law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. The insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.

3.If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.

.If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before your sign it, reread it carefully to be certain that all information has been properly recorded.

(Signature of Producer, Broker or Other Representative)

[Typed Name and Address of Producer or Broker]

The above “Notice to Applicant” was delivered to me on:

(Applicant’s Signature) (Date)

D.Direct Response Solicitations. Issuers using direct response solicitation methods shall deliver a notice regarding replacement of accident and sickness or long-term care coverage to the applicant upon issuance of the policy. The required notice shall be provided in the following manner:

NOTICE TO APPLICANT REGARDING REPLACEMENT

OF ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE

[Insurance company’s name and address]

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with the long-term care insurance policy delivered herewith issued by [company name] Insurance Company. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.

1.Health conditions which you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.

2.State law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. Your insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.

4.[To be included only if the application is attached to the policy.] If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application attached to your new policy and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to [company name and address] within thirty (30) days if any information is not correct and complete, or if any past medical history has been left out of the application.

[Company Name]

E.Where replacement is intended, the replacing issuer shall notify, in writing, the existing issuer of the proposed replacement. The existing policy shall be identified by the issuer, name of the insured and policy number or address including zip code. Notice shall be made within five (5) working days from the date the application is received by the issuer or the date the policy is issued, whichever is sooner.

F.Life insurance policies that accelerate benefits for long-term care shall comply with this section if the policy being replaced is a long-term care insurance policy. If the policy being replaced is a life insurance policy, the issuer shall comply with the requirements of Life Insurance and Annuities Replacement (Subchapter 25 Part 4 of this Chapter). If a life insurance policy that accelerates benefits for long-term care is replaced by another such policy, the replacing issuer shall comply with both the long-term care and the life insurance replacement requirements.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.15 Reporting Requirements

A.Every issuer shall maintain records for each producer of that producer’s amount of replacement sales as a percent of the producer’s total annual sales and the amount of lapses of long-term care insurance policies sold by the producer as a percent of the producer’s total annual sales.

B.Every issuer shall report annually by June 30 the ten percent (10%) of its producers with the greatest percentages of lapses and replacements as measured by § 1.15(A) of this Part. (Appendix G provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part)

C.Reported replacement and lapse rates do not alone constitute a violation of insurance laws or necessarily imply wrongdoing. The reports are for the purpose of reviewing more closely producer activities regarding the sale of long-term care insurance.

D.Every issuer shall report annually by June 30 the number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year. (Appendix G provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part)

E.Every issuer shall report annually by June 30 the number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year. (Appendix G provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part)

F.Every issuer shall report annually by June 30 for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied. (Appendix E provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part)

G.For purposes of this section:

1.“Policy” means only long-term care insurance;

2.Subject to § 1.15(G)(3) of this Part, “Claim” means a request for payment of benefits under an in-force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met;

3.“Denied” means the issuer refuses to pay a claim for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition; and

4.“Report” means on a statewide basis.

H.Reports required under this section shall be filed with the Director.

I.Annual rate certification requirements.

1.This Subsection applies to any long-term care policy issued in this state on or after January 1, 2019.

2.The following annual submission requirements apply subsequent to initial rate filings for individual long-term care insurance policies made under this section.

a.An actuarial certification prepared, dated and signed by a member of the American Academy of Actuaries who provides the information shall be included and shall provide at least the following information:

(1)A statement of the sufficiency of the current premium rate schedule including:

(AA)For the rate schedules currently marketed,

(i)The premium rate schedule continues to be sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated; or

(ii)If the above statement cannot be made, a statement that margins for moderately adverse experience may no longer be sufficient. In this situation, the insurer shall provide to the commissioner, within sixty (60) days of the date the actuarial certification is submitted to the commissioner, a plan of action, including a time frame, for the re-establishment of adequate margins for moderately adverse experience so that the ultimate premium rate schedule would be reasonably expected to be sustainable over the future life of the form with no future premium increases anticipated. Failure to submit a plan of action to the commissioner within sixty (60) days or to comply with the time frame stated in the plan of action constitutes grounds for the commissioner to withdraw or modify its approval of the form for future sales pursuant to R.I. Gen. Laws § 27-34.2-6(a)(2) and R.I. Gen. Laws Chapter 42-35.

(BB)For the rate schedules that are no longer marketed,

(i)That the premium rate schedule continues to be sufficient to cover anticipated costs under best estimate assumptions; or

(ii)That the premium rate schedule may no longer be sufficient. In this situation, the insurer shall provide to the director, within sixty (60) days of the date the actuarial certification is submitted to the commissioner, a plan of action, including a time frame, for the re-establishment of adequate margins for moderately adverse experience.

(2)A description of the review performed that led to the statement.

b.An actuarial memorandum dated and signed by a member of the American Academy of Actuaries who prepares the information shall be prepared to support the actuarial certification and provide at least the following information:

(1)A detailed explanation of the data sources and review performed by the actuary prior to making the statement in § 1.15(I)(2) of this Part.

(2)A complete description of experience assumptions and their relationship to the initial pricing assumptions.

(3)A description of the credibility of the experience data.

(4)An explanation of the analysis and testing performed in determining the current presence of margins.

c.The actuarial certification required pursuant to § 1.15(I)(2)(a) of this Part must be based on calendar year data and submitted annually no later than May 1st of each year starting in the second year following the year in which the initial rate schedules are first used. The actuarial memorandum required pursuant to § 1.15(I)(2)(b) of this Part must be submitted at least once every three (3) years with the certification.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.16 Licensing

A producer is not authorized to sell, solicit or negotiate with respect to long-term care insurance except as authorized by R.I. Gen. Laws Chapter 27-2.4.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.17 Discretionary Powers of Commissioner

A.The director may upon written request and after an administrative hearing, issue an order to modify or suspend a specific provision or provisions of this Part with respect to a specific long- term care insurance policy or certificate upon a written finding that:

1.The modification or suspension would be in the best interest of the insureds;

2.The purposes to be achieved could not be effectively or efficiently achieved without the modification or suspension; and

3.The modification or suspension is necessary to the development of an innovative and reasonable approach for insuring long-term care; or

4.The policy or certificate is to be issued to residents of a life care or continuing care retirement community or some other residential community for the elderly and the modification or suspension is reasonably related to the special needs or nature of such a community; or

5.The modification or suspension is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.18 Reserve Standards

A.When long-term care benefits are provided through the acceleration of benefits under group or individual life policies or riders to such policies, policy reserves for the benefits shall be determined in accordance with R.I. Gen. Laws Chapter 27-4.5.

B.Claim reserves shall also be established in the case when the policy or rider is in claim status.

C.Reserves for policies and riders subject to this subsection should be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations are acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event shall the reserves for the long-term care benefit and the life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit.

D. In the development and calculation of reserves for policies and riders subject to this subsection, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures and all other considerations which have an impact on projected claim costs, including, but not limited to, the following:

1.Definition of insured events;

2.Covered long-term care facilities;

3.Existence of home convalescence care coverage;

4.Definition of facilities;

5.Existence or absence of barriers to eligibility;

6.Premium waiver provision;

7.Renewability;

8.Ability to raise premiums;

9.Marketing method;

10.Underwriting procedures;

11.Claims adjustment procedures;

12.Waiting period;

13.Maximum benefit;

14.Availability of eligible facilities;

15.Margins in claim costs;

16.Optional nature of benefit;

17.Delay in eligibility for benefit;

18.Inflation protection provisions; and

19.Guaranteed insurability option.

E.Any applicable valuation morbidity table shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.

F.When long-term care benefits are provided other than as in § 1.18(A) of this Part, reserves shall be determined in accordance with R.I. Gen. Laws § 27-4.5-10 and regulations promulgated thereunder.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.19 Loss Ratio

A.This section shall apply to all long-term care insurance policies or certificates except those covered under §§ 1.10, 1.20 and 1.21 of this Part.

B.Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums provided the expected loss ratio is at least sixty percent (60%), calculated in a manner which provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, due consideration shall be given to all relevant factors, including:

1.Statistical credibility of incurred claims experience and earned premiums;

2.The period for which rates are computed to provide coverage;

3.Experienced and projected trends;

4.Concentration of experience within early policy duration;

5.Expected claim fluctuation;

6.Experience refunds, adjustments or dividends;

7.Renewability features;

8.All appropriate expense factors;

9.Interest;

10.Experimental nature of the coverage;

11.Policy reserves;

12.Mix of business by risk classification; and

13.Product features such as long elimination periods, high deductibles and high maximum limits.

C.§ 1.19(B) of this Part shall not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:

1.The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;

2.The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of R.I. Gen. Laws Chapter 27-4.5.

3.The policy meets the disclosure requirements of R.I. Gen. Laws §§ 27-34.2-6(i)(4), (j) and (k):

4.An actuarial memorandum is filed with the director that includes:

a.A description of the basis on which the long-term care rates were determined;

b.A description of the basis for the reserves;

c.A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

d.A description and a table of each actuarial assumption used. For expenses, an issuer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

e.A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

f.The estimated average annual premium per policy and the average issue age;

g.A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

h.A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.20 Premium Rate Schedule Increases

A.This section shall apply as follows:

1.Except as provided in § 1.20(A)(2) of this Part below, this section applies to any long-term care policy or certificate issued in this state on or after December 1, 2008 and prior to January 1, 2019.

B.An issuer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the Director at least 60 days prior to the notice to the policyholders and shall include:

1.Information required by § 1.9 of this Part;

2.Certification by a qualified actuary that:

a.If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated;

b.The premium rate filing is in compliance with the provisions of this section;

c.The insurer may request a premium rate schedule increase less than what is required under this section and the director may approve such premium rate schedule increase, without submission of the certification in § 1.20(B)(2)(a) of this Part, if the actuarial memorandum discloses the premium rate schedule increase necessary to make the certification required under § 1.20(B)(2)(a) of this Part, the premium rate schedule increase filing satisfies all other requirements of this section, and is, in the opinion of the commissioner, in the best interest of policyholders.

3.An actuarial memorandum justifying the rate schedule change request that includes:

a.Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase; and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale;

(1)Annual values for the five (5) years preceding and the three (3) years following the valuation date shall be provided separately;

(2)The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;

(3)The projections shall demonstrate compliance with § 1.20(C) of this Part; and

(4)For exceptional increases,

(AA)The projected experience should be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and

(BB)In the event the Director determines as provided in § 1.4(A)(4) of this Part that offsets may exist, the issuer shall use appropriate net projected experience;

b.Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;

c.Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary;

d.A statement that policy design, underwriting and claims adjudication practices have been taken into consideration;

e.In the event that it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the issuer will need to file composite rates reflecting projections of new certificates; and

f.A demonstration that actual and projected costs exceed costs anticipated at the time of initial pricing under moderately adverse experience and that the composite margin specified in § 1.10(B)(2)(d) of this Part is projected to be exhausted.

4.A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the Director; and

5.Sufficient information for review [and approval] of the premium rate schedule increase by the Director.

C.All premium rate schedule increases shall be determined in accordance with the following requirements:

1.Exceptional increases shall provide that seventy percent (70%) of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;

2.Premium rate schedule increases shall be calculated such that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:

a.The accumulated value of the initial earned premium times fifty-eight percent (58%);

b.Eighty-five percent (85%) of the accumulated value of prior premium rate schedule increases on an earned basis;

c.The present value of future projected initial earned premiums times fifty-eight percent (58%); and

d.Eighty-five percent (85%) of the present value of future projected premiums not in § 1.20(C)(2)(c) of this Part on an earned basis;

3.In the event that a policy form has both exceptional and other increases, the values in §§ 1.20(C)(2)(b) and (d) of this Part will also include seventy percent (70%) for exceptional rate increase amounts; and

4.All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in § 30-3.8(B)(1) of this Chapter. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages.

D.For each rate increase that is implemented, the issuer shall file for approval by the Director updated projections, as defined in § 1.20(B)(3)(a) of this Part, annually for the next three (3) years and include a comparison of actual results to projected values. The Director may extend the period to greater than three (3) years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in § 1.20(K) of this Part, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the Director.

E.If any premium rate in the revised premium rate schedule is greater than 200 percent (200%) of the comparable rate in the initial premium schedule, lifetime projections, as defined in § 1.20(B)(3)(a) of this Part, shall be filed for approval by the Director every five (5) years following the end of the required period in § 1.20(D) of this Part. For group insurance policies that meet the conditions in § 1.20(K) of this Part, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the Director.

F. If the Director has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in § 1.20(C) of this Part, the Director may require the issuer to implement any of the following:

1.Premium rate schedule adjustments; or

2.Other measures to reduce the difference between the projected and actual experience.

3.In determining whether the actual experience adequately matches the projected experience, consideration should be given to § 1.20(B)(3)(e) of this Part, if applicable.

G. If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the issuer shall file:

1.A plan, subject to Director approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the Director may impose the condition in § 1.20(H) of this Part; and

2.The original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to § 1.20(C) of this Part had the greater of the original anticipated lifetime loss ratio or fifty-eight percent (58%) been used in the calculations described in §§ 1.20(C)(2)(a) and (c) of this Part.

H.For a rate increase filing that meets the following criteria, the Director shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the twelve (12) months following each increase to determine if significant adverse lapsation has occurred or is anticipated:

1.The rate increase is not the first rate increase requested for the specific policy form or forms;

2.The rate increase is not an exceptional increase; and

3.The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse

I.In the event significant adverse lapsation has occurred, is anticipated in the filing or is evidenced in the actual results as presented in the updated projections provided by the issuer following the requested rate increase, the Director may determine that a rate spiral exists. Following the determination that a rate spiral exists, the Director may require the issuer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the issuer or its affiliates.

1.The offer shall:

a.Be subject to the approval of the Director;

b.Be based on actuarially sound principles, but not be based on attained age; and

c.Provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.

2.The issuer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:

a.The maximum rate increase determined based on the combined experience; and

b.The maximum rate increase determined based only on the experience of the insureds originally issued the form plus ten percent (10%).

J.If the Director determines that the issuer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the Director may, in addition to the provisions of § 1.20(H) of this Part, prohibit the issuer from either of the following:

1.Filing and marketing comparable coverage for a period of up to five (5) years; or

2.Offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.

K.§§ 1.20(F) and (H) of this Part shall not apply to policies for which the long-term care benefits provided by the policy are incidental if the policy complies with all of the following provisions:

2.The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in any of the following:

a.R.I. Gen. Laws Chapter 27-4.3 and

b.R.I. Gen. Laws Chapter 27-4.4

3.The policy meets the disclosure requirements of R.I. Gen. Laws. §§ 27-34.2-6(i)(4)(j) and (k);

4.The portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the policy illustrations as required by R.I. Gen. Laws Chapter 27-62;

5.An actuarial memorandum is filed with the insurance department that includes:

a.A description of the basis on which the long-term care rates were determined;

b.A description of the basis for the reserves;

c.A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

d.A description and a table of each actuarial assumption used. For expenses, an issuer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

e.A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

f.The estimated average annual premium per policy and the average issue age;

h.A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.

L.§§ 1.20(F) and (H) of this Part, shall not apply to group insurance policies as defined in R.I. Gen. Laws § 27-34.2-4 (4)(i) where:

1.The policies insure 250 or more persons and the policyholder has 5,000 or more eligible employees of a single employer; or

2.The policyholder, and not the certificate holders, pays a material portion of the premium, which shall not be less than twenty percent (20%) of the total premium for the group in the calendar year prior to the year a rate increase is filed.

1.20.1Premium Rate Schedule Increases for Policies Subject to Loss Ratio Limits Related to Original Filings.

A.This section shall apply as follows:

1.Except as provided in § 1.20.1(A)(2) of this Part below, this section applies to any long-term care policy or certificate issued in this state on or after January 1, 2019.

2.For certificates issued on or after the effective date of this amended Part under a group long term care insurance policy as defined in R.I. Gen. Laws § 27-34.2-4(E)(1), which policy was in force at the time this amended Part became effective, the provisions of this section shall apply on the policy anniversary following January 1, 2019.

B.An insurer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the commissioner at least [30] days prior to the notice to the policyholders and shall include:

1.Information required by § 1.9 of this Part;

2.Certification by a qualified actuary that:

b.The premium rate filing is in compliance with the provisions of this section;

c.The insurer may request a premium rate schedule increase less than what is required under this section and the commissioner may approve such premium rate schedule increase, without submission of the certification in § 1.20.1(B)(2)(a) of this Part, if the actuarial memorandum discloses the premium rate schedule increase necessary to make the certification required under § 1.20.1(B)(2)(a) of this Part, the premium rate schedule increase filing satisfies all other requirements of this section, and is, in the opinion of the commissioner, in the best interest of policyholders.

3.An actuarial memorandum justifying the rate schedule change request that includes:

(1)Annual values for the five (5) years preceding and the three (3) years following the valuation date shall be provided separately;

(2)The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;

(3)The projections shall demonstrate compliance with § 1.20(C) of this Part; and

(4)For exceptional increases,

(AA)The projected experience should be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and

(BB)In the event the commissioner determines as provided in § 1.4(A)(3)(e) of this Part that offsets may exist, the insurer shall use appropriate net projected experience;

b.Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;

d.A statement that policy design, underwriting and claims adjudication practices have been taken into consideration;

e.In the event that it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer will need to file composite rates reflecting projections of new certificates; and

5.Sufficient information for review and approval of the premium rate schedule increase by the director.

C.All premium rate schedule increases shall be determined in accordance with the following requirements:

1.Exceptional increases shall provide that seventy percent (70%) of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;

2.Premium rate schedule increases shall be calculated such that the sum of the lesser of:

a.the accumulated value of actual incurred claims, without the inclusion of active life reserves, or

b.the accumulated value of historic expected claims, without the inclusion of active life reserves, plus the present value of the future expected incurred claims, projected without the inclusion of active life reserves, will not be less than the sum of the following:

(1)The accumulated value of the initial earned premium times the greater of:

(AA)fifty-eight percent (58%) and

(BB)the lifetime loss ratio consistent with the original filing including margins for moderately adverse experience;

(2)Eighty-five percent (85%) of the accumulated value of prior premium rate schedule increases on an earned basis;

(3)The present value of future projected initial earned premiums times the greater of:

(AA)fifty-eight percent (58%) and

(BB)the lifetime loss ratio consistent with the original filing including margins for moderately adverse experience; and

(4)Eighty-five percent (85%) of the present value of future projected premiums not in § 1.20(C)(2)(b)((3)) of this Part on an earned basis;

3.Expected claims shall be calculated based on the original filing assumptions assumed until new assumptions are filed as part of a rate increase. New assumptions shall be used for all periods beyond each requested effective date of a rate increase. Expected claims are calculated for each calendar year based on the in-force at the beginning of the calendar year. Expected claims shall include margins for moderately adverse experience; either amounts included in the claims that were used to determine the lifetime loss ratio consistent with the original filing or as modified in any rate increase filing;

4.In the event that a policy form has both exceptional and other increases, the values in §§ 1.20.1(C)(2)(b) and (d) of this Part will also include seventy percent (70%) for exceptional rate increase amounts; and

5.All present and accumulated values used to determine rate increases, including the lifetime loss ratio consistent with the original filing reflecting margins for moderately adverse experience, shall use the maximum valuation interest rate for contract reserves as specified in Subchapter 30 Part 3 of this Chapter. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages.

D.For each rate increase that is implemented, the insurer shall file for review and approval by the director updated projections, as defined in § 1.20.1(B)(3)(a) of this Part, annually for the next three (3) years and include a comparison of actual results to projected values. The director may extend the period to greater than three (3) years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in § 1.20.1(K) of this Part, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the director.

E.If any premium rate in the revised premium rate schedule is greater than 200 percent of the comparable rate in the initial premium schedule, lifetime projections, as defined in § 1.20.1(B)(3)(a) of this Part, shall be filed for review and approval by the director every five (5) years following the end of the required period in § 1.20.1(D) of this Part. For group insurance policies that meet the conditions in § 1.20.1(K) of this Part, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the commissioner.

F.If the director has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in § 1.20.1(C) of this Part, the director may require the insurer to implement any of the following:

1.Premium rate schedule adjustments; or

2.Other measures to reduce the difference between the projected and actual experience.

3.In determining whether the actual experience adequately matches the projected experience, consideration should be given to § 1.20.1(B)(3)(e) of this Part, if applicable.

G.If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file a plan, subject to commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the director may impose the condition in § 1.20.1(H) of this Part.

H.Lapse Rates

1.For a rate increase filing that meets the following criteria, the director shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the twelve (12) months following each increase to determine if significant adverse lapsation has occurred or is anticipated:

a.The rate increase is not the first rate increase requested for the specific policy form or forms;

b.The rate increase is not an exceptional increase; and

c.The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse.

2.In the event significant adverse lapsation has occurred, is anticipated in the filing or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the commissioner may determine that a rate spiral exists. Following the determination that a rate spiral exists, the director may require the insurer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates.

a.The offer shall:

(1)Be subject to the approval of the director;

(2)Be based on actuarially sound principles, but not be based on attained age; and

(3)Provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.

b.The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:

(1)The maximum rate increase determined based on the combined experience; and

(2)The maximum rate increase determined based only on the experience of the insureds originally issued the form plus ten percent (10%).

I.If the director determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the commissioner may, in addition to the provisions of § 1.20.1(H) of this Part, prohibit the insurer from either of the following:

1.Filing and marketing comparable coverage for a period of up to five (5) years; or

2.Offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.

J.§§ 1.20(A) through (I) of this Part shall not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in § 1.4(A)(4) of this Part, if the policy complies with all of the following provisions:

2.The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in any of the following:

a.R.I. Gen. Laws Chapter 27-4.3 and

b.R.I. Gen. Laws Chapter 27-4.4.

3.The policy meets the disclosure requirements of R.I. Gen. Laws §§ 27-34.2-6(i)(4)(j) and (k);

4.The portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following:

a.Policy illustrations as required by Life Insurance Illustrations (Subchapter 25 Part 14 of this Chapter); and

b.Disclosure requirements in INSURANCE REGULATION 41 ANNUITY DISCLOSURE, Subchapter 25 Part 6 of this Chapter;

5.An actuarial memorandum is filed with the insurance department that includes:

a.A description of the basis on which the long-term care rates were determined;

b.A description of the basis for the reserves;

c.A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

d.A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

e.A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

f.The estimated average annual premium per policy and the average issue age;

K.§§ 1.20.1(F) and (H) of this Part shall not apply to group insurance policies as defined in R.I. Gen. Laws § 27-34.2-4(4)(i) where:

1.The policies insure 250 or more persons and the policyholder has 5,000 or more eligible employees of a single employer; or

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.21 Filing Requirements

Prior to an issuer offering group long-term care insurance to a resident of this state pursuant to R.I. Gen. Laws § 27-34.2-5, it shall file with the Director a copy of the certificate and the outline of coverage, along with evidence that the group policy or certificate thereunder has been approved by a state having statutory or regulatory long-term care insurance requirements substantially similar to those adopted in this state.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.22 Filing Requirements for Advertising

A.Every issuer providing long-term care insurance or benefits in this state shall provide a copy of any long-term care insurance advertisement intended for use in this state whether through written, radio or television medium to the director for review or approval by the director to the extent it may be required under state law. In addition, all advertisements shall be retained by the issuer for at least three (3) years from the date the advertisement was first used.

B.The director may exempt from these requirements any advertising form or material when, in the director’s opinion, this requirement may not be reasonably applied.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.23 Standards for Marketing

A.Every issuer marketing long-term care insurance coverage in this state, directly or through its producers, shall:

1.Establish marketing procedures and producer training requirements to assure that:

a.Any marketing activities, including any comparison of policies, by its producers or other producers will be fair and accurate; and

b.Excessive insurance is not sold or issued.

2.Display prominently by type, stamp or other appropriate means, on the first page of the outline of coverage and policy the following:

a.“Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations.”

3.Provide copies of the disclosure forms required in § 1.9(C) of this Part (Appendices B and F provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part) to the applicant.

4.Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has accident and sickness or long-term care insurance and the types and amounts of any such insurance, except that in the case of qualified long-term care insurance contracts, an inquiry into whether a prospective applicant or enrollee for long- term care insurance has accident and sickness insurance is not required.

5.Every issuer marketing long-term care insurance shall establish auditable procedures for verifying compliance with this § 1.23(A) of this Part.

6.If the state in which the policy or certificate is to be delivered or issued for delivery has a senior insurance counseling program approved by the Director, the issuer shall, at solicitation, provide written notice to the prospective policyholder and certificate holder that the program is available and the name, address and telephone number of the program.

7.For long-term care health insurance policies and certificates, use the terms “noncancellable” or “level premium” only when the policy or certificate conforms to §§ 1.6(A)(3) and (4) of this Part.

8.Provide an explanation of contingent benefit upon lapse provided for in § 1.28(D)(3) of this Part and, if applicable, the additional contingent benefit upon lapse provided to policies with fixed or limited premium paying periods in § 1.28(D)(4) of this Part.

B.In addition to the practices prohibited in R.I. Gen. Laws Chapter 27-29-1, the following acts and practices are prohibited:

1.Twisting. Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or issuers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on or convert any insurance policy or to take out a policy of insurance with another issuer.

2.High pressure tactics. Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance.

3.Cold lead advertising. Making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance producer or insurance company.

4.Misrepresentation. Misrepresenting a material fact in selling or offering to sell a long-term care insurance policy.

C.With respect to the obligations set forth in this subsection, the primary responsibility of an association, as defined in R.I. Gen. Laws § 27-34.2-4(4)(ii), when endorsing or selling long-term care insurance shall be to educate its members concerning long-term care issues in general so that its members can make informed decisions. Associations shall provide objective information regarding long-term care insurance policies or certificates endorsed or sold by such associations to ensure that members of such associations receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold.

1.The issuer shall file with the insurance department the following material:

a.The policy and certificate,

b.A corresponding outline of coverage, and

c.All advertisements requested by the insurance department.

2.The association shall disclose in any long-term care insurance solicitation:

a.The specific nature and amount of the compensation arrangements (including all fees, commissions, administrative fees and other forms of financial support) that the association receives from endorsement or sale of the policy or certificate to its members; and

b.A brief description of the process under which the policies and the issuer issuing the policies were selected.

3.If the association and the issuer have interlocking directorates or trustee arrangements, the association shall disclose that fact to its members.

4.The board of directors of associations selling or endorsing long- term care insurance policies or certificates shall review and approve the insurance policies as well as the compensation arrangements made with the issuer.

5.The association shall also:

a.At the time of the association’s decision to endorse, engage the services of a person with expertise in long-term care insurance not affiliated with the issuer to conduct an examination of the policies, including its benefits, features, and rates and update the examination thereafter in the event of material change;

b.Actively monitor the marketing efforts of the issuer and its producers; and

c.Review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding the policies or certificates.

d.§§ 1.24(C)(5)(a) through (c) of this Part above shall not apply to qualified long-term care insurance contracts.

6.No group long-term care insurance policy or certificate may be issued to an association unless the issuer files with the state insurance department the information required in this subsection.

7.The issuer shall not issue a long-term care policy or certificate to an association or continue to market such a policy or certificate unless the issuer certifies annually that the association has complied with the requirements set forth in this subsection.

8.Failure to comply with the filing and certification requirements of this section constitutes an unfair trade practice in violation of R.I. Gen. Laws Chapter 27-29-8.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.24 Suitability

A.This section shall not apply to life insurance policies that accelerate benefits for long-term care.

B.Every issuer marketing long-term care insurance shall:

1.Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant; ?

2.Train its producers in the use of its suitability standards; and

3.Maintain a copy of its suitability standards and make them available for inspection upon request by the director.

C.To determine whether the applicant meets the standards developed by the issuer

1.The producer and issuer shall develop procedures that take the following into consideration:

a.The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;

b.The applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and

c.The values, benefits and costs of the applicant's existing insurance, if any, when compared to the values, benefits and costs of the recommended purchase or replacement.

2.The issuer, and where a producer is involved, the producer shall make reasonable efforts to obtain the information set out in § 1.24(C)(1) of this Part above. The efforts shall include presentation to the applicant, at or prior to application, of the "Long-Term Care Insurance Personal Worksheet." The personal worksheet used by the issuer shall contain, at a minimum, the information in the format contained in Appendix B provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part, in not less than twelve (12) point type. The issuer may request the applicant to provide additional information to comply with its suitability standards.

3.A completed personal worksheet shall be returned to the issuer prior to the issuer's consideration of the applicant for coverage, except the personal worksheet need not be resumed for sales of employer group long-term care insurance to employees and their spouses.

4.The sale or dissemination outside the company or agency by the issuer or producer of information obtained through the personal worksheet in Appendix B provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part is prohibited.

D.The issuer shall use the suitability standards it has developed pursuant to this section in determining whether issuing long-term care insurance coverage to an applicant is appropriate.

E.Producers shall use the suitability standards developed by the issuer in marketing long-term care insurance.

F.At the same tune as the personal worksheet is provided to the applicant, the disclosure form entitled "Things You Should Know Before You Buy Long-Term Care Insurance" shall be provided. The form shall be in the format contained in Appendix C provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part, in not less than twelve (12) point type.

G.If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. In the alternative, the issuer shall send the applicant a letter similar to Appendix D provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part. However, if the applicant has declined to provide financial information, the issuer may use some other method to verify the applicant's intent. Either the applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file.

H.The issuer shall report annually to the director the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.25 Prohibition Against Preexisting Conditions and Probationary Periods in Replacement Policies or Certificates

If a long-term care insurance policy or certificate replaces another long-term care policy or certificate, the replacing issuer shall waive any time periods applicable to preexisting conditions and probationary periods in the new long-term care policy for similar benefits to the extent that similar exclusions have been satisfied under the original policy.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.26 Availability of New Services or Providers

A.An issuer shall notify policyholders of the availability of a new long-term policy series that provides coverage for new long-term care services or providers material in nature and not previously available through the issuer to the general public. The notice shall be provided within twelve (12) months of the date of the new policy series is made available for sale in this state.

B.Notwithstanding § 1.26(A) of this Part above, notification is not required for any policy issued prior to the effective date of this Section or to any policyholder or certificate holder who is currently eligible for benefits, within an elimination period or on a claim, or who previously had been in claim status, or who would not be eligible to apply for coverage due to issue age limitations under the new policy. The issuer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

C.The issuer shall make the new coverage available in one of the following ways:

1.By adding a rider to the existing policy and charging a separate premium for the new rider based on the insured’s attained age;

2.By exchanging the existing policy or certificate for one with an issue age based on the present age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy or certificate. The premium credits shall be based on premiums paid or reserves held for the prior policy or certificate;

3.By exchanging the existing policy or certificate for a new policy or certificate in which consideration for past insured status shall be recognized by setting the premium for the new policy or certificate at the issue age of the policy or certificate being exchanged. The cost for the new policy or certificate may recognize the difference in reserves between the new policy or certificate and the original policy or certificate; or

4.By an alternative program developed by the issuer that meets the intent of this Section if the program is filed with and approved by the Director.

D.An issuer is not required to notify policyholders of a new proprietary policy series created and filed for use in a limited distribution channel. For purposes of this Subsection, “limited distribution channel” means through a discrete entity, such as a financial institution or brokerage, for which specialized products are available that are not available for sale to the general public. Policyholders that purchased such a new proprietary policy shall be notified when a new long-term care policy series that provides coverage for new long-term care services or providers material in nature is made available to that limited distribution channel.

E.Policies issued pursuant to this Section shall be considered exchanges and not replacements. These exchanges shall not be subject to §§ 1.14 and 1.24 of this Part, and the reporting requirements of §§ 1.15(A) through (E) of this Part.

F.Where the policy is offered through an employer, labor organization, professional, trade or occupational association, the required notification in § 1.26(A) of this Part shall be made to the offering entity. However, if the policy is issued to a group defined in R.I. Gen. Laws § 27-34.2-4(4)(v), the notification shall be made to each certificate holder.

G.Nothing in this Section shall prohibit an issuer from offering any policy, rider, certificate or coverage change to any policyholder or certificate holder. However, upon request any policyholder may apply for currently available coverage that includes the new services or providers. The issuer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

H.This Section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

I.This Section shall become effective on or after June 1, 2009.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.27 Right to Reduce Coverage and Lower Premiums

A.Every long-term care insurance policy and certificate shall include a provision that

1.allows the policyholder or certificate holder to reduce coverage and lower the policy or certificate premium in at least one of the following ways:

a.Reducing the maximum benefit; or

b.Reducing the daily, weekly or monthly benefit amount.

2.The issuer may also offer other reduction options that are consistent with the policy or certificate design or the carrier’s administrative processes.

3.In the event the reduction in coverage involves the reduction or elimination of the inflation protection provision, the insurer shall allow the policyholder to continue the benefit amount in effect at the time of the reduction.

B.The provision shall include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage.

C.The premium for the reduced coverage shall:

1.Be based on the same age and underwriting class used to determine the premium for the coverage currently in force; and

2.Be consistent with the approved rate table.

D.The issuer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable.

E.If a policy or certificate is about to lapse, the issuer shall provide a written reminder to the policyholder or certificate holder of his or her right to reduce coverage and premiums in the notice required by R.I. Gen. Laws § 27-34.2-12(a)(3).

F.This Section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

G.The requirements of this §§ 1.27(A) through (F) of this Part shall apply to any long-term care policy issued in this state on or after December 1, 2008.

H.A premium increase notice required by § 1.9(E) of this Part shall include:

1.An offer to reduce policy benefits provided by the current coverage consistent with the requirements of this section;

2.A disclosure stating that all options available to the policyholder may not be of equal value; and

3.In the case of a partnership policy, a disclosure that some benefit reduction options may result in a loss in partnership status that may reduce policyholder protections.

I.The requirements of § 1.27(H) of this Part shall apply to any rate increase implemented in this state on or after July 1, 2019.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.28 Nonforfeiture Benefit Requirement

A.This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

B.To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of R.I. Gen. Laws § 27-34.2-19:

1.A policy or certificate offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers and benefit length that are the same as coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer shall be the benefit described in § 1.28(E) of this Part; and

2.The offer shall be in writing if the nonforfeiture benefit is not otherwise described in the Outline of Coverage or other materials given to the prospective policyholder.

C.If the offer required to be made under R.I. Gen. Laws § 27-34.2-19 is rejected, the issuer shall provide the contingent benefit upon lapse described in this section. Even if this offer is accepted for a policy with a fixed or limited premium paying period, the contingent benefit on lapse in § 1.28(D)(4) of this Part shall still apply.

D.After rejection of the offer required under R.I. Gen. Laws § 27-34.2-19, for individual and group policies without nonforfeiture benefits, the issuer shall provide a contingent benefit upon lapse.

1.In the event a group policyholder elects to make the nonforfeiture benefit an option to the certificate holder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse. ?

2.The contingent benefit on lapse shall be triggered every time an issuer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, and the policy or certificate lapses within one hundred twenty (120) days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase

Issue Age

Percent Increase Over Initial Premium

29 and Under

200%

30-34

190%

35-39

170%

40-44

150%

45-49

130%

50-54

110%

55-59

90%

70%

66%

62%

58%

54%

50%

48%

46%

44%

42%

40%

38%

36%

34%

32%

30%

28%

26%

24%

22%

20%

19%

18%

17%

16%

15%

14%

13%

12%

11%

90 and Over

10%

3.A contingent benefit on lapse shall also be triggered for policies with a fixed or limited premium paying period every time an issuer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured’s initial annual premium set forth below based on the insured’s issue age, the policy or certificate lapses within 120 days of the due date of the premium so increased, and the ratio in § 1.28(D)(5)(b) of this Part is forty percent (40%) or more. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase

Issue Age

Percentage Increase Over Initial Premium

Under 65

50%

65-80

30%

Over 80

10%

4.On or before the effective date of a substantial premium increase as defined in § 1.28(D)(2) of this Part, the issuer shall:

a.Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased:

b.Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of § 1.28(E) of this Part. This option may be elected at any time during the one hundred twenty (120) day period referenced in § 1.28(D)(2) of this Part; and

c.Notify the policyholder or certificate holder that a default or lapse at any time during the one hundred twenty (120) day period referenced in § 1.28(D)(2) of this Part shall be deemed to be the election of the offer to convert in § 1.28(D)(4)(b) of this Part above unless the automatic option in § 1.28(D)(5)(c) of this Part applies.

5.On or before the effective date of a substantial premium increase as defined in § 1.28(D)(3) of this Part above, the issuer shall:

a.Offer to reduce policy benefits provided by the current coverage consistent with the requirements of § 1.27 of this Part so that required premium payments are not increased;

b.Offer to convert the coverage to a paid-up status where the amount payable for each benefit is ninety percent (90%) of the amount payable in effect immediately prior to lapse times the ratio of the number of completed months of paid premiums divided by the number of months in the premium paying period. This option may be elected at any time during the 120-day period referenced in § 1.28(D)(3) of this Part; and

c.Notify the policyholder or certificate holder that a default or lapse at any time during the 120-day period referenced in § 1.28(D)(3) of this Part shall be deemed to be the election of the offer to convert in § 1.28(D)(5)(b) of this Part above if the ratio is forth percent (40%) or more.

6.For any long-term care policy issued in this state on or after January 1, 2019.

a.In the event the policy or certificate was issued at least twenty (20) years prior to the effective date of the increase, a value of 0% shall be used in place of all values in the above table; and

b.Values above 100% in the table in § 1.28(D)(3) of this Part above shall be reduced to 100%.

E.Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with § 1.28(D)(2) of this Part but not § 1.28(D)(3) of this Part, are described in this subsection:

1.For purposes of this subsection, attained age rating is defined as a schedule of premiums starting from the issue date which increases age at least one percent per year prior to age fifty (50), and at least three percent (3%) per year beyond age fifty (50).

2.For purposes of this subsection, the nonforfeiture benefit shall be a shortened benefit period providing paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increased thereafter) will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in § 1.28(D)(3) of this Part.

3.The standard nonforfeiture credit will be equal to 100 percent (100%) of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The issuer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit shall not be less than thirty (30) times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of § 1.28(F) of this Part.

4.The nonforfeiture benefit shall begin not later than the end of the third year following the policy or certificate issue date. The contingent benefit on lapse shall be effective during the first three (3) years as well as thereafter.

a.Notwithstanding § 1.28(E)(4) of this Part for a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of:

(1)The end of the tenth year following the policy or certificate issue date; or

(2)The end of the second year following the date the policy or certificate is no longer subject to attained age rating.

5.Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate.

F.All benefits paid by the issuer while the policy or certificate is in premium paying status and in the paid-up status will not exceed the maximum benefits which would have been payable if the policy or certificate had remained in premium paying status. ?

G.There shall be no difference in the minimum nonforfeiture benefits as required under this section for group and individual policies.

H.The requirements set forth in this section shall become effective as provided in Section 31 of the former Insurance Regulation 44 that this Part has replaced, and shall apply as follows:

1.Except as provided in § 1.28(H)(2) of this Part below, the provisions of this section apply to any long-term care policy issued in this state on or after September 8, 1998.

2.For certificates issued on or after the effective date of this section, under a group long-term care insurance policy as defined in R.I. Gen. Laws § 27-34.2-4(4)(i), which policy was in force on September 8, 1998, the provisions of this section shall not apply.

3.The last sentence in §§ 1.28(C), (D)(3) and (D)(5) of this Part shall apply to any long-term care insurance policy or certificate issued in this state after six (6) months after their adoption, except new certificates on a group policy one (1) year after their adoption.

I.Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse shall be subject to the loss ratio requirements of §§ 1.19, 1.20 and 1.20.1 of this Part treating the policy as a whole.

J.To determine whether contingent nonforfeiture upon lapse provisions are triggered under §§ 1.28(D)(2) or (D)(3) of this Part, a replacing issuer that purchased or otherwise assumed a block or blocks of long-term care insurance policies from another issuer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original issuer.

K.A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets the following requirements:

1.The nonforfeiture provision shall be appropriately captioned;

2.The nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency and interest as reflected in changes in rates for premium paying contracts approved by the Director for the same contract form; and

3.The nonforfeiture provision shall provide at least one of the following:

a.Reduced paid-up insurance;

b.Extended term insurance;

c.Shortened benefit period; or

d.Other similar offerings approved by the Director.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.29 Standards for Benefit Triggers

A.A long-term care insurance policy shall condition the payment of benefits on a determination of the insured's ability to perform activities of daily living and on cognitive impairment. Eligibility for the payment of benefits shall not be more restrictive than requiring either a deficiency in the ability to perform not more than three (3) of the activities of daily living or the presence of cognitive impairment.

B.Activities of daily living shall include at least the following as defined in § 1.5 of this Part and in the policy:

1.Bathing;

2.Continence;

3.Dressing;

4.Eating;

5.Toileting; and

6.Transferring.

C.Issuers may use activities of daily living to trigger covered benefits in addition to those contained in §§ 1.29(B)(1) through (6) of this Part above as long as they are defined in the policy.

D.An issuer may use additional provisions for the determination of when benefits are payable under a policy or certificate; however the provisions shall not restrict, and are not in lieu of, the requirements contained in §§ 1.29(A) and (B) of this Part.

E.For purposes of this section the determination of a deficiency shall not be more restrictive than:

1.Requiring the hands-on assistance of another person to perform the prescribed activities of daily living; or

2.If the deficiency is due to the presence of a cognitive impairment, supervision or verbal cueing by another person is needed in order to protect the insured or others.

F.Assessments of activities of daily living and cognitive impairment shall be performed by licensed or certified professionals, such as physicians, nurses or social workers.

G.Long-term care insurance policies shall include a clear description of the process for appealing and resolving benefit determinations.

H.A long-term care insurance policy that is intended to be tax qualified may contain benefit trigger provisions that are less favorable to the policyholder or beneficiary than the standards in this section only to the extent necessary to qualify under federal tax standards.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.30 Additional Standards for Benefit Triggers for Qualified Long-Term Care Insurance Contracts

A.For purposes of this section the following definitions apply:

1.“Qualified long-term care services” means services that meet the requirements of Section 7702(c)(1) of the Internal Revenue Code of 1986 (26 U.S.C. § 7702(c)(1)), as amended, as follows: necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation and rehabilitative services, and maintenance or personal care services which are required by a chronically ill individual, and are provided pursuant to a plan of care prescribed by a licensed health care practitioner.

2.“Chronically ill individual” has the meaning prescribed for this term by section 7702B(c)(2) of the Internal Revenue Code of 1986 (26 U.S.C. § 7702B(c)(2)), as amended. Under this provision, a chronically ill individual means any individual who has been certified by a licensed health care practitioner as:

(a)Being unable to perform (without substantial assistance from another individual) at least two (2) activities of daily living for a period of at least ninety (90) days due to a loss of functional capacity; or

(b)Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.

(c)The term “chronically ill individual” shall not include an individual otherwise meeting these requirements unless within the preceding twelve-month period a licensed health care practitioner has certified that the individual meets these requirements.

3.“Licensed health care practitioner” means a physician, as defined in Section 1861(r)(1) of the Social Security Act (42 U.S.C. 1395x), a registered professional nurse, licensed social worker or other individual who meets requirements prescribed by the Secretary of the Treasury.

4.“Maintenance or personal care services” means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual (including the protection from threats to health and safety due to severe cognitive impairment).

B.A qualified long-term care insurance contract shall pay only for qualified long-term care services received by a chronically ill individual provided pursuant to a plan of care prescribed by a licensed health care practitioner.

C.A qualified long-term care insurance contract shall condition the payment of benefits on a determination of the insured’s inability to perform activities of daily living for an expected period of at least ninety (90) days due to a loss of functional capacity or to severe cognitive impairment.

D.Certifications regarding activities of daily living and cognitive impairment required pursuant to § 1.30(C) of this Part shall be performed by the following licensed or certified professionals: physicians, registered professional nurses, licensed social workers, or other individuals who meet requirements prescribed by the Secretary of the Treasury.

E.Certifications required pursuant to § 1.30(C) of this Part may be performed by a licensed health care professional at the direction of the carrier as is reasonably necessary with respect to a specific claim, except that when a licensed health care practitioner has certified that an insured is unable to perform activities of daily living for an expected period of at least ninety (90) days due to a loss of functional capacity and the insured is in claim status, the certification may not be rescinded and additional certifications may not be performed until after the expiration of the ninety-day period.

F.Qualified long-term care insurance contracts shall include a clear description of the process for appealing and resolving disputes with respect to benefit determinations.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.31 Standard Format Outline of Coverage

A.This section of the Part implements, interprets and makes specific, the provisions of R.I. Gen. Laws § 27-34.2-6(H) in prescribing a standard format and the content of an outline of coverage.

B.The outline of coverage shall be a free-standing document, using no smaller than ten-point type.

C.The outline of coverage shall contain no material of an advertising nature.

D.Text which is capitalized or underscored in the standard format outline of coverage may be emphasized by other means that provide prominence equivalent to such capitalization or underscoring.

E.Use of the text and sequence of text of the standard format outline of coverage is mandatory, unless otherwise specifically indicated.

F.Format for outline of coverage:

[COMPANY NAME]

[ADDRESS - CITY & STATE]

[TELEPHONE NUMBER]

LONG-TERM CARE INSURANCE

OUTLINE OF COVERAGE

[Policy Number or Group Master Policy and Certificate Number]

[Except for policies or certificates which are guaranteed issue, the following caution statement, or language substantially similar, must appear as follows in the outline of coverage.]

Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your responses to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address]

1.The policy is [an individual policy of insurance] ([a group policy] which was issued in the [indicate jurisdiction in which group policy was issued]).

2.PURPOSE OF OUTLINE OF COVERAGE. This outline of coverage provides a very brief description of the important features of the policy. You should compare this outline of coverage to outlines of coverage for other policies available to you. This is not an insurance contract, but only a summary of coverage. Only the individual or group policy contains governing contractual provisions. This means that the policy or group policy sets forth in detail the rights and obligations of both you and the insurance company. Therefore, if you purchase this coverage, or any other coverage, it is important that you READ YOUR POLICY (OR CERTIFICATE) CAREFULLY!

3.FEDERAL TAX CONSEQUENCES.

This [POLICY] [CERTIFICATE] is intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended.

Federal Tax Implications of this [POLICY] [CERTIFICATE]. This [POLICY] [CERTIFICATE] is not intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986 as amended. Benefits received under the [POLICY] [CERTIFICATE] may be taxable as income.

4.TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE CONTINUED IN FORCE OR DISCONTINUED.

(a)[For long-term care health insurance policies or certificates describe one of the following permissible policy renewability provisions:]

(1)[Policies and certificates that are guaranteed renewable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS GUARANTEED RENEWABLE. This means you have the right, subject to the terms of your policy, [certificate] to continue this policy as long as you pay your premiums on time. [Company Name] cannot change any of the terms of your policy on its own, except that, in the future. IT MAY INCREASE THE PREMIUM YOU PAY.

(2)[Policies and certificates that are noncancellable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS NONCANCELLABLE. This means that you have the right, subject to the terms of your policy, to continue this policy as long as you pay your premiums on time. [Company Name] cannot change any of the terms of your policy on its own and cannot change the premium you currently pay. However, if your policy contains an inflation protection feature where you choose to increase your benefits, [Company Name] may increase your premium at that time for those additional benefits.

(b)[For group coverage, specifically describe continuation/conversion provisions applicable to the certificate and group policy;]

(c)[Describe waiver of premium provisions or state that there are not such provisions;]

5.TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED.

(a)[Provide a brief description of the right to return -- "free look" provision of the policy.]

(b)[Include a statement that the policy either does or does not contain provisions providing for a refund or partial refund of premium upon the death of an insured or surrender of the policy or certificate. If the policy contains such provisions, include a description of them.]

6.TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED.

(a)[Provide a brief description of the right to return–“free look” provision of the policy.]

7.THIS IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are eligible for Medicare, review the Medicare Supplement Buyer's Guide available from the insurance company.

(a)[For producers] Neither [insert company name] nor its producers represent Medicare, the federal government or any state government.

(b)[For direct response] [insert company name] is not representing Medicare, the federal government or any state government.

8.LONG-TERM CARE COVERAGE. Policies of this category are designed to provide coverage for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital, such as in a nursing home, in the community or in the home.

This policy provides coverage in the form of a fixed dollar indemnity benefit for covered long-term care expenses, subject to policy [limitations] [waiting periods] and [coinsurance] requirements. [Modify this paragraph if the policy is not an indemnity policy.]

9.BENEFITS PROVIDED BY THIS POLICY.

(a)[Covered services, related deductible(s), waiting periods, elimination periods and benefit maximums.]

(b)[Institutional benefits, by skill level.]

(c)[Non-institutional benefits, by skill level.]

(d)Eligibility for Payment of Benefits

[Activities of daily living and cognitive impairment shall be used to measure an insured's need for long-term care and must be defined and described as part of the outline of coverage.]

[Any additional benefit triggers must also be explained. If these triggers differ for different benefits, explanation of the triggers should accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too must be specified.]

10.LIMITATIONS AND EXCLUSIONS.

[Describe:

(a)Preexisting conditions;

(b)Non-eligible facilities/provider;

(c)Non-eligible levels of care (e.g., unlicensed providers, care or treatment provided by a family member, etc.);

(d)Exclusions/exceptions;

(e)Limitations.]

[This section should provide a brief specific description of any policy provisions which limit, exclude, restrict, reduce, delay, or in any other manner operate to qualify payment of the benefits described in (9) above.]

THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.

11.RELATIONSHIP OF COST OF CARE AND BENEFITS. Because the costs of long-term care services will likely increase over time, you should consider whether and how the benefits of this plan may be adjusted. [As applicable, indicate the following:

(a)That the benefit level will not increase over time;

(b)Any automatic benefit adjustment provisions;

(c)Whether the insured will be guaranteed the option to buy additional benefits and the basis upon which benefits will be increased over time if not by a specified amount or percentage;

(d)If there is such a guarantee, include whether additional underwriting or health screening will be required, the frequency and amounts of the upgrade options, and any significant restrictions or limitations;

(e)And finally, describe whether there will be any additional premium charge imposed, and how that is to be calculated.]

12.ALZHEIMER'S DISEASE AND OTHER ORGANIC BRAIN DISORDERS.

[State that the policy provides coverage for insureds clinically diagnosed as having Alzheimer's disease, other dementias or organic brain disorder. Specifically describe each benefit screen or other policy provision which provides preconditions to the availability of policy benefits for such an insured.]

13.PREMIUM

[(a)State the total annual premium for the policy;

(b)If the premium varies with an applicant's choice among benefit options, indicate the portion of annual premium which corresponds to each benefit option.]

14.ADDITIONAL FEATURES

[(a)Indicate if medical underwriting is used;

(b)Describe other important features.]

15.CONTACT THE STATE SENIOR HEALTH INSURANCE ASSISTANCE PROGRAM IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM CARE INSURANCE. CONTACT THE INSURANCE COMPANY IF YOU HAVE SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM CARE INSURANCE POLICY OR CERTIFICATE.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.32 Prompt Payment of Clean Claims

A.For purposes of this section:

1.“Claim” means a request for payment of benefits under an in-force policy, regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met.

2.“Clean claim” means a claim that has no defect or impropriety, including any lack of required substantiating documentation, such as satisfactory evidence of expenses incurred, or particular circumstance requiring special treatment that prevents timely payment from being made on the claim.

B.Within thirty (30) business days after receipt of a claim for benefits under a long- term care insurance policy or certificate, an insurer shall pay such claim if it is a clean claim, or send a written notice acknowledging the date of receipt of the claim and one of the following:

1.The insurer is declining to pay all or part of the claim and the specific reason(s) for denial; or

2.That additional information is necessary to determine if all or any part of the claim is payable and the specific additional information that is necessary.

C.Within thirty (30) business days after receipt of all the requested additional information, an insurer shall pay a claim for benefits under a long-term care insurance policy or certificate if it is a clean claim, or send a written notice that the insurer is declining to pay all or part of the claim, and the specific reason or reasons for denial.

D.If an insurer fails to comply with §§ 1.32(B) or (C) of this Part, such insurer shall pay interest at the rate of 1% per month on the amount of the claim that should have been paid but that remains unpaid forty-five (45) business days after the receipt of the claim with respect to § 1.32(B) of this Part or all requested additional information with respect to § 1.32(C) of this Part. The interest payable pursuant to this subsection shall be included in any late reimbursement without requiring the person who filed the original claim to make any additional claim for such interest.

E.The provisions of § 1.32 of this Part shall not apply where the insurer has a reasonable basis supported by specific information that such claim was fraudulently submitted.

F.Any violation of this Part by an insurer if committed flagrantly and in conscious disregard of the provisions of this regulation or with such frequency as to constitute a general business practice shall be considered a violation of the R.I. Gen. Laws Chapter 27-29

G.The provisions of § 1.32 of this Part supersedes any other claim payment requirement found in R.I. Gen. Laws § 27-18-61.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.33 Requirement to Deliver Shoppers Guide

A.A long-term care insurance shopper's guide in the format developed by the National Association of Insurance Commissioners, or a guide developed or approved by the director, shall be provided to all prospective applicants of a long-term care insurance policy or certificate.

1.In the case of producer solicitations, a producer must deliver the shopper's guide prior to the presentation of an application or enrollment form.

2.In the case of direct response solicitations, the shopper's guide must be presented in conjunction with any application or enrollment form.

B.Life insurance policies or riders containing accelerated long-term care benefits are not required to furnish the above-referenced guide, but shall furnish the policy summary required under R.I. Gen. Laws § 27-34.2-6.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

230-RICR-20-35-01 § 1.34 Rhode Island Long-Term Care Partnership Program

A.In order to provide for the offering and sale of policies (including certificates) under the Rhode Island State Long-term Care Insurance Partnership Program, in accordance with Section 1917(b)(1)(C) of the Social Security Act [42 U.S.C. 1396p(b)(1)(C), as amended by Pub. L. No. 109-171, Sec. 6021], and R.I. Gen. Laws § 40-8-22, the following provisions in § 1.34(B) of this Part shall apply:

B.A “qualified state long-term care partnership policy” or “partnership policy” must meet the following conditions:

1.The person insured under the policy is Rhode Island resident at the time the coverage becomes effective.

2.The policy is a qualified long-term care insurance policy as defined in Sec. 7702B(b) of the Internal Revenue Code of 1986, as amended. (26 U.S.C. 7702B(b)).

3.The policy provides the following inflation protection:

a.If the person insured has not attained the age of 61 as of the date of purchase, the policy provides:

(1)automatic annual compounded inflation increases at a rate not less than be no less favorable than three percent (3%) compound annual inflation protection; or

(2)automatic annual compounded inflation increases at a rate based on changes in the consumer price index. “Consumer price index” means consumer price index for all urban consumers, U.S. city average, all items, as determined by the Bureau of Labor Statistics of the United States Department of Labor; or

(3)annual compounded inflation increases at a rate not less than three percent which meets all of the following requirements:

(4)the benefit increases occur automatically, unless the insured specifically rejects an increase;

(5)the increases must be provided until the insured has at least attained age 76 and each increase up to and including the increase that takes effect at age 76 must not be rejected in order to retain partnership policy status – the insurer must notify the insured that rejection of an increase will cause the policy’s partnership status to end;

(6)increases may end when the insured has attained age 76 or if the insured becomes eligible for benefits on or after age 76;

(7)the additional premium for each increase under this feature may be based on the premium rates that apply to the insured’s attained age at the time of the increase; and rejection of an increase may not operate to prevent the insured from receiving future increases.

b.If the person insured has attained age 61 but has not attained age 76 as of the date of purchase, the policy provides some level of inflation protection

c.If the person insured has attained age 76 as of the date of purchase, the policy may, but is not required to, provide some level of inflation protection.

4.An issuer may offer the exchange of one policy for a qualified partnership policy, in accordance with the rules for exchange applicable to new services or providers contained in § 1.26 of this Part. In making an offer to exchange policies that were in effect prior to the effective date of the 2008 amendments to this Part, the issuer shall determine conditions of the offer in a uniform and nondiscriminatory manner. For purposes of applying the Medicaid rules relating to the Partnership program, the addition of a rider, endorsement, or change in schedule page for a policy may be treated as giving rise to an exchange.” When the addition of a rider, endorsement, or change in the schedule page for a policy is used to give the coverage a new effective date to qualify for Partnership (and no other coverage changes are made), the policyholder shall not lose any benefits built up from the original effective date of the coverage.

C.Certification of Qualified Long-term Care Insurance Policies

1.In keeping with 42 U.S.C. § 1396p(b)(5)(B)(iii), the Director shall certify policies to be in compliance with §§ 1.34(A) and (B) of this Part. An issuer may apply for certification of a policy that has been previously approved, or it may request certification when the form is filed for approval.

a.The director’s certification shall be based on certification on the form in Appendix H provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part by an officer of the issuer that;

(1)The policy is designed and intended to be a qualified long- term care policy, as described in § 1.34(B)(2) of this Part, and

(2)The policy complies with all sections of this Part [Required for Partnership].

b.The Director may also consider such other information pertaining to the policy’s certification, as he may deem appropriate.

c.The issuer shall notify the Director within ten (10) business days following any time that it should become aware that a certified policy shall have its status as a tax qualified long-term care policy challenged by the United States Department of the Treasury.

D.An insurer or its agent, soliciting or offering to sell a policy that is intended to qualify as a partnership policy, shall provide to each prospective applicant a Partnership Program Notice (Appendix I provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part), outlining the requirements and benefits of a partnership policy. A similar notice may be used for this purpose if filed and approved by the commissioner. The Partnership Program Notice shall be provided with the required Outline of Coverage.

E.A partnership policy issued or issued for delivery in Rhode Island shall be accompanied by a Partnership Disclosure Notice (Appendix J provided in a Bulletin issued for the purpose of designating the forms required to be used by this Part) explaining the benefits associated with a partnership policy and indicating that at the time issued, the policy is a qualified state long-term care insurance partnership policy. A similar notice may be used if filed and approved by the commission. The Partnership Disclosure Notice shall also include a statement indicating that by purchasing this partnership policy, the insured does not automatically qualify for Medicaid.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2019-05-26 to 05/26/2019
Amendment — effective from 2019-05-26 to 05/26/2019
Technical Revision — effective from 2008-06-10 to 05/26/2019
Amendment — effective from 2008-06-10 to 06/10/2008
Periodic Refile — effective from 2001-12-19 to 06/10/2008

Subchapter 40 Claims

230-RICR-20-40-1 Unfair Life, Accident and Health Claims Settlement Practices

230-RICR-20-40-1 § 1.1 Authority

This Part is promulgated under the authority of R.I. Gen. Laws § 27-9.1-8. This Part does not apply to claims subject to R.I. Gen. Laws §§ 27-18-61, 27-19-52, 27-20-47 or 27-41-64. This Part applies only to individuals and entities subject to the jurisdiction of the Department of Business Regulation and not those subject to the jurisdiction of the Office of the Health Insurance Commissioner as indicated in R.I. Gen. Laws §§ 42-14-5(d) and 42-14.5-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-23 to 01/04/2022
Technical Revision — effective from 2005-11-23 to 11/23/2005
Adoption — effective from 2005-11-23 to 11/23/2005

230-RICR-20-40-1 § 1.2 Purpose

The purpose of this Part is to set forth minimum standards for the investigation and disposition of life, accident and health claims arising under policies or certificates issued pursuant to State law. It is not intended to cover claims involving workers’ compensation insurance. The various provisions of this part are intended to define procedures and practices which constitute unfair claims practices. Nothing herein shall be construed to create or imply a private cause of action for violation of this part. This is merely a clarification of original intent and does not indicate of any change of position.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-23 to 01/04/2022
Technical Revision — effective from 2005-11-23 to 11/23/2005
Adoption — effective from 2005-11-23 to 11/23/2005

230-RICR-20-40-1 § 1.3 Definitions

A.All definitions contained in R.I. Gen. Laws Chapter 27-9.1. The Unfair Claims Settlement Practices Act are hereby incorporated by reference. As otherwise used in this part:

1.“Agent” means any individual, corporation, association, partnership or other legal entity authorized to represent an insurer with respect to a claim;

2.“Beneficiary” means the party entitled to receive the proceeds or benefits occurring under the policy in lieu of the insured;

3.“Claim file” means any retrievable electronic file, paper file or combination of both;

4.“Claimant” means an insured, the beneficiary or legal representative of the insured, including a member of the insured’s immediate family designated by the insured, making a claim under a policy;

5.“Days” means calendar days;

6.“Documentation” includes, but is not limited to, all pertinent communications, transactions, notes, work papers, claim forms, bills and explanation of benefits forms relative to the claim;

7.“Investigation” means all activities of an insurer directly or indirectly related to the determination of liabilities under coverages afforded by an insurance policy or insurance contract;

8.“Notification of a claim” means any notification, whether in writing or other means acceptable under the terms of an insurance policy to an insurer or its agent, by a claimant, which reasonably apprises the insurer of the facts pertinent to a claim;

9.“Proof of loss” means written proofs, such as claim forms, medical bills, medical authorizations or other reasonable evidence of the claim that is ordinarily required of all insureds or beneficiaries submitting the claims;

10.“Reasonable explanation” means information sufficient to enable the insured or beneficiary to compare the allowable benefits with policy provisions and determine whether proper payment has been made;

11.“Written communications” includes all correspondence, regardless of source or type, that is materially related to the handling of the claim.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-23 to 01/04/2022
Technical Revision — effective from 2005-11-23 to 11/23/2005
Adoption — effective from 2005-11-23 to 11/23/2005

230-RICR-20-40-1 § 1.4 Claims Practices

A.Every insurer, upon receiving due notification of a claim shall, within fifteen (15) days of the notification, provide necessary claim forms, instructions and reasonable assistance so the insured can properly comply with company requirements for filing a claim.

B.Upon receipt of proof of loss from a claimant, the insurer shall begin any necessary investigation of the claim within fifteen (15) days.

C.The insurer’s standards for claims processing shall be such that notice of claim or proof of loss submitted against one policy issued by that insurer shall fulfill the insured’s obligation under any and all similar policies issued by that insurer and specifically identified by the insured to the insurer to the same degree that the same form would be required under any similar policy. If additional information is required to fulfill the insured’s obligation under similar policies, the insurer may request the additional information. When it is apparent to the insurer that additional benefits would be payable under an insured’s policy upon additional proofs of loss, the insurer shall communicate to and cooperate with the insured in determining the extent of the insurer’s additional liability.

D.The insurer shall affirm or deny liability on claims within a reasonable time and shall offer payment within thirty (30) days of affirmation of liability if the amount of the claim is determined and not in dispute. If portions of the claim are in dispute, the insurer shall tender payment for those portions that are not disputed within thirty (30) days.

E.With each claim payment, the insurer shall provide to the insured an Explanation of Benefits that shall include the name of the provider or services covered, dates of service, and a reasonable explanation of the computation of benefits.

F.An insurer may not impose a penalty upon any insured for noncompliance with insurer requirements for precertification unless such penalty is specifically and clearly set forth in the policy.

G.If a claim remains unresolved for thirty (30) days from the date proof of loss is received, the insurer shall provide the insured or, when applicable, the insured’s beneficiary, with a reasonable written explanation for the delay. In credit, mortgage and assigned accident/health claims, the notice shall be provided to the debtor/insured or medical provider in addition to the insured. If the investigation remains incomplete, the insurer shall, forty-five (45) days from the date of initial notification and every forty-five (45) days thereafter, send to the claimant a letter setting forth the reasons additional time is needed for investigation.

H.The insurer shall acknowledge and respond within fifteen (15) days to any written communications relating to a pending claim.

I.When a claim is denied, written notice of denial shall be sent to the claimant within fifteen (15) days of the determination. The insurer shall reference the policy provision, condition or exclusion upon which the denial is based.

J.No insurer shall deny a claim upon information obtained in a telephone conversation or personal interview with any source unless the telephone conversation or personal interview is documented in the claim file.

K.Insurers offering cash settlements of first party long-term disability income claims, except in cases where there is a bona fide dispute as to the coverage for, or amount of, the disability, shall develop a present value calculation of future benefits (with probability corrections for mortality and morbidity) utilizing contingencies such as mortality, morbidity, and interest rate assumptions, etc. appropriate to the risk. A copy of the amount so calculated shall be given to the insured and signed by him/her at the time a settlement is entered into.

L.No insurer shall indicate to a first party claimant on a payment draft, check or in any accompanying letter that said payment is “final” or “a release” of any claim unless the policy limit has been paid or there has been a compromise settlement agreed to by the first party claimant and the insurer as to coverage and amount payable under the policy.

M.No insurer shall withhold any portion of any benefit payable as a result of a claim on the basis that the sum withheld is an adjustment or correction for an overpayment made on a prior claim arising under the same policy unless:

a.The insurer has in its files clear, documented evidence of an overpayment and written authorization from the insured permitting the withholding procedure, or

b.The insurer has in its files clear, documented evidence that:

1.The overpayment was clearly erroneous under the provisions of the policy and if the overpayment is not the subject of a reasonable dispute as to facts;

2.The error that resulted in the payment is not a mistake of the law;

3.The insurer has notified the insured within six (6) months of the date of the error, except that in instances of error prompted by representations or nondisclosures of claimants or third parties, the insurer notified the insured within fifteen (15) days after the date the evidence of discovery of such error is included in its file. For the purpose of this rule, the date of the error shall be the day on which the draft for benefits is issued; and

4.The notice stated clearly the nature of the error and the amount of the overpayment.

N.If, after an insurer rejects a claim, the claimant objects to such rejection, the insurer shall notify the claimant in writing that he or she may have the matter reviewed by the State of Rhode Island Insurance Division, via the contact information for the Department promulgated in a Bulletin for this specific purpose.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-23 to 01/04/2022
Technical Revision — effective from 2005-11-23 to 11/23/2005
Adoption — effective from 2005-11-23 to 11/23/2005

230-RICR-20-40-1 § 1.5 File and Record Documentation

A.Each insurer’s claim files for policies or certificates are subject to examination by the Director or by his or her duly appointed designees. To aid in the examination:

1.The insurer shall maintain claim data that are accessible and retrievable for examination. An insurer shall be able to provide the claim number, line of coverage, date of loss and date of payment of the claim, date of denial or date closed without payment. This data shall be available for all open and closed files for the current year and the two (2) preceding years.

2.Detailed documentation shall be contained in each claim file in order to permit reconstruction of the insurer’s activities relative to each claim.

3.Each document within the claim file shall be noted as to date received, date processed or date mailed.

4.For those insurers that do not maintain hard copy files, claim files must be accessible from a computer monitor or micrographics and be capable of being printed as hard copy.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-23 to 01/04/2022
Technical Revision — effective from 2005-11-23 to 11/23/2005
Adoption — effective from 2005-11-23 to 11/23/2005

230-RICR-20-40-1 § 1.6 Severability

If any provision of this part or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this part which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this part are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-23 to 01/04/2022
Technical Revision — effective from 2005-11-23 to 11/23/2005
Adoption — effective from 2005-11-23 to 11/23/2005

Subchapter 45 Financial Standards and Corporate Operations

230-RICR-20-45-1 Insurance Holding Company Systems

230-RICR-20-45-1 § 1.1 Authority

A.This Part is promulgated pursuant to the authority granted by R.I. Gen. Laws § 27-35-7.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.2 Purpose

A.The purpose of this Part is to set forth rules and procedural requirements which the Commissioner deems necessary to carry out the provisions of R.I. Gen. Laws Chapter 27-35. The information called for by this Part is hereby declared to be necessary and appropriate in the public interest and for the protection of the policyholders in this State.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.3 Severability Clause

A.If any provision of this Part, or the application thereof to any person or circumstance, is held invalid, such determination shall not affect other provisions or applications of this Part which can be given effect without the invalid provision or application, and to that end the provisions of these Regulations are severable.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.4 Forms -- General Requirements

A.Forms A, B, C, D, E and F (§§ 1.24 through 1.28 of this Part) are intended to be guides in the preparation of the statements required by R.I. Gen. Laws §§ 27-35-2 through 27-35-4. They are not intended to be blank forms which are to be filled in. The statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers thereto are prepared in such a manner as to indicate clearly the scope and coverage of the items. All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted. Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made.

B.One (1) complete copy of each statement including exhibits and all other papers and documents filed as a part thereof, shall be filed with the Commissioner by personal delivery or mail addressed to: State of Rhode Island. Department of Business Regulation, Insurance Division, Financial Analysis Section. At least one (1) of the copies shall be signed in the manner prescribed on the form. Unsigned copies shall be conformed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of the power of attorney or other authority shall also be filed with the statement.

C.If an applicant requests a hearing on a consolidated basis under R.I. Gen. Laws § 27-35-2(d), in addition to filing the Form A with the department, the applicant shall file a copy of Form A (§ 1.24 of this Part) with the National Association of Insurance Commissioners (NAIC) in electronic form.

D.Statements should be prepared electronically. Statements shall be easily readable and suitable for review and reproduction. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies. Statements shall be in the English language and monetary values shall be stated in United States currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary value shown in a foreign currency normally shall be converted into United States currency.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.5 Forms -- Incorporation by Reference, Summaries and Omissions

A.Information required by any item of Form A, Form B, Form D, Form E or Form F (§§ 1.24, 1.25, 1.27, 1.28 and 1.29 of this Part) may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Form A, Form B, Form D, Form E or Form F (§§ 1.24, 1.25, 1.27, 1.28 and 1.29 of this Part) provided the document is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the Commissioner which were filed within three (3) years need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material and shall specifically indicate that such material is to be incorporated by reference in answer to the item. Matter shall not be incorporated by reference in any case where the incorporation would render the statement incomplete, unclear or confusing.

B.Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the Commissioner which was filed within three (3) years and may be qualified in its entirety by such reference. In any case where two (2) or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties thereto, the dates of execution, or other details, a copy of only one of the documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which the documents differ from the documents, a copy of which is filed.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.6 Forms -- Information Unavailable and Extension of Time to Furnish

A.If it is impractical to furnish any required information, document or report at the time it is required to be filed, there shall be filed with the Commissioner a separate document:

1.Identifying the information, document or report in question;

2.Stating why the filing thereof at the time required is impractical; and

3.Requesting an extension of time for filing the information, document or report to a specified date. The request for extension shall be deemed granted unless the Commissioner within thirty (30) days after receipt thereof enters an order denying the request.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.7 Forms -- Additional Information and Exhibits

A.In addition to the information expressly required to be included in Form A, Form B, Form C, Form D, Form E and Form F, the Commissioner may request such further material information, if any, as may be necessary to make the information contained therein not misleading. The person filing may also file such exhibits as it may desire in addition to those expressly required by the statement. The exhibits shall be so marked as to indicate clearly the subject matters to which they refer. Changes to Forms A, B, C, D, E or F (§§ 1.24 through 1.29 of this Part) shall include on the top of the cover page the phrase: “Change No. [insert number] to” and shall indicate the date of the change and not the date of the original filing.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.8 Definitions

A."Executive officer" means chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under whatever title.

B."Ultimate controlling person” means that person which is not controlled by any other person.

C.Unless the context otherwise requires, other terms found in this Part and in R.I. Gen. Laws § 27-35-1 are used as defined in the said R.I. Gen. Laws § 27-35-1. Other nomenclature or terminology is according to the Insurance Code, or industry usage if not defined by the Code.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.9 Subsidiaries of Domestic Insurers

A.The authority to invest in subsidiaries under R.I. Gen. Laws § 27-35-1.5 is in addition to any authority to invest in subsidiaries which may be contained in any other provision of the Insurance Code.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.10 Acquisition of Control -- Statement Filing (Form A)

A.A person required to file a statement pursuant to R.I. Gen. Laws § 27-35-2 shall furnish the required information on Form A, hereby made a part of this Part. Such person shall also furnish the required information on Form E (§ 1.28 of this Part), hereby made a part of this Part and described in § 1.13 of this Part.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.11 Amendments to Form A

A.The applicant shall promptly advise the Commissioner of any changes in the information furnished on Form A (§ 1.24 of this Part) arising subsequent to the date upon which the information was furnished but prior to the Commissioner's disposition of the application.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.12 Acquisition of Section 27-35-2(a)(1) Insurers

A.If the person being acquired is deemed to be a "domestic insurer" solely because of the provisions of R.I. Gen. Laws § 27-35-2(a)(1), the name of the domestic insurer on the cover page should be indicated as follows:

1."ABC Insurance Company, a subsidiary of XYZ Holding Company."

B.Where a R.I. Gen. Laws § 27-35-2(a)(1) insurer is being acquired, references to "the insurer" contained in Form A shall refer to both the domestic subsidiary insurer and the person being acquired.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.13 Pre-Acquisition Notification

A.If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to R.I. Gen. Laws § 27-35-2(a)(1), that person shall file a pre-acquisition notification form, Form E, which was developed pursuant to R.I. Gen. Laws § 27-35-2.5(c).

B.Additionally, if a non-domiciliary insurer licensed to do business in this state is proposing a merger or acquisition pursuant to R.I. Gen. Laws § 27-35-2.5, that person shall file a pre-acquisition notification form, Form E (§ 1.28 of this Part). No pre-acquisition notification form need be filed if the acquisition is beyond the scope of R.I. Gen. Laws § 27-35-2.5 as set forth in R.I. Gen. Laws § 27-35-2.5(b)(2).

C.In addition to the information required by Form E (§ 1.28 of this Part), the Commissioner may wish to require an expert opinion as to the competitive impact of the proposed acquisition.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.14 Annual Registration of Insurers -- Statement Filing

A.An insurer required to file an annual registration statement pursuant to R.I. Gen. Laws § 27-35-3 shall furnish the required information on Form B (§ 1.25 of this Part), hereby made a part of this Part.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.15 Summary of Registration - Statement Filing

A.An insurer required to file an annual registration statement pursuant to R.I. Gen. Laws § 27-35-3 is also required to furnish information required on Form C (§ 1.26 of this Part), hereby made a part of this Part.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.16 Amendments to Form B

A.An amendment to Form B (§ 1.25 of this Part) shall be filed within fifteen (15) days after the end of any month in which there is a material change to the information provided in the annual registration statement.

B.Amendments shall be filed in the Form B format with only those items which are being amended reported. Each amendment shall include at the top of the cover page “Amendment No. [insert number] to Form B for [insert year]” and shall indicate the date of the change and not the date of the original filings.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.17 Alternative and Consolidated Registrations

A.Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers which are required to register under R.I. Gen. Laws § 27-35-3. A registration statement may include information not required by R.I. Gen. Laws § 27-35-3(b) regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in this State. In lieu of filing a registration statement on Form B (§ 1.25 of this Part), the authorized insurer may file a copy of the registration statement or similar report which it is required to file in its State of domicile, provided:

1.The statement or report contains substantially similar information required to be furnished on Form B (§ 1.25 of this Part); and

2.The filing insurer is the principal insurance company in the insurance holding company system.

B.The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of Form B (§ 1.25 of this Part) on behalf of an affiliated insurer, shall set forth a brief statement of facts which will substantiate the filing insurer's claim that it, in fact, is the principal insurer in the insurance holding company system.

C.With the prior approval of the Commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under § 1.17(A) of this Part above.

D.Any insurer may take advantage of the provisions of R.I. Gen. Laws §§ 27-35-3(f) or 27-35-3(g) without obtaining the prior approval of the Commissioner. The Commissioner, however, reserves the right to require individual filings if he or she deems such filings necessary in the interest of clarity, ease of administration or the public good.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.18 Disclaimers and Termination of Registration

A.A disclaimer of affiliation or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control another person (hereinafter referred to as the "subject") shall contain the following information:

1.The number of authorized, issued and outstanding voting securities of the subject;

2.With respect to the person whose control is denied and all affiliates of such person, the number and percentage of shares of the subject's voting securities which are held of record or known to be beneficially owned, and the number of shares concerning which there is a right to acquire, directly or indirectly;

3.All material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of such person;

4.A statement explaining why the person should not be considered to control the subject.

B.A request for termination of registration shall be deemed to have been granted unless the Commissioner, within thirty (30) days after receipt of the request, notifies the registrant otherwise.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.19 Transactions Subject to Prior Notice -- Notice Filing

A.An insurer required to give notice of a proposed transaction pursuant to R.I. Gen. Laws § 27-35-4 shall furnish the required information on Form D (§ 1.27 of this Part), hereby made a part of this Part.

B.Agreements for cost sharing services and management services shall at a minimum and as applicable:

1.Identify the person providing services and the nature of such services;

2.Set forth the methods to allocate costs;

3.Require timely settlement, not less frequently than on a quarterly basis, and compliance with the requirements in the Accounting Practices and Procedures Manual;

4.Prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;

5.State that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance;

6.Define books and records of the insurer to include all books and records developed or maintained under or related to the agreement;

7.Specify that all books and records of the insurer are and remain the property of the insurer,

a.Are subject to control of the insurer:

b.Are identifiable, and

c.Are segregated from all other persons' records and data or are readily capable of segregation at no additional cost to insurer.

8.State that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer;

9.Include standards for termination of the agreement with and without cause;

10.Include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services and for any actions by the affiliate that violate provisions of the agreement required in §§ 19(B)(11), 19(B)(12), 19(B)(13), 19(B)(14) and 19(B)(15) of this Part;

11.Specify that, if the insurer is placed in supervision, seizure, conservatorship or receivership pursuant to R.I. Gen. Laws §§ 27-14.1 and 27-14.3.

a.All of the rights of the insurer under the agreement extend to the receiver or commissioner to the extent permitted by the law of Rhode Island;

b.All records and data of the insurer shall be identifiable and segregated from all other persons' records and data or readily capable of segregation at no additional cost to the receiver or the commissioner;

c.A complete set of records and data of the unsurer will immediately be made available to the receiver or the commissioner, shall be made available in a useable format and shall be turned over to the receiver or commissioner immediately upon the receiver or the commissioner's request, and the cost to transfer data to the receiver of the commissioner shall be fair and reasonable; and,

d.The affiliated person(s) will make available all employees essential to the operations of the insurer and the services associated therewith for the immediate continued performance of the essential services ordered or directed by the receiver or commissioner;

12.Specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership pursuant to the R.I. Gen. Laws § 27-14.3; and

13.Specify that the affiliate will provide the essential services for a minimum period of time specified in the agreement after the termination of the agreement, if the insurer is placed into supervision, seizure, conservatorship or receivership pursuant to R.I. Gen. Laws §§ 27-14.1 and 27-14.3, as ordered or directed by the receiver or commissioner. Performance of the essential services will contiue to be provided without regard to pre-receivership unpaid fees, so long as the affiliate continues to receive timely payment for post-receivership services rendered, and unless released by the receiver, commissioner or supervising court;

14.Specify that the affiliate will continue to maintain any systems, programs, or other infrastructure, notwithstanding supervision, seizure, conservatorship or receivership pursuant to R.I. Gen. Laws §§ 27-14.1 and 27-14.3, and will make them available to the receiver or commissioner as ordered or directed by the receiver or commissioner for so long as the affiliate continues to receive timely payment for post-receivership services rendered, and unless released by the receiver, commissioner or supervising court; and

15.Specify that, in furtherance of the cooperation between the receiver and the affected guaranty association(s) and subject to the receiver's authority over the insurer, if the insurer is placed into supervision, seizure, conservatorship or receivership pursuant to R.I. Gen. Laws §§ 27-14.1 and 27-14.3t, and portions of the insurer's policies or contracts are eligible for coverage by one or more guaranty associations, the affiliate's commitments under Subsections 19(B)(11), 19(B)(12), 19(B)(13) and 19(B)(14) of this Part will extend to such guaranty association(s).

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.20 Enterprise Risk Report

A.The ultimate controlling person of an insurer required to file an enterprise risk report pursuant to R.I. Gen. Laws § 27-35-3(l) shall furnish the required information on Form F (§ 1.29 of this Part), hereby made a part of this Part.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.21 Group Capital Calculations

A.Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation if the lead state commissioner makes a determination based upon that filing that the insurance holding company system meets all of the following criteria:

1.Has annual direct written and unaffiliated assumed premium (including international direct and assumed premium), but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $1,000,000,000;

2.Has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories;

3.Has no banking, depository or other financial entity that is subject to an identified regulatory capital framework within its holding company structure;

4.The holding company system attests that there are no material changes in the transactions between insurers and non-insurers in the group that have occurred since the last filing of the annual group capital; and

5.The non-insurers within the holding company system do not pose a material financial risk to the insurer's ability to honor policyholder obligations.

B.Where an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner has the discretion to accept in lieu of the group capital calcualtion a limited group capital filing if:

1.The insurance holding company system has annual direct written and unaffiliated assumed premium (including international direct and assumed premium), but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than $1,000,000,000; and all of the following additional criteria are met:

a.Has no insurers within its holding company structure that are domiciled outside of the United States or one of its territories;

b.Does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework; and

c.The holding company system attests that there are no material changes in transactions between insurers and non-insurers in the group that have occurred since the last filing of the report to the lead state commissioner and the non-insurers within the holding company system do not pose a material financial risk to the insurers ability to honor policyholder obligations.

C.For an insurance holding company that has previously met an exemption with respect to the group capital calculation pursuant to §§ 1.21(A) or 1.21(B) of this Part, the lead state commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the NAIC Group Capital Calculation Instruction, if any of the following criteria are met:

1.Any insurer within the insurance holding company system is in a Risk-Based Capital action level event as set forth in R.I. Gen. Laws § 27-4.6-3 or a similar standard for a non-U.S. insurer; or

2.Any insurer within the insurance holding company system meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in R.I. Gen. Laws § 27-14.2-2; or

3.Any insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer as determined by the lead state commissioner based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests.

D.A non-U.S. jurisdiction is considered to "recognize and accept" the group capital calculation if it satisfies the following criteria:

1.With respect to R.I. Gen. Laws § 27-35-3(l)(2)(iv):

a.The non-U.S. jurisdiction recognizes the U.S. state regulatory approach to group supervision and group capital, by providing the confirmation by a competent regulatory authority, in such jurisdiction, that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC Accreditation Program shall be subject only to worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction; or

b.Where no U.S. insurance groups operate in the non-U.S. jurisdiction, that non-U.S. jurisdiction indicates formally in writing to the lead state with a copy to the International Association of Insurance Supervisors that the group capital calculation is an acceptable international capital standard. This will serve as the documentation otherwise required in Section 21(D)(1)(a).

2.The non-U.S. jurisdiction provides confirmation by a competent regulatory authority in such jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the lead state commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such jurisdiction, including but not limited to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC. The commissioner shall determine, in consultation with the NAIC Committee Process, if the requirements of the information sharing agreements are in force.

E.A list of non-U.S. jurisdictions that "recognize and accept" the group capital calculation will be published through the NAIC Committee Process:

1.A list of jurisdictions that "recognize and accept" the group capital calculation pursuant to R.I. Gen. Laws § 27-35-3(l)(2)(iv), is published through the NAIC Committee Process to assist the lead state commissioner in determining which insurers shall file an annual group capital calculation. The list will clarify those situations in which a jurisdiction that is exempted under R.I. Gen. Laws § 27-35-3(l)(2)(iv). To assist with a determination under R.I. Gen. Laws § 27-35-3(l)(2)(v), the list will also identify whether a jurisdiction that is exempted under either R.I. Gen. Laws §§ 27-35-3(l)(2)(iii) or 27-35-3(l)(2)(iv) requires a group capital filing for any U.S. based insurance group's operations in that non-U.S. jurisdiction.

2.For a non-U.S. jurisdiction where no U.S. insurance groups operate, the confirmation provided to meet the requirement of Section 21(D)(1)(b) will serve as support for recommendation to be published as a jurisdiction that "recognizes and accepts" the group capital calculation through the NAIC Committee Process.

3.If the lead state commissioner makes a determination pursuant to R.I. Gen. Laws § 27-35-3(l)(2)(iv) that differs from the NAIC List, the lead state commissioner shall provide thoroughly documented justification to the NAIC and other states.

4.Upon determination by the lead state commissioner that a non-U.S. jurisdiction no longer meets one or more of the requirements to "recognize and accept" the group capital calculation, the lead state commissioner may provide a recommendation to the NAIC that the non-U.S. jurisdiction be removed from the list of jurisdictions that "recognize and accepts" the group capital calculation.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.22 Extraordinary Dividends and Other Distributions

A.Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following:

1.The amount of the proposed dividend;

2.The date established for payment of the dividend;

3.A statement as to whether the dividend is to be in cash or other property and, if in property, a description thereof, its cost, and its fair market value together with an explanation of the basis for valuation;

4.A copy of the calculations determining that the proposed dividend is extraordinary. The work paper shall include the following information:

a.The amounts, dates and form of payment of all dividends or distributions (including regular dividends but excluding distributions of the insurer’s own securities) paid within the period of twelve (12) consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought and commencing on the day after the same day of the same month in the last preceding year;

b.Surplus as regards policyholders (total capital and surplus) as of the 31st day of December next preceding;

c.If the insurer is a life insurer, the net gain from operations for the 12-month period ending the 31st day of December next preceding;

d.If the insurer is not a life insurer, the net income less realized capital gains for the 12-month period ending the 31st day of December next preceding and the two preceding 12-month periods; and

e.If the insurer is not a life insurer, the dividends paid to stockholders excluding distributions of the insurer’s own securities in the preceding two (2) calendar years;

5.A balance sheet and statement of income for the period intervening from the last annual statement filed with the Commissioner and the end of the month preceding the month in which the request for dividend approval is submitted; and

6.A brief statement as to the effect of the proposed dividend upon the insurer's surplus and the reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs.

B.Subject to R.I. Gen. Laws § 27-35-4(c), each registered insurer shall report to the Commissioner all dividends and other distributions to shareholders within fifteen (15) business days following the declaration thereof, including the same information required by § 1.22(A)(4) of this Part.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.23 Adequacy of Surplus

A.The factors set forth in R.I. Gen. Laws § 27-35-4(b) are not intended to be an exhaustive list. In determining the adequacy and reasonableness of an insurer's surplus no single factor is necessarily controlling. The Commissioner, instead, will consider the net effect of all of these factors plus other factors bearing on the financial condition of the insurer. In comparing the surplus maintained by other insurers, the Commissioner will consider the extent to which each of these factors varies from company to company and in determining the quality and liquidity of investments in subsidiaries, the Commissioner will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments so warrant.

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.24 Form A: Statement Regarding Theacquisition Of Control Of Or Merger With A Domestic Insurer

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.25 Form B: Insurance Holding Company System Annual Registration Statement

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.26 Form C: Summary Of Changes To Registration Statement

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.27 Form D: Prior Notice Of A Transaction

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.28 Form E: Pre-Acquisition Notification Form Regarding The Potential Competitive Impact Of A Proposed Merger Or Acquisition By A Non-Domiciliary Insurer Doing Business In This State Or By A Domestic Insurer

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-1 § 1.29 Form F: Enterprise Risk Report

History

Amendment — effective from 2026-05-25 to current
Periodic Refile — effective from 2022-01-04 to 05/25/2026
Technical Revision — effective from 2012-04-12 to 01/04/2022
Amendment — effective from 2012-04-12 to 04/12/2012
Periodic Refile — effective from 2001-12-19 to 04/12/2012

230-RICR-20-45-2 Surrender and Non-Renewal of Licenses by Insurers

230-RICR-20-45-2 § 2.1 Purpose, Scope and Authority

A.Purpose and Scope. This Regulation establishes the procedure by which an insurer licensed to write insurance in Rhode Island may surrender or non-renew its existing license and requires submission of a withdrawal plan that will protect the residents of the state. The plan shall be approved by the Commissioner of Insurance prior to becoming effective.

B.The purpose of this Regulation is to limit and prevent, where possible, market disturbances and to preserve the rights of insureds and others affected by the withdrawal of insurers from the Rhode Island insurance market, while permitting insurers to phase out their business in an orderly fashion consistent with their obligations under applicable laws.

C.Authority. This Regulation is promulgated in accordance with the authority granted to the Director of the Department of Business Regulation R.I. Gen. Laws §§ 27-1-1 et seq., 27-2-1 et seq., 27-3-1 et seq., 27-7.1-1 et seq., 27-7.2-1 et seq., 27-13-1 et seq., 27-16-1 et seq., 27-18-1 et seq., 27-19-1 et seq., 27-20-1 et seq., 27-20.1-1 et seq., 27-20.2-1 et seq., 27-20.3-1 et seq., 27-20.4-1 et seq., 27-29-1 et seq., 27-41-1 et seq., and 27-46-1 et seq., 42-14-1 et seq., and 42-62-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-10-01 to 01/04/2022
Technical Revision — effective from 2003-10-01 to 10/01/2003
Technical Revision — effective from 2003-10-01 to 10/01/2003
Periodic Refile — effective from 2001-12-19 to 10/01/2003

230-RICR-20-45-2 § 2.2 Applicability and Effective Date

A.This regulation applies to any insurance company that has obtained a license pursuant to Title 27 of the Rhode Island General Laws and that intends to surrender or to not renew such license for any line or all lines of business.

B.No applicant may implement a withdrawal plan until that plan is approved by the Commissioner in accordance with the provisions of this regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-10-01 to 01/04/2022
Technical Revision — effective from 2003-10-01 to 10/01/2003
Technical Revision — effective from 2003-10-01 to 10/01/2003
Periodic Refile — effective from 2001-12-19 to 10/01/2003

230-RICR-20-45-2 § 2.3 Definitions

A.As used in this Regulation, the following terms shall mean:

1.“Applicant” means an insurer who proposes to surrender, not renew, or amend any license to delete approval, in whole or in part, to engage in the business of insurance in the State of Rhode Island and seeks approval of a withdrawal plan to implement that proposal.

2.“Affiliate” means any corporation or business of any type which controls the applicant or any corporation or business of any type which is either controlled by the applicant, or by a corporation or business which controls the applicant.

3."Control" shall have the meaning ascribed to it in R.I. Gen. Laws § 27-35-1(c).

4.“Commissioner” means the Commissioner of Insurance appointed pursuant to R.I. Gen. Laws § 42-14-1 et seq., or his or her designee.

5.“Department” means the Department of Business Regulation, established pursuant to R.I. Gen. Laws § 42-14-1 et seq.

6.“Insurer” means any company licensed under Title 27 or R.I. Gen. Laws § 42-62-1 et seq. of the General Laws of Rhode Island.

7.“License” means any license, certificate of authority, certificate of compliance, or other formal approval granted or issued by the Department of Business Regulation, Division of Insurance, allowing an insurer to transact the business of insurance in Rhode Island. License shall not mean a formal approval to an excess or surplus lines insurer.

8.“NCCI” means National Council on Compensation Insurance.

9.“NWCRP” means National Worker's Compensation Reinsurance Pool.

10.“Policy” means any policy of insurance, annuity, rider, endorsement or other contract which provides benefits to any Rhode Island resident.

11.“Producer” means an insurance "agent" or "broker" or a person who solicits, negotiates, effects, procures, delivers, renews, continues or binds policies of insurance or who offers advice, counsel, opinion or service in this state licensed in accordance with the General Laws of Rhode Island, as amended. An insurance producer does not include an excess or surplus lines agent or broker licensed pursuant to R.I. Gen. Laws § 27-3-38.

12.“Rhode Island Resident” means a person who is domiciled in Rhode Island or a corporation or business entity doing business or having any employees in Rhode Island.

13.“Surrender” means voluntary relinquishing of a license or part of a license, the intentional failure to renew a license or part of a license, or the amendment of any license to delete a line or lines of business.

14.“Withdrawal Plan” means a plan submitted by an applicant in accordance with the provisions of this regulation which describes how the applicant proposes to surrender or not renew any or all licenses.

15.“Workers' Compensation Insurance Fund” means the plan and entity established by R.I. Gen. Laws § 27-7.2-1 et seq. which serves as a voluntary and residual market mechanism for workers' compensation insurance.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-10-01 to 01/04/2022
Technical Revision — effective from 2003-10-01 to 10/01/2003
Technical Revision — effective from 2003-10-01 to 10/01/2003
Periodic Refile — effective from 2001-12-19 to 10/01/2003

230-RICR-20-45-2 § 2.4 Filing Requirements

A.Effect of Filing: Nothing contained in this Regulation shall preclude the Commissioner from initiating a proceeding to revoke or suspend the applicant's license or licenses.

B.Timing: An applicant intending to surrender any license or part of any license shall submit all documents required by § 2.4(C) of this Part no less than ninety (90) days before the proposed effective date of the withdrawal.

C.Content of Plan: The applicant shall submit to the Commissioner a withdrawal plan which shall contain the following:

1.A copy of all Rhode Island licenses currently held by the applicant, indicating the date on which such licenses were issued;

2.An organizational chart indicating the relationship among the applicant and its affiliates;

3.A provision that the insurer will comply with all lawful fair claims practice requirements contained in the insurance laws and applicable regulations of the Department;

4.A provision that insureds and producers of record of affected inforce policies will be advised of the insurer's intention to surrender a Rhode Island license. Such notice must be given no later than thirty (30) days after the insurer files the withdrawal plan with the Commissioner. Copies of the prototype notice the applicant intends to send to its insureds and prototypes of any other notices of nonrenewal or cancellation shall be submitted to the Commissioner. All such notices shall include the following statement: "[Name of applicant] has submitted a withdrawal plan for approval by the Commissioner of Insurance of the State of Rhode Island which will result in the [applicant's] cessation of [Insert line(s) of insurance] insurance in Rhode Island. Should the withdrawal plan be disapproved, you will be notified."

5.A list of all of the applicant's producers of record of affected Rhode Island business as of the date of submission of the withdrawal plan.

6.A written statement that the insurer will comply with all lawful rulings and directives pertaining to cessation of business in Rhode Island issued by the governing bodies of the following entities:

a.NWCRP

b.the Rhode Island Life and Health Insurance Guaranty Association;

c.the Federal Riot Reinsurance Reimbursement Fund;

d.the Rhode Island Insurers' Insolvency Fund;

e.the Workers' Compensation Insurance Fund;

f.Rhode Island Auto Insurance Plan; and,

g.any other residual market facility or other entity required by law.

7.A list and the amount of all the applicant's deposits currently held by the General Treasurer of the State of Rhode Island

8.A provision that for as long as there exist any potential claims arising from any insurance policy written by the applicant which insures a Rhode Island resident:

a.the applicant will fully honor its obligations arising from any such policy;

b.the applicant will fully service all outstanding policies, bonds, and surety lines or credit, including processing all usual and customary endorsements that become effective while such policies are in effect, subject to the applicant's normal underwriting standards;

c.the applicant will not unfairly discriminate against Rhode Island policyholders in its dividend practices in those cases in which policies remaining in force provide for dividends to be paid;

d.the applicant will continue to submit annual statements to the Division of Insurance, will continue to submit information to the entities identified in § 2.4(C) of this Part upon request, will agree to examination by the Division of Insurance as deemed necessary by the Commissioner, will pay the costs of examination under applicable statutes until notice is given that reports are no longer required, and will continue to operate in accordance with and submit to the Commissioner's jurisdiction under R.I. Gen. Laws § 27-16-1 et seq, provided, however, that this subparagraph shall apply only if applicant is surrendering or nonrenewing its authority to write all lines of insurance; and;

e.the Commissioner of Insurance will continue as applicant's agent for service of process, if applicable.

9.A written statement that the applicant will promptly pay all statutory assessments it is legally obligated to pay.

10.If the applicant is surrendering or nonrenewing its authority to write all lines of insurance, a provision that the applicant will maintain a security deposit in an amount sufficient to provide security for its outstanding liabilities including but not limited to unearned premiums, policy reserves, policy liabilities, and unpaid losses, including incurred but not reported losses, to Rhode Island policyholders and claimants if the Commissioner so requires.

11.A written agreement that, upon the Commissioner's request, the applicant will maintain a staffed service office in Rhode Island and/or a toll free telephone number directly to the insurer's home office for the use of the applicant's policyholders and claimants. The listing of such telephone number in telephone directories in this state will not constitute the solicitation of business in this state. Policyholders, producers, and claimants shall be furnished with the telephone number with each written communication from the insurer.

12.A provision that the insurer will have responsible representatives available in Rhode Island for conferences or discussions when required by the Commissioner.

D.Incomplete Filings. In the event the Commissioner finds the initial filing of a withdrawal plan incomplete, he or she shall notify the applicant in writing within thirty (30) days after receipt of such filing, and shall specify the additional documents or information required by § 2.4(C) of this Part. The applicant shall file the additional information within fifteen (15) days of its receipt of the notice, or longer if permitted by the Commissioner. Failure to comply with such a request for additional information may delay the approval of the withdrawal plan.

E.Complete Filings. A filing shall not be deemed complete until all information required by § 2.4(C) of this Part has been received by the Commissioner.

F.Abbreviated Filings. The Commissioner may permit an abbreviated filing when an applicant proposes to surrender or not renew its license for a line of insurance in which it wrote less than five per cent (5%) of the total Rhode Island premium for that line of business in any of the three (3) most recent years for which data is available, and proposes to otherwise retain at least one other line of insurance. The procedure for this abbreviated filing is as follows:

1.The insurer shall file with the Commissioner its proposed abbreviated filing, which shall include:

a.a request for an abbreviated filing; and

b.the information it proposes to file as the abbreviated filing.

2.The Commissioner shall, within thirty (30) days of receipt of the proposed abbreviated filing:

a.grant the request for an abbreviated filing and accept the filing as complete;

b.grant the request for an abbreviated filing and request additional information; or

c.deny the request for an abbreviated filing and require a full filing pursuant to § 2.5(C) of this Part.

G.If the Commissioner fails to act within thirty (30) days, the request for an abbreviated filing will be deemed to have been granted. In such a case, the Commissioner retains the right to request additional information pursuant to § 2.4(F)(2)(b) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-10-01 to 01/04/2022
Technical Revision — effective from 2003-10-01 to 10/01/2003
Technical Revision — effective from 2003-10-01 to 10/01/2003
Periodic Refile — effective from 2001-12-19 to 10/01/2003

230-RICR-20-45-2 § 2.5 Review and Approval of Filing

A.The Commissioner shall promptly review a completed withdrawal plan, and may conduct a hearing, if necessary, to inquire into any aspect of the withdrawal plan.

B.The Commissioner shall issue a written decision on the applicant's withdrawal plan no later than thirty (30) days from the receipt of a complete filing. The Commissioner shall approve the plan if it conforms with the requirements of § 2.4(C) of this Part. If the decision disapproves the withdrawal plan in whole or in part, the Commissioner shall specify in what respect(s) the plan fails to conform with the requirements of § 2.4(C) of this Part.

C.In the event the Commissioner disapproves an applicant's withdrawal plan without hearing, the applicant may request a hearing by filing a written request for a hearing within ten (10) days of its receipt of notice of disapproval. The Commissioner shall schedule the hearing to be held within twenty (20) days of receipt of the request for the hearing. Within thirty (30) days after the conclusion of the hearing, the Commissioner shall either approve, approve with conditions or disapprove the withdrawal plan. The applicant shall have the right to judicial review of the Commissioner's decision in accordance with the provisions of R.I. Gen. Laws § 42-35-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-10-01 to 01/04/2022
Technical Revision — effective from 2003-10-01 to 10/01/2003
Technical Revision — effective from 2003-10-01 to 10/01/2003
Periodic Refile — effective from 2001-12-19 to 10/01/2003

230-RICR-20-45-2 § 2.6 Severability

If any provision of this Regulation or its applicability to any person or entity is held invalid by a court, the remainder of this regulation shall not be affected thereby.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-10-01 to 01/04/2022
Technical Revision — effective from 2003-10-01 to 10/01/2003
Technical Revision — effective from 2003-10-01 to 10/01/2003
Periodic Refile — effective from 2001-12-19 to 10/01/2003

230-RICR-20-45-5 Insider Trading of Domestic Stock Insurance Company Equity Securities

230-RICR-20-45-5 § 5.1 Definitions of Certain Terms.

A.“Act” means R.I. Gen. Laws §§ 27-1-29 to 27-1-36, inclusive, of the general laws.

B. “Equity security” means any stock or similar security; or any voting trust certificate or certificate of deposit for such a security; or any security convertible, with or without consideration into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right.

C. “Immediate family” of a trustee means:

1.a son or daughter of the trustee, or a descendant of either;

2.a stepson or stepdaughter of the trustee;

3.the father or mother of the trustee, or an ancestor of either;

4.a stepfather or stepmother of the trustee;

5.a spouse of the trustee.

For the purpose of determining whether any of the foregoing relations exists, a legally adopted child of a person shall be considered a child of such person by blood.

D. “Issuer” means any domestic stock insurance company any class of whose equity securities are subject to the provisions of R.I. Gen. Laws §§ 27-1-29 to 27-1-35, inclusive, of the general laws and are not exempt by reason of the application of R.I. Gen. Laws §§ 27-1-32 and 27-1-33.

E.“Officer” means a president, vice president, treasurer, actuary secretary, controller and any other person who performs functions corresponding to those performed by the foregoing officers.

F. “Qualified stock option” and “employee stock purchase plan” shall be defined as those terms are defined in Sections 422 and 423 of the Internal Revenue Code of 1954, as amended (26 U.S.C. §§ 422 and 423).

G.“Restricted stock option” shall be defined as that term is defined in Section 424 (b) of the Internal Revenue Code of 1954, as amended (26 U.S.C. § 424(b)); provided for the purposes of this Section an option which meets all of the conditions of that Section other than the date of issuance shall be deemed to be a “restricted stock option”.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.2 Definition of Securities "Held of Record."

A.For the purpose of determining whether the equity securities of an issuer are held of record by one hundred or more persons, securities shall be deemed to be “held of record” by each person who is identified as the owner of such securities on records of security holders maintained by or on behalf of such issuer, subject to the following conditions:

1.In any case where the records of security holders have not been maintained in accordance with accepted practice, any additional person who would be identified as such an owner on such records if they had been maintained in accordance with accepted practice shall be included as a holder of record.

2.Securities identified as held of record by a corporation, a partnership, a trust whether or not the trustees are named, or other organization shall be included as so held by one person.

3.Securities identified as held of record by one or more persons as trustees, executors, guardians, custodians or in other fiduciary capacities with respect to a single trust, estate or account shall be included as held of record by one person.

4.Securities held by two (2) or more persons as co-owners shall be included as held of record by one person.

5.Each outstanding unregistered or bearer certificate shall be included as held of record by a separate person, except to the extent that the issuer can establish that, if such securities were registered, they would be held of record, under the provisions of this rule, by a lesser number of persons.

6.Securities registered in substantially similar names where the issuer has reason to believe because of the address or other indications that such names represent the same person, may be included as held of record by one person.

B.Notwithstanding § 5.2(A) of this Part above:

1.Securities held, to the knowledge of the issuer, subject to a voting trust, deposit agreement or similar arrangement shall be included as held of record by the record holders of the voting trust certificates, certificates of deposit, receipts or similar evidence of interest in such securities; provided however, that the issuer may rely in good faith on such information as is received in response to its request from a non-affiliated issuer of the certificates or evidence of interest.

2.If the issuer knows or has reason to know that the form of holding securities of record is used primarily to circumvent the provisions of the act, the beneficial owners of such securities shall be deemed to be the record owners thereof.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.3 Transactions Exempted from the Operation of R.I. Gen. Laws § 27-1-30

Any acquisition or disposition of any equity security by a director or officer of an issuer within six (6) months prior to the date on which this act shall first become applicable with respect to the equity securities of such issuer shall not be subject to the operation of R.I. Gen. Laws § 27-1-30.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.4 Reports of Directors, Officers and Principal Stockholders – Filing of Statements.

Initial statements of beneficial ownership of equity securities required by R.I. Gen. Laws § 27-1-29 shall be filed on or before June 30, 1966 on Form 3, a sample of which is attached hereto. Statements of changes in such beneficial ownership required by R.I. Gen. Laws § 27-1-29 shall be filed on Form 4, a sample of which is attached hereto. All such statements shall be prepared and filed in accordance with the requirements of the applicable form.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.5 Ownership of More than Ten Percent of an Equity Security.

In determining, for the purpose of R.I. Gen. Laws § 27-1-29 whether a person is the beneficial owner, directly or indirectly, of more than ten percent (10%) of any class of any equity security of an issuer such class shall be deemed to consist of the total amount of such class outstanding, exclusive of any securities of such class held by or for the account of the issuer or a subsidiary of the issuer: except that for the purpose of determining percentage ownership of voting trust certificates or certificates of deposit for equity securities, the class voting trust certificates or certificates of deposit shall be deemed to consist of the amount of voting trust certificates or certificates of deposit issuable with respect to the total amount of outstanding equity securities of the class which may be deposited under the voting trust agreement or deposit agreement is question, whether or not all of such outstanding securities have been so deposited For the purpose of this rule a person acting in good faith may rely on the information contained in the latest Convention Form Statement filed with the Commissioner, with respect to the amount of securities of a class outstanding or in the case of voting trust certificates or certificates of deposit the amount thereof issuable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.6 Disclaimer of Beneficial Ownership.

Any person filing a statement may expressly declare therein that the filing of such statement shall not be construed as an admission that such person is, for the purpose of the act, the beneficial owner of any equity securities covered by the statement.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.7 Exemption from R.I. Gen. Laws §§ 27-1-29 and 27-1-30.

A.During the period of twelve (12) months following their appointment and qualification, securities held by the following their appointment and qualification, securities held by the following persons shall be exempt from R.I. Gen. Laws §§ 27-1-29 and 27-1-30.

1.Executors or administrators of the estate of a decedent;

2.Guardians or committees for an incompetent; and

3.Receivers, trustees in bankruptcy, assignees for the benefit of creditors, conservators, liquidating agents, and other similar persons duly authorized by law to administer the estate or assets of other persons.

B.After the twelve (12) month period following their appointment or qualification the foregoing persons shall be required to file reports with respect to the securities held by the estates which they administer under R.I. Gen. Laws § 27-1-29 and shall be liable for profits realized from trading in such securities pursuant to R.I. Gen. Laws § 27-1-30 only when the estate being administered is a beneficial owner of more than ten percent (10%) of any class of equity security which is an issuer subject to the act.

C.Securities reacquired by or for the account of an issuer and held by it for its account shall be exempt from R.I. Gen. Laws §§ 27-1-29 and 27-1-30 during the time they are held by the issuer.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.8 Exemptions from the Act of Securities Purchased or Sold by Odd Lot Dealers.

Securities purchased or sold by an odd-lot dealer in odd lots so far as reasonably necessary to carry on odd-lot transactions or in round lots to offset odd-lot transactions previously or simultaneously executed or reasonably anticipated in the usual course of business, shall be exempt from the provisions of the act with respect to participation by such odd-lot dealer in such transaction.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.9 Certain Transactions Subject to R.I. Gen. Laws § 27-1-29.

The acquisition or disposition of any transferable option, put, call, spread or straddle shall be deemed such a change in the beneficial ownership of the security to which such privilege relates as to require the filing of a statement reflecting the acquisition or disposition of such privilege. Nothing in this paragraph, however, shall exempt any person from filing the statements required upon the exercise of such option, put, call, spread or straddle.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.10 Ownership of Securities Held in Trust.

A.Beneficial Ownership of a security for the purpose of R.I. Gen. Laws § 27-1-29 shall include:

1.The ownership of securities as a trustee where either the trustee or members of his immediate family have a vested interest in the income or corpus of the trust,

2.The ownership of a vested beneficial interest in a trust, and

3.The ownership of securities as a settlor of a trust in which the settlor has the power to revoke the trust without obtaining the consent of all the beneficiaries.

B.Except as provided in § 5.10(C) of this Part hereof, beneficial ownership of securities solely as a settlor or beneficiary of a trust shall be exempt from the provision of R.I. Gen. Laws § 27-1-29 where less than twenty percent (20%) in market value of the securities having a readily ascertainable market value held by such trust, determined as of the end of the preceding fiscal year of the trust, consists of equity securities with respect to which reports would otherwise be required. Exemption is likewise accorded from R.I. Gen. Laws § 27-1-29 with respect to any obligation which would otherwise be imposed solely by reason of ownership as settlor or beneficiary of securities held in trust, where the ownership, acquisition, or disposition of such securities by the trust is made without prior approval by the settlor or beneficiary. No exemption pursuant to § 5.10 of this Part shall, however, be acquired or lost solely as a result of changes in the value of the trust assets during any fiscal year or during any time when there is no transaction by the trust in the securities otherwise subject to the reporting requirements of R.I. Gen. Laws § 27-1-29.

C.In the event that ten percent (10%) of any class of any equity security of an issuer is held in a trust, that trust and the trustees thereof as such shall be deemed a person required to file the reports specified in R.I. Gen. Laws § 27-1-29.

D.Not more than one (1) report need be filed to report any holdings or with respect to any transaction in securities held by a trust, regardless of the number of officers, directors or ten percent (10%) stockholders who are either trustees, settlors, or beneficiaries of a trust, provided that the report filed shall disclose the names of all trustees, settlors and beneficiaries who are officers, directors or ten percent (10%) stockholders. A person having an interest only as a beneficiary of a trust shall not be required to file any such report so long as he relies in good faith upon an understanding that the trustee of such trust will file whatever reports might otherwise be required of such beneficiary.

E.In determining, for the purposes of R.I. Gen. Laws § 27-1-29, whether a person is the beneficial owner, directly or indirectly, of more than ten percent (10%) of any class of any equity security, the interest of such person in the remainder of a trust shall be excluded for the computation.

F.No report shall be required by any person, whether or not otherwise subject to the requirement of filing reports under R.I. Gen. Laws § 27-1-29, with respect to his indirect interest in portfolio securities held by:

1.a pension or retirement plan holding securities of an issuer whose employees generally are the beneficiaries of the plan,

2.a business trust with over twenty five (25) beneficiaries.

G.Nothing in § 5.10 of this Part shall be deemed to impose any duties or liabilities with respect to reporting any transaction or holding prior to its effective date.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.11 Exemption for Small Transactions.

A.Any acquisition of securities shall be exempt from R.I. Gen. Laws § 27-1-29 where

1.The person effecting the acquisition does not within six (6) months thereafter effect any disposition, otherwise than by way of gift, of securities of the same class, and

2.The person effecting such acquisition does not participate in acquisitions or in dispositions of securities of the same class having a total market value in excess of three thousand dollars ($3,000) for any six (6) month period during which the acquisition occurs.

B.Any acquisition or disposition of securities by way of gift, where the total amount of such gifts does not exceed three thousand dollars ($3,000) in market value for any six (6) month period, shall be exempt from R.I. Gen. Laws § 27-1-29 and may be excluded from the computation prescribed in § 5.11(A)(2) of this Part.

C.Any person exempted by §§ 5.11(A) or (B) of this Part shall include in the first report filed by him after a transaction within the exemption a statement showing his acquisitions and dispositions for each six (6) month period or portion thereof which has elapsed since his last filing.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.12 Exemption from R.I. Gen. Laws § 27-1-30 of the Act of Transactions Which Need Not Be Reported under R.I. Gen. Laws § 27-1-29.

Any transaction which has been or shall be exempted from the requirements of R.I. Gen. Laws § 27-1-29 shall, insofar as it is otherwise subject to the provisions of R.I. Gen. Laws § 27-1-30 be likewise exempted from R.I. Gen. Laws § 27-1-30.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.13 Exemption from R.I. Gen. Laws § 27-1-30 of Certain Transactions Effected in connection with a Distribution.

A.Any transaction of purchase and sale, or sale and purchase, of a security which is affected in connection with the distribution of a substantial block of securities shall be exempt from the provisions of R.I. Gen. Laws § 27-1-30, to the extent specified, as not comprehended within the purpose of said Section, upon the following conditions:

1.The person affecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of such business, in the distribution of such block of securities;

2.The security involved in the transaction is

a.a part of such block of securities and is acquired by the person effecting the transaction, with a view to the distribution thereof, from the issuer of other person on whose behalf such securities are being distributed or from a person who is participating in good faith in the distribution of such block of securities, or

b.a security purchased in good faith by or for the account for the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with such distribution; and

3.Other persons not within the purview of R.I. Gen. Laws § 27-1-30 are participating in the distribution of such block of securities on terms at least as favorable as those on which such person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of R.I. Gen. Laws § 27-1-30 by § 5.13 of this Part. However, the performance of the functions of a manager of a distributing group and the receipt of a bona fide payment for performing such functions shall not preclude an exemption which would otherwise be available under § 5.13 of this Part.

B.The exemption of a transaction pursuant to § 5.13 of this Part with respect to the participation therein of one party thereto shall not render such transaction exempt with respect to participation of any other party therein unless such other party also meets the conditions of § 5.13 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.14 Exemption from R.I. Gen. Laws § 27-1-30 of Acquisitions of Shares of Stock and Stock Options under Certain Stock Bonus, Stock Option or Similar Plans.

A.Any acquisition of shares of stock (other than stock acquired upon the exercise of an option, warrant or right) pursuant to a stock bonus, profit sharing, retirement, incentive, thrift, savings or similar plan, or any acquisition of a qualified or a restricted stock option pursuant to a qualified or a restricted stock option plan, or a stock option pursuant to an employee stock purchase plan, by a director or officer of the issuer of such stock or stock option shall be exempt from the operation of R.I. Gen. Laws § 27-1-30 if the plan meets the following conditions:

1.The plan has been approved, directly or indirectly, by the affirmative votes of the holders of a majority of the securities of such issuer present or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of this state, or by the written consent of the holders of a majority of the securities of such issuer entitled to vote: provided, however, that if such vote or written consent was not solicited substantially in accordance with the proxy rules and regulations, if any, in effect at the time of such vote or written consent, the issuer shall furnish in writing to the holders of record of the securities entitled to vote for the plan substantially the same information concerning the plan which would be required by the rules and regulations in effect at the time such information is furnished, if proxies to be voted with respect to the approval or disapproval of the plan were then being solicited, on or prior to the date of the first annual meeting of security holders held subsequent to the later of the date the act first applies to such issuer, or the acquisition of an equity security for which exemption is claimed. Such written information may be furnished by mail to the last known address of the security holders of record within thirty (30) days prior to the date of mailing. Four copies of such written information shall be filed with, or mailed for filing to the Commissioner not later than the date on which it is first sent or given to security holders of the issuer. For the purposes of this subdivision, the term “issuer” includes a predecessor corporation if the plan or obligations to participate thereunder were assumed by the issuer in connection with the succession.

2.If the selection of any director or officer of the issuer to who stock may be allocated or to whom qualified, restricted or employee stock purchase plan stock options may be granted pursuant to the plan, or the determination of the number or maximum number of shares of stock which may be allocated to any such director or officer or which may be covered by qualified, restricted or employee stock purchase plan stock options granted to any such director or officer, is subject to the discretion of any person, then such discretion shall be exercised only as follows:

a.With respect to the participation of directors:

(1)By the board of directors of the issuer, a majority of which board and a majority of the directors acting in the matter are disinterested persons;

(3)otherwise in accordance with the plan, if the plan specifies the number or maximum number of shares of stock which directors may acquire or which may be subject to qualified, restricted or employee stock purchases plan stock options granted to directors and the terms upon which, and the times at which or the periods within which, such stock may be acquired or such options may be acquired and exercised; or sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the company, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time, or similar factors.

b.With respect to the participation of officers who are not directors:

(1)by the board of directors of the issuer, a committee of three (3) or more directors; or

(2)by, or only in accordance with the recommendations of, a committee of three (3) or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons. For the purpose of this subdivision, a director or committee member shall be deemed to be a disinterested person only if such person is not at the time such discretion is exercised eligible and has not at any time within one year prior thereto been eligible for selection as a person to whom stock may be allocated or to whom qualified, restricted or employee stock purchase plan stock options may be granted pursuant to the plan or any other plan of the issuer or any of its affiliates entitling the participants therein to acquire stock or qualified, restricted or employee stock purchase plan stock options of the company or any of its affiliates.

c.The provisions of this subdivision shall not apply with respect to any option granted, or other equity security acquired, prior to the date that R.I. Gen. Laws §§ 27-1-29, 27-1-30 and 27-1-31 first become applicable with respect to any class of equity securities of any issuer.

3.As to each participant or as to all participants the plan effectively limits the aggregate dollar amount or the aggregate number of shares of stock which may be allocated, or which may be subject to qualified, restricted, or employee stock purchase plan stock options granted, pursuant to the plan. The limitations may be established on an annual basis, or for the duration of the plan, whether or not the plan has a fixed termination date; and may be determined either by fixed or maximum dollar amounts or fixed or maximum numbers of shares or by formulas based upon earnings of the issuer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time, or similar factors which will result in an effective and determinable limitation. Such limitations may be subject to any provisions for adjustment of the plan or of stock allocable or options outstanding thereunder to prevent dilution or enlargement of rights.

4.All terms used in § 5.15 of this Part shall have the same meaning as in the act. In addition, for the purpose of § 5.15 of this Part, the following definition applies:

a.“Plan” includes any plan, whether or not set forth in any formal written document or documents and whether or not approved in its entirety at one time.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.15 Exemption from R.I. Gen. Laws § 27-1-30 of Certain Transactions in Which Securities are Received by Redeeming Other Securities.

A.Any acquisition of an equity security, other than a convertible security or tight to purchase a security, by a director or officer of the issuer of such security shall be exempt from the operation of R.I. Gen. Laws § 27-1-30 if:

1.The equity security is acquired by way of redemption of another security of an issuer substantially all of whose assets other than cash, or Government bonds, consist of securities of the issuer of the equity security so acquired, and which

a.Represented substantially and in practical effect a stated or readily ascertainable amount of such equity security,

b.Had a value which was substantially determined by the value of such equity security, and

c.Conferred upon the holder the right to receive such equity security without the payment of any consideration other than the security redeemed;

2.No security of the same class as the security redeemed was acquired by the director or officer within six (6) months prior to such redemption or is acquired within six (6) months after such redemption:

3.The issuer of the equity security acquired has recognized the applicability of § 5.15(A) of this Part by appropriate corporate action.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.16 Exemption of Long Term Profits Incident to Sales Within Six Months of the Exercise of an Option.

A.To the extent specified in § 5.16(B) of this Part, the Commissioner hereby exempts as not comprehended within the purposes of R.I. Gen. Laws § 27-1-30 any transaction or transactions involving the purchase and sale, or sale and purchase, of any equity security where such purchase is pursuant to the exercise of an option or similar right either:

1.acquired more than six (6) months before its exercise, or

acquired pursuant to the terms of an employment contract entered into more than six (6) months before its exercise.

B.In respect of transactions specified above in § 5.16(A) of this Part, the profits inuring to the issuer shall not exceed the difference between the proceeds of sale and the lowest market price of any security of the same class within six (6) months before or after the date of sale. Nothing in this rule shall be deemed to enlarge the amount of profit which would inure to such company in the absence of this rule.

C.The Commissioner also hereby exempts as not comprehended within the purposes of R.I. Gen. Laws § 27-1-30, the disposition of a security, purchased in a transaction specified in § 5.16(A) of this Part above, pursuant to a plan or agreement for merger or consolidation, or reclassification of the issuer’s securities, or for the exchange of its securities for the securities of another person which has acquired its assets, where the terms of such plan or agreement are binding upon all stockholders of the issuer except to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of the holdings.

D.The exemptions provided by this rule shall not apply to any transaction made unlawful by R.I. Gen. Laws § 27-1-31 or by any rules and regulation thereunder.

E.The burden of establishing market price of a security for the purpose of § 5.16 of this Part shall rest upon the person claiming the exemption.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.17 Exemption from R.I. Gen. Laws § 27-1-30 of Certain Acquisitions and Dispositions of Securities Pursuant to Merger or Consolidations.

A.The following transactions shall be exempt from the provisions of R.I. Gen. Laws § 27-1-30 as not comprehended within the purpose of said Section;

1.The acquisition of a security of an issuer, pursuant to a merger or consolidation, in exchange for a security of an issuer which, prior to said merger or consolidation, owned eighty-five percent (85%) or more of the equity securities of all other issuers involved in the merger or consolidation except, in the case of consolidation, the resulting issuer;

2.The disposition of a security, pursuant to a merger or consolidation of an issuer which, prior to said merger or consolidation, owner eighty-five percent (85%) or more of the equity securities of all other issuers involved in the merger or consolidation except, in the case of consolidation, the resulting issuer;

3.The acquisition of a security of an issuer, pursuant to a merger or consolidation, in exchange for a security of an issuer which, prior to said merger or consolidation, held over eighty-five percent of the combined assets of all the issuers undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation as determined by reference to their most recent available financial statements for a twelve (12) month period prior to the merger or consolidation.

4.The disposition of a security, pursuant to a merger or consolidation, of an issuer which, prior to said merger or consolidation, held over eighty-five percent (85%) of the combined assets of all the issuers undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation, as determined by reference to their most recent available financial statements for a twelve (12) month period prior to the merger or consolidation.

B.A merger within the meaning of this rule shall include the sale of purchase of substantially all the assets of one issuer by another in exchange for stock which is then distributed to the security holders of the issuer which sold its assets.

C.Notwithstanding the foregoing, if an officer, director or stockholder shall make any purchase, other than a purchase exempted by § 5.17 of this Part of a security in any issuer involved in the merger or consolidation and any sale other than a sale exempted by § 5.17 of this Part of a security in any other issuer involved in the merger or consolidation within any period of less than six (6) months during which the merger or consolidation took place, the exemption provided by this rule shall be unavailable to such officer, director, or stockholder.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.18 Exemption from R.I. Gen. Laws § 27-1-30 of Certain Securities Received Upon Surrender of Similar Equity Securities.

A. Any receipt by a person from an issuer of its shares of stock of a class having general voting power upon the surrender by such person of an equal number of shares of stock of such issuer of a class which does not have general voting power, pursuant to provisions of the issuer’s certificate of incorporation, for the purpose of and accompanied simultaneously or followed immediately by the sale of the shares so received, shall be exempt from the operation of R.I. Gen. Laws § 27-1-30 as a transaction not comprehended within the purpose of said Section, if the following conditions exist:

1.The person so receiving such shares is not an officer or director, or the beneficial owner, directly or indirectly immediately prior to such receipt, of more than ten percent (10%) of an equity security of such issuer;

2.The shares surrendered and the shares issued upon such surrender shall be of classes which are freely transferable and entitle the holders thereof to participate equally per share in all distributions of earnings and assets;

3.The surrender and issuance are made pursuant to provisions of a certificate of incorporation which require that the shares issued upon such surrender shall be registered upon issuance in the name of a person or persons other that the holder of the shares surrendered and may be required to be issued as of right only in connection with the public offering, sale and distribution of such shares and the immediate sale by such holder of such shares for that purpose, or in connection with a gift of such shares;

4.Neither the shares so surrendered nor any shares of the same class, nor other shares of the same class as those issued upon such surrender, have been or are purchased otherwise than in a transaction exempted by this rule, by the person surrendering such shares, within six (6) months before or after such surrender or issuance.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.19 Exemption from R.I. Gen. Laws § 27-1-30 of Certain Transactions Involving an Exchange of Similar Securities.

A. Any acquisition or disposition of securities made in an exchange of shares of a class, or series thereof, of stock of an issuer for an equivalent number of shares of another class, or series thereof, of stock of the same issuer, pursuant to a right of conversion under the terms of the issuer’s charter or other governing instruments shall be exempt from the operation of R.I. Gen. Laws § 27-1-30 if:

1.The shares surrendered and those acquired in exchange therefor evidence substantially the same rights and privileges except that, pursuant to the provisions of the issuer’s charter or other governing instruments, the board of directors may declare and pay a lesser dividend per share on shares of the class surrendered than on shares of the class acquired in exchange therefor or may declare and pay no dividend on shares of the class surrendered;

2.The transaction was effected in contemplation of a public sale of the shares acquired in the exchange; provided, this rule shall not be construed to exempt from the operation of R.I. Gen. Laws § 27-1-30 any purchase or sale of shares of the class surrendered and any sale or purchase of shares of the class acquired in the exchange, otherwise than in the transaction of exchange exempted by this rule, within a period of less than six (6) months.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.20 Exemption of Certain Securities from R.I. Gen. Laws § 27-1-31.

Any security shall be exempt from the operation of R.I. Gen. Laws § 27-1-31 to the extent necessary to render lawful under such Section the execution by a broker of an order for an account in which he has no direct or indirect interest.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.21 Exemption from R.I. Gen. Laws § 27-1-31 of Certain Transactions Effected in connection with a Distribution.

A.Any security shall be exempt from the operation of R.I. Gen. Laws § 27-1-31 to the extent necessary to render lawful under such Section any sale made by or on behalf of a dealer in connection with a distribution of a substantial block of securities, upon the following conditions:

1.The sale is represented by an over-allotment in which the dealer is participating as a member of an underwriting group, or the dealer or a person acting on his behalf intends in good faith to offset such sale with a security to be acquired by or on behalf of the dealer as a participant in an underwriting, selling or soliciting-dealer group of which the dealer is a member at the time of the sale, whether or not the security to be so acquired is subject to a prior offering to existing security holders or some other class of persons; and

2.Other persons not within the purview of R.I. Gen. Laws § 27-1-31 are participating in the distribution of such block of securities on terms at least as favorable as those on which such dealer is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of R.I. Gen. Laws § 27-1-31 by this rule. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing such functions shall not preclude an exemption which would otherwise be available under this rule.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.22 Exemption of Sales of Securities To Be Acquired from R.I. Gen. Laws § 27-1-31.

A.Whenever any person is entitled, as an incident to his ownership of an issued security and without the payment of consideration, to receive another security “when issued” or “when distributed,” the security to be acquired shall be exempt from the operation of R.I. Gen. Laws § 27-1-31 provided:

1.The sale is made subject to the same conditions as those attaching to the right of acquisition, and

2.Such person exercises reasonable diligence to deliver such security to the purchaser promptly after his right of acquisition matures, and

3.Such person reports the sale on the appropriate form for reporting transactions by persons subject to R.I. Gen. Laws § 27-1-29.

B.This rule shall not be construed as exempting transactions involving both a sale of a security “when issued” or “when distributed” and a sale of the security by virtue of which the seller expects to receive the “when-issued” or “when-distributed” security, if the two (2) transactions combined result in a sale of more units than the aggregate of those owned by the seller plus those to be received by him pursuant to his right of acquisition.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 § 5.23 Arbitrage Transactions under R.I. Gen. Laws § 27-1-33.

It shall be unlawful for any director or officer of the issuer of an equity security to effect any foreign or domestic arbitrage transaction in any equity security or such issuer, unless he includes such transaction in the statements required by R.I. Gen. Laws § 27-1-29 and accounts to such issuer for the profits arising from such transaction, as provided in R.I. Gen. Laws § 27-1-30. The provisions of R.I. Gen. Laws § 27-1-31 shall not apply to such arbitrage transactions. The provisions of the act shall not apply to any bona fide foreign or domestic arbitrage transaction insofar as it is effected by any person other than such director or officer of the issuer of such security.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-5 Insider Trading of Domestic Stock Insurance Company Equity Securities

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-6 Voluntary Restructuring of Solvent Insurers

230-RICR-20-45-6 § 6.1 Authority

This Regulation is promulgated in accordance with R.I. Gen. Laws §§ 27-14.5-6 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-08-18 to 01/04/2022
Amendment — effective from 2015-08-18 to 08/18/2015
Amendment — effective from 2014-06-12 to 08/18/2015
Amendment — effective from 2009-12-31 to 06/12/2014
Adoption — effective from 2004-09-05 to 12/31/2009

230-RICR-20-45-6 § 6.2 Purpose

The purpose of this Regulation is to outline the procedural requirements for insurance companies applying for an Insurance Business Transfer Plan or for the implementation of a Commutation Plan pursuant to R.I. Gen. Laws § 27-14.5-1 et seq. and related matters.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-08-18 to 01/04/2022
Amendment — effective from 2015-08-18 to 08/18/2015
Amendment — effective from 2014-06-12 to 08/18/2015
Amendment — effective from 2009-12-31 to 06/12/2014
Adoption — effective from 2004-09-05 to 12/31/2009

230-RICR-20-45-6 § 6.3 Definitions

A. The following definitions shall apply to this Regulation:

1.“Assuming Company” means an insurer as defined in R.I. Gen. Laws § 27-14.5-1(6) that has filed an application to assume commercial insurance or reinsurance business pursuant to this Regulation.

2.“Court” means the Business Calendar of the Superior Court or its equivalent in and for the County of Providence, Rhode Island.

3.“Department” means the Insurance Division of the Rhode Island Department of Business Regulation.

4.“Insurance Business Transfer” means the transfer of liabilities and assets in accordance with the procedures delineated in this Regulation. An Insurance Business Transfer must be approved by the Department and sanctioned by the Court resulting in a novation of the insurance business identified in the Insurance Business Transfer Plan.

5.“Insurance Business Transfer Plan” means the Plan submitted to the Department to accomplish the transfer of liabilities and assets pursuant to an Insurance Business Transfer.

6.“Independent Consultant” means an impartial person who has no financial interest in either the Assuming Company or Transferring Company, has not been employed by or acted as a consultant or other independent contractor for either the Assuming Company or Transferring Company within the past twenty-four (24) months and is receiving no compensation in connection with the transaction governed by this regulation other than a fee premised on a fixed or hourly basis.

7.“Meeting of Creditors” means a meeting of Creditors, to consider the Commutation Plan held within ninety (90) days of the date the Applicant’s notice is transmitted to the Court, or as otherwise directed by the Court upon the Applicant’s petition.

8.“Novation” means an agreement between the policyholder and two insurers whereby a contract with one insurer is replaced by a contract with the other, regardless of any language to the contrary in the policy or contract.

9.“Officer” means such individuals as specified and defined in the Commutation Plan.

10.“Plan Administrator” means the individual or entity retained by the Applicant for the purpose of administering the Commutation Plan in accordance with its terms.

11.“Transferring Company” means a company that transfers a part or all of its commercial insurance or reinsurance business to an Assuming Company pursuant to an Insurance Business Transfer Plan.

12.“Value” means the amount of a claim by a Creditor or Class of Creditors as prescribed in the Commutation Plan.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-08-18 to 01/04/2022
Amendment — effective from 2015-08-18 to 08/18/2015
Amendment — effective from 2014-06-12 to 08/18/2015
Amendment — effective from 2009-12-31 to 06/12/2014
Adoption — effective from 2004-09-05 to 12/31/2009

230-RICR-20-45-6 § 6.4 Insurance Business Transfers

A.Insurance Business Transfer Plans

1.The policies or contracts that are the subject of an Insurance Business Transfer must have a natural expiration which occurred more than sixty (60) months prior to the filing of the Insurance Business Transfer Plan and be in a closed book of business or a reasonably specified groups of policies.

2.The amount of commercial liabilities transferred must be less than or equal to the amount of assets transferred to the newly formed or reactivated company. This requirement does not supersede any other requirements that exist pursuant to statutes and regulations governing the capital and surplus and financial solvency of insurers.

3.Any Assuming Company that wishes to apply to the Court for an order approving an Insurance Business Transfer Plan must first submit that Plan for review and consideration of approval by the Department.

4.Pursuant to R.I. Gen. Laws § 27-64, one or more property & casualty run off agreements, loss portfolio transfers and/or Insurance Business Transfers may be transferred to a commercial run-off insurer that is a protected cell company as protected cells.

5.If the transferred business is intended to be transferred into a protected cell, the requirements of R.I. Gen. Laws § 27-64-4 with respect to a plan of operation must be included in the Insurance Business Transfer Plan. In such a case the Insurance Business Transfer Plan will constitute the plan of operation required by R.I. Gen. Laws § 27-64-4.

B.Application Procedure

1.The Insurance Business Transfer Plan must be submitted by the Assuming Company for review by the Department and must contain all operative provisions delineated in § 6.4 of this Part. At a minimum, the following items must be included in the Insurance Business Transfer Plan or an explanation provided as to why the particular provision is not included. This may be supplemented by other information deemed necessary by the Department.

a.The identities of the Transferring Company and the Assuming Company and their respective controlling parties, if any;

b.Summary of the Insurance Business Transfer Plan, including the Business Transfer Agreement, if any

c.Identification and description of business to be transferred;

d.Most recent audited financial statements and annual reports of the Transferring Company filed with its domiciliary regulator;

e.If the Assuming Company has a present intention of filing a commutation plan, a summary of the operative provisions of that commutation plan;

f.The most recent actuarial report and opinion that quantifies the liabilities in the business to be transferred to the Assuming Company under the policies or reinsurance agreements;

g.Pro-forma financial statements demonstrating the projected solvency of the Assuming Company;

h.Officers’ certificates of the Transferring Company and the Assuming Company attesting that each has obtained all required internal approvals and authorizations regarding the Insurance Business Transfer Plan and completed all necessary and appropriate actions relating thereto;

i.Plan Administration, including the form of notice to be provided under the Insurance Business Transfer Plan to any policyholder or reinsured of the Transferring Company whose policies or contracts are to be transferred and to any reinsurers of any such polices or contracts;

j.Full description as to how such notice shall be provided. Depending upon the facts and circumstances as presented to the Department in advance of sending out notice, electronic notice may be used to satisfy the requirements of R.I. Gen. Laws 27-14.5-3;

k.Description of any guarantees or additional reinsurance that will cover the transferred business;

l.Description of any reinsurance arrangements that would pass to the Assuming Company under the Insurance Business Transfer Plan;

m.If the transferred business is intended to be transferred into a protected cell, the requirements of R.I. Gen. Laws § 27-64-4 with respect to a plan of operation shall be included in the Insurance Business Transfer Plan;

n.A statement describing the Assuming Company’s proposed investment policies and any contemplated third-party claims management and administration arrangements;

o.Approval of the Insurance Business Transfer Plan obtained from the Transferring Company’s domiciliary regulator; and

p.An expert report providing an opinion on the proposed transaction and providing, at a minimum, the following:

(1)A statement of the expert’s professional qualifications and (where appropriate) descriptions of the experience that fits him or her for the role;

(2)Whether the expert has, or has had, direct or indirect interest in the transferring or assuming companies or any entities within their respective holding companies and details of any such interest;

(3)The scope of the report;

(4)The purpose of the Insurance Business Transfer Plan;

(5)A summary of the terms of the Insurance Business Transfer Plan in so far as they are relevant to the report;

(6)Documents, reports and other material information the expert has considered in preparing the report and whether any information requested was not provided;

(7)The extent to which the expert has relied on information provided by and the judgment of others;

(8)The people on whom the expert has relied and why, in his opinion, such reliance is reasonable;

(9)The expert’s opinion of the likely effects of the Insurance Business Transfer Plan on policyholders, distinguishing between: (a) transferring policyholders and claimants; (b) policyholders and claimants of the Transferring Company whose contracts will not be transferred; and (c) policyholders and claimants of the Assuming Company;

(10)For each opinion that the expert expresses in the report the facts and circumstances supporting the opinion; and

(11)Consideration as to whether the security position of policyholders or reinsureds of the Transferring Company are materially adversely affected by the transfer.

2.The Department shall have sixty (60) days from the date of receipt of the Insurance Business Transfer Plan to review the Plan. The Department may extend the sixty (60) day review period for an additional thirty (30) business days. The standards for the Department’s review will include, but not be limited to:

a.An actuarial review of the ceding company’s reserves for the book of business being transferred to the assuming company to determine the reserve adequacy of that book of business.

b.An actuarial analysis to determine the feasibility that the assuming company’s assets are sufficient to achieve a solvent run-off of all known and anticipated liabilities.

c.An analysis of the assuming company’s invested assets to determine that the quality of its investment portfolio is appropriate for a company in run-off.

d.An analysis of the assuming company’s corporate governance structure to ensure that there is proper board and management oversight and expertise to manage the assumed book of business.

e.Any other examination and/or analysis procedures that the Superintendent of Insurance deems appropriate in order to monitor the financial solvency of the assuming company.

3.If the Department’s review determines that the Insurance Business Transfer Plan as submitted does not meet the standards of R.I. Gen. Laws § 27-14.5-1 et seq. or this Regulation, the Department shall notify the Assuming Company and specify any modifications, supplements, or amendments and any additional information or documentation with respect to the Plan that must be provided to the Department before the Department will consider whether the Plan may proceed with the Court filing.

4.The Assuming Company will have sixty (60) days from the date the Department notifies it pursuant to § 6.4(C)(3) of this Part, to file an amended Insurance Business Transfer Plan providing the modifications, supplements, or amendments and additional information or documentation as requested by the Department. If the Assuming Company does not make an amended filing within that time period, or requests and receives an extension of that time period from the Department, the Insurance Business Transfer filing will terminate and a subsequent filing by the Assuming Company will be considered a new filing which will require compliance with all provisions of this Regulation as if the prior filing had never been made.

5.The Department’s review period in § 6.4(C)(2) of this Part will begin anew when the modification, supplement, amendment or additional information is received.

6.The Department may engage Independent Consultants, at the Assuming Company’s expense, as set forth in § 6.8(C) of this Part, to assist the Department in its review of the Insurance Business Transfer Plan.

7.Once the Department is satisfied that the Plan is in a format that would allow it to proceed with the Court filing, the Department will send electronic notice to all persons who have requested notice of insurance issues indicating that the Plan has been filed and is available for review upon request. Any person wishing to comment at this stage shall file comments with the Department within thirty (30) days as indicated in the notice. Failure to file comments with the Department does not preclude any person from filing comments with the Court nor shall such failure reflect in any way on comments or objections filed with the Court.

8.The Department will consider the comments provided to the Department before the Department will determine whether it will allow the Plan to proceed with the Court filing.

9.If it determines that the Plan may proceed with the Court filing, the Department will confirm that fact in writing to the Assuming Company.

C.Application to the Court for Approval of the Insurance Business Transfer Plan

1.Within ninety (90) days after notice from the Department that the Assuming Company may proceed, the Assuming Company shall apply to the Court for approval of the Insurance Business Transfer Plan. Upon written request by the Assuming Company, the Department may extend the period for an additional thirty (30) days. The Assuming Company will provide the Department with any additional information it may request to support the request for an extension.

2.The application shall be in the form of a Petition for Implementation of the Insurance Business Transfer Plan in the Providence County Superior Court and will include the Insurance Business Transfer Plan and any evidence which the parties to the proposed transfer intend to submit to the Court for the approval hearing.

3.The Department will be a party to the proceedings and will be served with copies of all filings pursuant to the Superior Court Rules of Practice. The Department’s position in this litigation shall not be limited by its initial review of the Plan pursuant to § 6.4(C) of this Part.

4.Following filing of the Petition, the Assuming Company will file a motion for a scheduling order setting a hearing on the Petition.

5.Within fifteen (15) days after receipt of the scheduling order, the Assuming Company shall cause notice to be provided in accordance with the notice provisions of R.I. Gen. Laws § 27-14.5-3. Depending upon the facts and circumstances as presented in advance of sending out notice, electronic notice or other alternative may be used to satisfy the requirements of R.I. Gen. Laws § 27-14.5-3

6.The notice to policyholders shall comply with R.I. Gen. Laws § 27-14.5-3, and will include the date and time of the approval hearing and instructions on how to submit comments on or raise objections to the Insurance Business Transfer Plan. The comment period shall be at least sixty (60) days following the date of distribution of the notice. All comments and objections will be filed with the Court and distributed by the Assuming Company within ten (10) days of receipt to all persons who have made an appearance with regard to the Petition. The notice shall state or provide:

a.The date the transfer and novation of the policyholder's contract of insurance is proposed to take place;

b.The name, address and telephone number of the assuming and transferring companies;

c.That the policyholder may comment on or object to the transfer and novation;

d.The procedures and time limit for submitting comment or objections to the transfer and novation;

e.A summary of any effect that the transfer and novation will have on the policyholder's rights;

f.A statement that the assuming company is authorized, as provided in § 6.4 of this Part, to assume that business;

g.Contact information for the Department where the policyholder may obtain further information;

h.Information on how an electronic copy of the Insurance Business Transfer Plan may be accessed.

7.Any person (either in person or by their legal representative) who considers himself or herself to be adversely affected can make a representation to the Court at the Approval Hearing. Any person participating in the Approval Hearing shall bear his or her own costs and attorney’s fees.

D.Approval of the Insurance Business Transfer Plan

1.After the comment period has ended the Insurance Business Transfer Plan shall be presented by the Assuming Company for approval by the Court. The Assuming Company shall inform the Court of the reasons why it petitions the Court to find no material adverse impact to policyholders, reinsureds or claimants on the transferred policies.

2.At any time before the Court issues the Order approving the Insurance Business Transfer Plan, the Assuming Company may apply to the Court for a non-material amendment to the Insurance Business Transfer Plan, subject to the Department’s approval;

3.At any time before the Court issues the Order approving the Insurance Business Transfer Plan, the Assuming Company may withdraw the Insurance Business Transfer Plan without prejudice.

4.If the Court finds that the Insurance Business Transfer Plan should be approved, the Court by its order may make provisions as it deems fit on the following issues:

a.Approval of the Insurance Business Transfer Plan;

b.A finding that there is no material adverse impact to policyholders, reinsureds or claimants on the transferred policies;

c.Implementation of a statutory novation with respect to all policyholders or reinsureds and their respective policies and reinsurance agreements under the Insurance Business Transfer Plan. The novation shall provide that the Transferring Company shall have no further rights, obligations, or liabilities with respect to such policies and reinsurance agreements, and that the Assuming Company shall have all such rights, obligations, and liabilities as if it, instead of the Transferring Company, were the original party to such policies and reinsurance agreements;

d.Release of the Transferring Company from any and all rights, obligations or liabilities under the transferred policies or reinsurance agreements;

e.The transfer of property or liabilities, including but not limited to reinsurance of transferred policies and contracts, whether or not the transferring party otherwise has the capacity to effect the transfer in question or whether such transfer would not otherwise be capable of being transferred or assigned. If the order makes any such provision for the transfer of property or liabilities, then such property is transferred to and vests in, and such liabilities are transferred to and become liabilities of the transferee as a result of the order; and

f.Such other provisions with respect to incidental, consequential and supplementary matters as are necessary to assure the Insurance Business Transfer Plan is fully and effectively carried out.

5.If the Court finds that the Insurance Business Transfer Plan should be disapproved, the Court by its order may make provisions as it deems fit on the following issues:

a.Dismissal of the Petition, or

b.Whether the Assuming Company is given leave to file an amended Insurance Business Transfer Plan.

6.Nothing in § 6.4 of this Part in any way effects the appellate rights of any party.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-08-18 to 01/04/2022
Amendment — effective from 2015-08-18 to 08/18/2015
Amendment — effective from 2014-06-12 to 08/18/2015
Amendment — effective from 2009-12-31 to 06/12/2014
Adoption — effective from 2004-09-05 to 12/31/2009

230-RICR-20-45-6 § 6.5 Commutation Plans

A.Application Procedures

1.Any Applicant that wishes to apply to the Court for an order implementing a Commutation Plan must first submit the Commutation Plan for review by the Department.

2.A Commutation Plan may be submitted by a company that has previously undergone an Insurance Business Transfer Plan that has been approved by the Court.

3.A Commutation Plan may be submitted by a protected cell formed under R.I. Gen. Laws § 27-64-4.

4.The Commutation Plan, submitted for review by the Applicant, should contain all operative provisions. The following items should be included or an explanation provided as to why the particular provision is not included. This list is not exhaustive and other provisions may be included in the commutation plan.

a.Explanation of the Plan

b.Plan Administration, including proposed form and manner of Notice

c.Effect on Creditors

d.Meetings of Creditors

e.Determination of Classes of Creditors

f.Claims Procedures

g.Alternative Solutions

h.Financial Position

i.Actuarial Review

j.Enforcement Provisions

k.Determination of Liabilities

l.Dispute Resolution Procedure

m.Payment of Claims

n.Effect of Insolvency

o.Termination of the Commutation Plan

5.The Department shall have sixty (60) days from the date of its receipt of the Commutation Plan to provide comment on the Commutation Plan to the Applicant.

a.The Department may engage independent consultants, at the Applicant’s expense, as set forth in § 6.9(C) of this Part, to assist the Department in its review of the Commutation Plan.

b.If the Department is unable to complete its review within the sixty (60) days it may extend the time by informing the Applicant of the reason for the extension and providing an estimate of the time necessary to complete the review.

c.If the Department determines that it cannot support the Commutation Plan as filed, the Applicant will be so informed and given the opportunity to amend the Commutation Plan to satisfy the concerns of the Department or withdraw the Commutation Plan.

B.Application to the Court

1.Once the Department’s comments to the Commutation Plan, if any, are resolved to the satisfaction of the Department, or if the sixty (60) day period set forth in § 6.5(A)(5) of this Part, above and any extension thereto, has passed and the Department has no comments on the Commutation Plan, the Applicant may apply to the Court for an order with a copy of the Petition being provided to the Department:

2.The application shall be in the form of a Petition for Implementation of the Plan in the Providence County Superior Court.

3.Following the filing of the Petition the Applicant may file a motion on the Business Calendar requesting an order:

a.Establishing the classes of Creditors for the purposes of the Meeting of Creditors.

b.Calling a Meeting of Creditors or class of Creditors.

C.Meeting of Creditors

1.Within ninety (90) days of the date the Petition is filed with the Court, or as otherwise directed by the Court upon the Applicant’s application, a Meeting of Creditors shall be held to consider the Commutation Plan.

2.Notice of the Meeting shall be pursuant to the Notice provisions of R.I. Gen. Laws § 27-14.5-3 and shall be designed to provide notice of that date and time of the meeting as well as information concerning voting and proxies.

3.All known Creditors and/or representatives of all Classes of Creditors shall be invited to the Meeting

4.Any Creditor that objects to the Commutation Plan, or any aspect thereof, including but not limited to, the schedule for the Meeting of Creditors or the designation of classes of creditors should file any such objection with the Court and serve any such objection within sixty (60) days of the date the Applicant transmits notice of the Court’s Order setting the date for the Meeting of Creditors

5.Voting Procedure at the Meeting of Creditors

a.To determine whether the requisite statutory majority to approve the Commutation Plan has been achieved at the Meeting of Creditors, votes will be calculated according to the aggregate amount of claims specified against the Applicant in respect of insurance or reinsurance contracts detailed in the voting form.

b.The Applicant will provide a voting form to all Creditors.

c.The Creditor must submit its voting form within the time, date and other requirements of the Commutation Plan.

d.Only returned voting forms will be considered in order to determine the value of each Creditor’s vote at the Meeting of Creditors.

e.The Value to be attributed to each Creditor’s claim, for voting purposes only, will be determined on the basis of the information provided by the Creditor in its voting form or the information available to the Applicant from its existing records.

(1)Account will be taken of any known set off or cross claim in relation to any particular Creditor. However, a Creditor’s claim will not be reduced by the value of any letter of credit or other form of collateral posted by the Applicant to secure its obligation to the Creditor.

(2)A secured Creditor, or a holder of a promissory note issued by the Applicant, may vote only in respect of the balance, if any, of his claim after deducting the value of his security.

f.If the Applicant agrees on the amount of the Value of a Creditor’s claim, for voting purposes only, the amount will be used for the purposes of valuing the relevant Creditor’s vote at the Meeting of Creditors.

6.The Chair of the Meeting of Creditors

a.The Chair of the Meeting of Creditors shall be the Plan Administrator unless otherwise selected by Applicant.

b.The Chair of the Meeting of Creditors has the power to admit or reject any Creditor’s voting form for the purpose of its entitlement to vote and the power is exercisable with respect to all or part of the voting form.

(1)If the Chair is in doubt whether a voting form should be admitted or rejected, the Chair shall mark the voting form as objected to but allow the Creditor to vote subject to the vote being declared invalid if the objection is ultimately sustained.

(2)If agreement cannot be reached between the Applicant and any Creditor on the amount of the value of a Creditor’s claim, for voting purposes only, the Chair of the Meeting of Creditors will determine what he or she considers to be a fair and reasonable value for voting purposes.

(3)Where possible, the Chair will notify the relevant Creditor of his or her decision on valuation for voting purposes before the Meeting of Creditors.

(4)Any Creditor may appeal the Chair’s decisions to the Court.

(5)If a Chair’s decision is reversed or altered on appeal and the vote is declared invalid, the Court may order a new Meeting of Creditors or such other relief as is appropriate.

7.The Meeting of Creditors shall be stenographically recorded and such recording shall be provided to the Court and the Department in connection with any appeal of a decision at the Meeting of Creditors.

D.Approval of the Commutation Plan

1.The Commutation Plan, as presented by the Applicant at the Meeting of Creditors, shall be considered to be approved and binding on all Creditors of the Applicant if fifty percent in number, representing at least three fourths in value of each Class of Creditors, present and voting either in person or by proxy at the Meeting, agree to the terms and conditions of the Commutation Plan.

2.Within thirty (30) days following the approval of the Commutation Plan at the Meeting of Creditors the Applicant shall file a motion with the Court requesting:

a.If approved, that the Court enter an order confirming the approval of the Commutation Plan;

b.If disapproved, that:

(1)That the Petition be dismissed;

(2)The applicant be given leave to file an amended Commutation Plan.

(a) If an amended Commutation Plan is filed, the Department shall be given an opportunity to review and opine;

(b) If the Department approves the amended Commutation Plan, the Applicant shall proceed to obtain an order from the Court to convene a Meeting of Creditors. If the Court grants approval, the Applicant shall proceed with the Meeting of Creditors.

E.Administration of the Commutation Plan

1.The Applicant, with the approval of the Department, shall appoint such Officers, or a Plan Administrator, as it deems necessary to administer the Commutation Plan

2.The Applicant, or its agent, shall:

a.Within thirty (30) days of the end of each quarter, make quarterly reports to the Department regarding implementation and administration of the Commutation Plan in a form acceptable to the Department with a copy provided to the Court; and

b.Respond to all inquiries of the Department and the Court.

3.All disputes between a Creditor(s) or Class of Creditors and the Applicant will be resolved pursuant to the dispute resolution provisions of the Commutation Plan.

F.Termination of the Commutation Plan

1.The Commutation Plan will terminate as provided in the Commutation Plan documents.

2.Notice of termination of the Commutation Plan will be transmitted as provided in the Commutation Plan.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-08-18 to 01/04/2022
Amendment — effective from 2015-08-18 to 08/18/2015
Amendment — effective from 2014-06-12 to 08/18/2015
Amendment — effective from 2009-12-31 to 06/12/2014
Adoption — effective from 2004-09-05 to 12/31/2009

230-RICR-20-45-6 § 6.6 Regulation of Insurers

A.All Insurers subject to or formed as a result of this regulation shall be subject to all statutes and regulations governing insurers as deemed applicable by the Department.

B.Insurers subject to or formed as a result of this regulation consent to the jurisdiction of the Department with regard to ongoing oversight of operations, management and solvency relating to the transferred business, including the authority of the Department to conduct financial analysis and examinations pursuant to R.I. Gen. Laws § 27-13.1.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-08-18 to 01/04/2022
Amendment — effective from 2015-08-18 to 08/18/2015
Amendment — effective from 2014-06-12 to 08/18/2015
Amendment — effective from 2009-12-31 to 06/12/2014
Adoption — effective from 2004-09-05 to 12/31/2009

230-RICR-20-45-6 § 6.7 Modification or Waiver

A.If, for good cause shown, the Department determines that any one or more of these requirements in this regulation should be modified or waived, the Department shall have the ability to approve an Insurance Business Transfer Plan or Commutation plan with such modification or waiver.

B.An applicant that wishes to request such a modification or waiver shall make such request in writing no later than the filing of the Insurance Business Transfer Plan or Commutation Plan with the Department.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-08-18 to 01/04/2022
Amendment — effective from 2015-08-18 to 08/18/2015
Amendment — effective from 2014-06-12 to 08/18/2015
Amendment — effective from 2009-12-31 to 06/12/2014
Adoption — effective from 2004-09-05 to 12/31/2009

230-RICR-20-45-6 § 6.8 Fees

A.At the time of application for implementation of an Insurance Business Transfer Plan, the Applicant shall pay a nonrefundable fee to the Department in the amount of $5,000 or such lesser amount as the Department shall deem adequate.

B.At the time of application for implementation of a Commutation Plan, the Applicant shall pay a nonrefundable fee to the Department in the amount of $10,000 or such lesser amount as the Department shall deem adequate.

C.The applicant shall pay the expenses of the Department and its consultants as set forth in R.I. Gen. Laws § 27-14.5-5(b)(2)(i).

D.The Applicant shall pay the costs of regulatory administration of the Commutation Plan as assessed by the Department pursuant to R.I. Gen. Laws § 27-14.5-5(b).

E.Failure to pay any of these fees shall be grounds for the Department to request that the Court dismiss the Petition for approval of the Commutation Plan prior to final order.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-08-18 to 01/04/2022
Amendment — effective from 2015-08-18 to 08/18/2015
Amendment — effective from 2014-06-12 to 08/18/2015
Amendment — effective from 2009-12-31 to 06/12/2014
Adoption — effective from 2004-09-05 to 12/31/2009

230-RICR-20-45-6 § 6.9 Severability

If any section, term, or provision of this Regulation should be adjudged invalid for any reason, that judgment should not affect, impair, or invalidate any remaining section, term, or provision, which shall remain in full force and effect.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2015-08-18 to 01/04/2022
Amendment — effective from 2015-08-18 to 08/18/2015
Amendment — effective from 2014-06-12 to 08/18/2015
Amendment — effective from 2009-12-31 to 06/12/2014
Adoption — effective from 2004-09-05 to 12/31/2009

230-RICR-20-45-8 Life and Health Reinsurance Agreements

230-RICR-20-45-8 § 8.1 Authority

This Part is adopted and promulgated pursuant to R.I. Gen. Laws Chapter 27-4.2

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-8 § 8.2 Purpose

The purpose of this Part is to establish definitions of the risk categories noted in R.I. Gen. Laws § 27-4.2-3(a)(6) and to set forth an acceptable formula for determining the reserve interest rate adjustment noted in R.I. Gen. Laws § 27-4.2-3(a)(7)(iii).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-8 § 8.3 Definitions

A."Morbidity" means the risk that a policyholder will become ill, sick or contract a disease during the effective dates of the policy.

B."Mortality" means the risk that a policyholder will die during the effective dates of the policy.

C."Lapse" means the risk that a policy will voluntarily terminate prior to the recoupment of a statutory surplus strain experienced at issue of the policy.

D."Credit quality" means the risk that invested assets supporting the reinsured business will decrease in value. The main hazards are that assets will default or that there will be a decrease in earning power. It excludes market value declines due to changes in the interest rate.

E."Reinvestment" means the risk that interest rates will fall and funds reinvested (coupon payments or monies received upon asset maturity or call) will therefore earn less than expected. If asset durations are less than liability durations, the mismatch will increase.

F."Disintermediation" means the risk that interest rates rise and policy loans and surrenders increase or maturing contracts do not renew at anticipated rates of renewal. If asset durations are greater than the liability durations, the mismatch will increase. Policyholders will move their funds into new products offering higher rates. The company may have to sell assets at a loss to provide for these withdrawals

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-8 § 8.4 Accounting Requirements

A.No insurer subject to this Part shall, for reinsurance ceded, reduce any liability or establish any asset in any financial statement filed with the Insurance Division of the Department of Business Regulation if, by the terms of the reinsurance agreement, in substance or effect, the treaty does not transfer all of the significant risk inherent in the business being reinsured. The following table identifies for a representative sampling of products or type of business, the risks which are considered to be significant. For products not specifically included, the risks determined to be significant shall be consistent with this table:

B.Risk Categories

significant0 insignificant

Risk Category

Health Insurance – Other Than Ltc/Ltd*

Health Insurance – Ltc/Ltd*

Immediate Annuities

Single Premium Deferred Annuities

Flexible Premium Deferred Annuities

Guaranteed Interest Contracts

Other Annuity Deposit Business

Single Premium Whole Life

Traditional Non-Par Permanent

Traditional Non-Par Term

Traditional Par Permanent

Traditional Par Term

Adjustable Premium Permanent

Indeterminate Premium Permanent

Universal Life Flexible Premium

Universal Life Fixed Premium

dump-in premiums allowed

*LTCLong Term Care Insurance

LTDLong Term Disability Insurance

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-8 § 8.5 Reserve Interest Rate Adjustment Formula

A.Pursuant to R.I. Gen. Laws § 27-4.2-3(a)(7)(ii), the associated formula for determining the reserve interest rate adjustment must use a formula which reflects the ceding company's investment earnings and incorporates all realized and unrealized gains and losses reflected in the statutory settlement. The following is an acceptable formula:

Rate = 2 (I + CG) / (X + Y - I - CG)

Where:

Iis the net investment income (Exhibit 2 of the annual statement).

CGis the Capital Gains less Capital Losses (Exhibit 4 of the annual statement).

Xis the current year cash and invested assets plus investment income due and accrued less borrowed money.

Yis the same as X but for the prior year.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-8 § 8.6 Retroactive Reinsurance Resulting In Increased Surplus

A.Any increase in surplus net of federal income tax resulting from arrangements described in R.I. Gen. Laws § 27-4.2-3(c)(1) shall be identified separately on the insurer's statutory financial statement as a surplus item (aggregate write-ins for gains and losses in surplus in the Capital and Surplus Account, page 4 of the Annual Statement) and recognition of the surplus increase as income shall be reflected on a net of tax basis in the "Reinsurance ceded" line, page 4 of the Annual Statement as earnings emerge from the business reinsured.

B.For example, on the last day of calendar year N, company XYZ pays a $20 million initial commission and expense allowance to company ABC for reinsuring an existing block of business. Assuming a thirty four (34%) tax rate, the net increase in surplus at inception is $13.2 million ($20 million - $6.8 million) which is reported on the "Aggregate write-ins for gains and losses in surplus" line in the Capital and Surplus account. $6.8 million (34% of $20 million) is reported as income on the "Commissions and expense allowances on reinsurance ceded" line of the Summary of Operations.

C.At the end of year N + l the business has earned $4 million. ABC has paid $.5 million in profit and risk charges in arrears for the year and has received a $1 million experience refund. Company ABC's annual statement would report $1.65 million (66% of ($4 million - $1 million - %.5 million) up to a maximum of $13.2 million) on the "Commissions and expense allowance on reinsurance ceded" line of the Summary of Operations, and - $1.65 million on the "Aggregate write-ins for gains and losses in surplus" line of the Capital and Surplus account. The experience refund would be reported separately as a miscellaneous income item in the Summary of Operations. Agreements which involve the reinsurance of business issued prior to the effective date of the agreements should be filed by ceding Company with the Commissioner within thirty days from the date of execution.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-9 Actuarial Opinion and Memorandum

230-RICR-20-45-9 § 9.1 Authority

This Part is promulgated in accordance with R.I. Gen. Laws Chapter 27-4.5.

History

Amendment — effective from 2025-04-11 to current
Periodic Refile — effective from 2022-01-04 to 04/11/2025
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Amendment — effective from 2004-09-21 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 09/21/2004

230-RICR-20-45-9 § 9.2 Purpose

A.The purpose of this Part is to prescribe:

1.Requirements for statements of actuarial opinion which are to be submitted in accordance with R.I. Gen. Laws § 27-4.5-3, and for memoranda in support thereof;

2.Rules applicable to the appointment of an appointed actuary; and

3.Guidance as to the meaning of “adequacy of reserves”.

History

Amendment — effective from 2025-04-11 to current
Periodic Refile — effective from 2022-01-04 to 04/11/2025
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Amendment — effective from 2004-09-21 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 09/21/2004

230-RICR-20-45-9 § 9.3 Scope

A.This Part shall apply to all life insurance companies and fraternal benefit societies doing business in this State and to all life insurance companies and fraternal benefit societies which are authorized to reinsure life insurance, annuities or accident and health insurance business in this State.

B.This Part shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant actuarial standards of practice. However, the commissioner shall have the authority to specify specific methods of actuarial analysis and actuarial assumptions when, in the commissioner’s judgment, these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items.

C.This Part shall be applicable to all annual statements filed with the office of the commissioner after the effective date of this regulation. A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with § 9.6 of this Part, and a memorandum in support thereof in accordance with § 9.7 of this Part, shall be required each year.

History

Amendment — effective from 2025-04-11 to current
Periodic Refile — effective from 2022-01-04 to 04/11/2025
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Amendment — effective from 2004-09-21 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 09/21/2004

230-RICR-20-45-9 § 9.4 Definitions

A.As used in this Part:

1."Actuarial opinion" means the opinion of an Appointed Actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy test in accordance with § 9.6 of this Part and with applicable Actuarial Standards of Practice.

2."Actuarial Standards Board" means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.

3."Annual statement" shall mean that statement required by R.I. Gen. Laws §§ 27-12-1 and 27-12.1-2 to be filed by the company with the office of the Commissioner annually.

4."Appointed Actuary" shall mean an individual who is appointed or retained in accordance with the requirements set forth in § 9.5(C) of this Part to provide the actuarial opinion and supporting memorandum as required by R.I. Gen. Laws § 27-4.5-3.

5."Asset adequacy analysis" shall mean an analysis that meets the standards and other requirements referred to in § 9.5(D) of this Part.

6."Commissioner," shall mean the Director of the Department of Business Regulation of this State.

7."Company" shall mean a life insurance company, fraternal benefit society or reinsurer subject to the provisions of this Regulation.

8."Qualified actuary" shall mean an individual who meets the requirements set forth in § 9.5(B) of this Part.

History

Amendment — effective from 2025-04-11 to current
Periodic Refile — effective from 2022-01-04 to 04/11/2025
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Amendment — effective from 2004-09-21 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 09/21/2004

230-RICR-20-45-9 § 9.5 General Requirements

A.Submission of Statement of Actuarial Opinion

1.There is to be included on or attached to Page 1 of the Annual Statement for each year beginning with the year in which this Regulation becomes effective the statement of an appointed actuary, entitled "Statement of Actuarial Opinion," setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with § 9.6 of this Part.

2.Upon written request by the company, the commissioner may grant an extension of the date for submission of the statement of actuarial opinion.

B.Qualified Actuary. A "qualified actuary" is an individual who:

1.Is a member in good standing of the American Academy of Actuaries;

2.Is qualified to sign statements of actuarial opinion for life and health insurance company Annual Statements in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements;

3.Is familiar with the valuation requirements applicable to life and health insurance companies;

4.Has not been found by the Commissioner (or if so found has subsequently been reinstated as a qualified actuary), following appropriate notice and hearing to have:

a.Violated any provision of, or any obligation imposed by, the Insurance Law or other law in the course of his or her dealings as a qualified actuary;

b.Been found guilty of fraudulent or dishonest practices;

c.Demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as a qualified actuary;

d.Submitted to the Commissioner during the past five (5) years, pursuant to this Regulation, an actuarial opinion or memorandum that the Commissioner rejected because it did not meet the provisions of this Regulation including standards set by the Actuarial Standards Board; or

e.Resigned or been removed as an actuary within the past five (5) years as a result of acts or omissions indicated in any adverse report on examination or as a result of failure to adhere to generally acceptable actuarial standards; and

5.Has not failed to notify the Commissioner of any action taken by any Commissioner of any other state similar to that under § 9.5(B)(4) of this Part.

C.Appointed Actuary. An "appointed actuary" is a qualified actuary who is appointed or retained to prepare the Statement of Actuarial Opinion required by this Regulation; either directly by or by the authority of the board of directors through an executive officer of the company other than the qualified actuary. The company shall give the Commissioner timely written notice of the name, title (and, in the case of a consulting actuary, the name of the firm) and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in such notice that the person meets the requirements set forth in § 9.5(B) of this Part. Once notice is furnished, no further notice is required with respect to this person, provided that the company shall give the Commissioner timely written notice in the event the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements set forth in § 9.5(B) of this Part. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall so state and give the reasons for replacement.

D.Standards for Asset Adequacy Analysis. The asset adequacy analysis required by this Regulation:

1.Shall conform to the Standards of Practice as promulgated from time to time by the Actuarial Standards Board and on any additional standards under this Regulation, which standards are to form the basis of the statement of actuarial opinion in accordance with this Regulation; and

2.Shall be based on methods of analysis as are deemed appropriate for such purposes by the Actuarial Standards Board.

E.Liabilities to be Covered

1.Under authority of R.I. Gen. Laws § 27-4.5-3, the statement of actuarial opinion shall apply to all in force business on the statement date, whether directly issued or assumed, regardless of when or where issued, e.g., reserves of Exhibits 8, 9 and 10, and claim liabilities in Exhibit 11, Part I and equivalent items in the separate account statement or statements

2.If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in R.I. Gen. Laws Chapter 27-4.5, the company shall establish such additional reserve.

a.Additional reserves established under § 9.5(E)(2) of this Part and deemed not necessary in subsequent years may be released. Any amounts released shall be disclosed in the actuarial opinion for the applicable year. The release of such reserves would not be deemed an adoption of a lower standard of valuation.

History

Amendment — effective from 2025-04-11 to current
Periodic Refile — effective from 2022-01-04 to 04/11/2025
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Amendment — effective from 2004-09-21 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 09/21/2004

230-RICR-20-45-9 § 9.6 Statement of Actuarial Opinion Based on an Asset Adequacy Analysis and Regulatory Asset Adequacy Issues Summary

A.General Description. The statement of actuarial opinion submitted in accordance with this section shall consist of:

1.A paragraph identifying the appointed actuary and his or her qualifications (see § 9.6(B)(1) of this Part);

2.A scope paragraph identifying the subjects on which an opinion is to be expressed and describing the scope of the appointed actuary's work, including a tabulation delineating the reserves and related actuarial items that have been analyzed for asset adequacy and the method of analysis, (see § 9.6(B)(2) of this Part) and identifying the reserves and related actuarial items covered by the opinion that have not been so analyzed;

3.A reliance paragraph describing those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures or assumptions, (e.g., anticipated cash flows from currently owned assets, including variation in cash flows according to economic scenarios) (see § 9.6(B)(4) of this Part, supported by a statement of each such expert in the form prescribed by § 9.6(E) of this Part; and

4.An opinion paragraph expressing the appointed actuary's opinion with respect to the adequacy of the supporting assets to mature the liabilities (see § 9.6(B)(7) of this Part.)

5.One or more additional paragraphs will be needed in individual company cases as follows:

a.If the appointed actuary considers it necessary to state a qualification of his or her opinion;

b.If the appointed actuary must disclose an inconsistency in the method of analysis or basis of asset allocation used at the prior opinion date with that used for this opinion.

c.If the appointed actuary must disclose whether additional reserves of the prior opinion date are released as of this opinion date, and the extent of the release.

d.If the appointed actuary chooses to add a paragraph briefly describing the assumptions which form the basis for the actuarial opinion.

B.Recommended Language. The following paragraphs are to be included in the statement of actuarial opinion in accordance with this section. Language is that which in typical circumstances should be included in a statement of actuarial opinion. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary should use language which clearly expresses his or her professional judgment. However, in any event the opinion shall retain all pertinent aspects of the language provided in this section.

1.The opening paragraph should generally indicate the appointed actuary's relationship to the company and his or her qualifications to sign the opinion. For a company actuary, the opening paragraph of the actuarial opinion should include a statement such as:

a."I, [name], am [title] of [insurance company name] and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of said insurer to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies." For a consulting actuary, the opening paragraph should contain a sentence such as:

b."I, [name], a member of the American Academy of Actuaries, am associated with the firm of [name of consulting firm]. I have been appointed by, or by the authority of, the Board of Directors of [name of company] to render this opinion as stated in the letter to the Commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies."

2.The scope paragraph should include a statement such as the following: "I have examined the actuarial assumptions and actuarial methods used in determining reserves and related actuarial items listed below, as shown in the Annual Statement of the company, as prepared for filing with state regulatory officials, as of December 31, 20[ ]. Tabulated below are those reserves and related actuarial items which have been subjected to asset adequacy analysis.

Asset Adequacy Tested Amounts Reserves and Liabilities

Statement Item

Formula Reserves

(1)

Additional Actuarial Reserves

(a) (2)

Analysis Method

(b)

Other Amount

(3)

Total Amount

(1) + (2) + (3)

(4)

Exhibit 8

A. Life Insurance

B. Annuities

C. Supplementary Contracts Involving Life Contingencies

D. Accidental Death Benefit

E. Disability - Active

F. Disability - Disabled

G. Miscellaneous

Total (Exhibit 8 Item 1, pg. 3)

Exhibit 9

A. Active Life Reserve

B. Claim Reserve

Total

(Exhibit 9 Item 2, pg. 3)

Exhibit 10

Premiums and other Deposit funds

(Column 5, Line 14)

Guaranteed Interest Contracts

(Column 2, Line 14

Other

(Column 6, Line 14)

Supplementary Contracts and Annuities Certain

(Column 3, Line 14)

Divided Accumulations or Refunds (Column 4, Line 14)

Total Exhibit 10 (Column 1, Line 14)

Exhibit 11, Part 1

Life (Page 3, Line 4.1)
Health (Page 3, Line 4.2)

Total Exhibit 11, Part 1

Separate Accounts (pg. 3 of the Annual Statement of the Separate Accounts, Lines 1,2,3.1,3.2, 3.3)

Total Reserves

IMR (General Account, Page _____ Line ______

Separate Accounts (Page _____ Line ______

AVR (Page _____ Line_____

(c)

Net Deferred and Uncollected Premium

3.Notes:

a.The additional actuarial reserves are the reserves established under § 9.5(E)(2) of this Part.

b.The appointed actuary should indicate the method of analysis, determined in accordance with the standards for asset adequacy analysis referred to in § 9.5(D) of this Part, by means of symbols which should be defined in footnotes to the table.

c.Allocated amount of Asset Valuation Reserve

4.If the appointed actuary has relied on other experts to develop certain portions of the analysis, the reliance paragraph should include a statement such as:

a."I have relied on [name], [title] for [e.g., anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios” or “certain critical aspects of the analysis performed in conjunction with forming my opinion”] as certified in the attached statement. I have reviewed the information relied upon for reasonableness"

(1)A statement of reliance on other experts should be accompanied by a statement by each of such experts in the form prescribed by § 9.6(E) of this Part.

5.If the appointed actuary has examined the underlying asset and liability records, the reliance paragraph should include a statement such as:

a."My examination included such review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and such tests of the actuarial calculations as I considered necessary. I also reconciled the underlying basic asset and liability records to [exhibits and schedules listed as applicable] of the company’s current annual statement.”

6.If the appointed actuary has not examined the underlying records, but has relied upon data (e.g. listings and summaries of policies in force or asset records) prepared by the company, the reliance paragraph should include a sentence such as:

a."In forming my opinion on [specify types of reserves] I relied upon data prepared by [name and title of company officer certifying in-force records or other data] as certified in the attached statement. I evaluated that data for reasonableness and consistency. I also reconciled that data to [exhibits and schedules to be listed as applicable] of the company’s current annual statement. In other respects my examination included review of the actuarial assumptions and actuarial methods used and tests of the actuarial calculations as I considered necessary."

(1)The section shall be accompanied by a statement by each person relied upon of the form prescribed by § 9.6(E) of this Part.

7.The opinion paragraph should include a statement such as:

a."In my opinion the reserves and related actuarial values concerning the statement items I identified above:

(1)Are computed in accordance with presently accepted actuarial standards consistently applied and are fairly stated, in accordance with sound actuarial principles;

(2)Are based on actuarial assumptions that produce reserves at least as great as those called for in any contract provision as to reserve basis and method, and are in accordance with all other contract provisions;

(3)Meet the requirements of the Insurance Law and regulation of the state of [state of domicile] and are at least as great as the minimum aggregate amounts required by the state in which this statement is filed.

(4)Are computed on the basis of assumptions consistent with those used in computing the corresponding items in the Annual Statement of the preceding year-end (with any exceptions noted below); and

(5)Include provision for all actuarial reserves and related statement items which ought to be established.

8.The reserves and related items, when considered in light of the assets held by the company with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts, make adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the company. (At the discretion of the Commissioner, this language may be omitted for an opinion filed on behalf of a company doing business only in this state and in no other state.)

9.The actuarial methods, considerations and analyses used in forming my opinion conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis of this statement of opinion.

10.This opinion is updated annually as required by statute. To the best of my knowledge, there have been no material changes from the applicable date of the Annual Statement to the date of the rendering of this opinion which should be considered in reviewing this opinion. or

11.The following material change(s) which occurred between the date of the statement for which this opinion is applicable and the date of this opinion should be considered in reviewing this opinion: (Describe the change or changes.)

12.Note: Choose one of the above two paragraphs, whichever is applicable.

a.The impact of unanticipated events subsequent to the date of this opinion is beyond the scope of this opinion. The analysis of asset adequacy portion of this opinion should be viewed recognizing that the company's future experience may not follow all the assumptions used in the analysis.

Signature of Appointed Actuary

Address of Appointed Actuary

Telephone Number of Appointed Actuary

Date

C.Assumptions for New Issues

1.The adoption for new issues or new claims or other new liabilities of an actuarial assumption which differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of § 9.6 of this Part.

D.Adverse Opinions

1.If the appointed actuary is unable to form an opinion, then he or she shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then he or she shall issue an adverse or qualified actuarial opinion explicitly stating the reason(s) for such opinion. This statement should follow the scope paragraph and precede the opinion paragraph.

E.Reliance on Information Furnished by Other Persons

1.If the appointed actuary relies on the certification of others on matters concerning the accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, the actuarial opinion should so indicate the persons the actuary is relying upon and a precise identification of the items subject to reliance. In addition, the persons on whom the appointed actuary relies shall provide a certification that precisely identifies the items on which the person is providing information and a statement as to the accuracy, completeness or reasonableness, as applicable, of the items. This certification shall include the signature, title, company, address and telephone number of the person rendering the certification, as well as the date on which it is signed.

F.Alternate Option

1.R.I. Gen. Laws § 27-4.5-1 et seq. gives the Commissioner broad authority to accept the valuation of a foreign insurer when that valuation meets the requirements applicable to a company domiciled in this state in the aggregate. As an alternative to the requirements of 9.6(7)(a)(3) of this Part, the Commissioner may make one or more of the following additional approaches available to the opining actuary:

a.A statement that the reserves “meet the requirements of the insurance laws and regulations of the State of [state of domicile] and the formal written standards and conditions of this state for filing an opinion based on the law of the state of domicile.”

(1)If the Commissioner chooses to allow this alternative, a formal written list of standards and conditions shall be made available. If a company chooses to use this alternative, the standards and conditions in effect on July 1 of a calendar year shall apply to statements for that calendar year, and they shall remain in effect until they are revised or revoked. If no list is available, this alternative is not available.

b.A statement that the reserves “meet the requirements of the insurance laws and regulations of the State of [state of domicile] and I have verified that the company’s request to file an opinion based on the law of the state of domicile has been approved and that any conditions required by the commissioner for approval of that request have been met.”

(1)If the commissioner chooses to allow this alternative, a formal written statement of such allowance shall be issued no later than March 31 of the year it is first effective. It shall remain valid until rescinded or modified by the commissioner.

(2)The rescission or modifications shall be issued no later than March 31 of the year they are first effective. Subsequent to that statement being issued, if a company chooses to use this alternative, the company shall file a request to do so, along with justification for its use, no later than April 30 of the year of the opinion to be filed.

(3)The request shall be deemed approved on October 1 of that year if the commissioner has not denied the request by that date.

c.A statement that the reserves “meet the requirements of the insurance laws and regulations of the State of [state of domicile] and I have submitted the required comparison as specified by this state.

(1)If the commissioner chooses to allow this alternative, a formal written list of products (to be added to the table in § 9.6(F)(1)(c)(2) of this Part below) for which the required comparison shall be provided will be published. If a company chooses to use this alternative, the list in effect on July 1 of a calendar year shall apply to statements for that calendar year, and it shall remain in effect until it is revised or revoked. If no list is available, this alternative is not available.

(2)If a company desires to use this alternative, the appointed actuary shall provide a comparison of the gross nationwide reserves held to the gross nationwide reserves that would be held under NAIC codification standards. Gross nationwide reserves are the total reserves calculated for the total company in force business directly sold and assumed, indifferent to the state in which the risk resides, without reduction for reinsurance ceded. The information provided shall be at least:

(1) Product Type

(2) Death Benefit or Account Value

(3) Reserves Held

(4) Codification Reserves

(5) Codification Standard

(3)The information listed shall include all products identified by either the state of filing or any other states subscribing to this alternative.

(4)If there is no codification standard for the type of product or risk in force or if the codification standard does not directly address the type of product or risk in force, the appointed actuary shall provide detailed disclosure of the specific method and assumptions used in determining the reserves held.

(5)The comparison provided by the company is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.

2.Notwithstanding the above, the commissioner may reject an opinion based on the laws and regulations of the state of domicile and require an opinion based on the laws of this state. If a company is unable to provide the opinion within sixty (60) days of the request or such other period of time determined by the commissioner after consultation with the company, the commissioner may contract an independent actuary at the company’s expense to prepare and file the opinion.

History

Amendment — effective from 2025-04-11 to current
Periodic Refile — effective from 2022-01-04 to 04/11/2025
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Amendment — effective from 2004-09-21 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 09/21/2004

230-RICR-20-45-9 § 9.7 Description of Actuarial Memorandum Including an Asset Adequacy Analysis and Regulatory Asset Adequacy Issues Summary

A.General

1.In accordance with R.I. Gen. Laws § 27-4.5-3, the appointed actuary shall prepare a memorandum to the company describing the analysis done in support of his or her opinion regarding the reserves. The memorandum shall be made available for examination by the Commissioner upon his or her request but shall be returned to the company after such examination and shall not be considered a record of the insurance department or subject to automatic filing with the Commissioner.

2.In preparing the memorandum, the appointed actuary may rely on, and include as a part of his or her own memorandum, memoranda prepared and signed by other actuaries who are qualified within the meaning of § 9.5(B) of this Part, with respect to the areas covered in such memoranda, and so state in their memoranda.

3.If the Commissioner requests a memorandum and no such memorandum exists or if the Commissioner finds that the analysis described in the memorandum fails to meet the standards of the Actuarial Standards Board or the standards and requirements of this Regulation, the Commissioner may designate a qualified actuary to review the opinion and prepare such supporting memorandum as is required for review. The reasonable and necessary expense of the independent review shall be paid by the company but shall be directed and controlled by the Commissioner.

4.The reviewing actuary shall have the same status as an examiner for purposes of obtaining data from the company and the work papers and documentation of the reviewing actuary shall be retained by the Commissioner; provided, however, that any information provided by the company to the reviewing actuary and included in the work papers shall be considered as material provided by the company to the Commissioner and shall be kept confidential to the same extent as is prescribed by law with respect to other material provided by the company to the Commissioner pursuant to the statute governing this Regulation. The reviewing actuary shall not be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the insurer pursuant to this Regulation for any one of the current year or the preceding three (3) years.

5.In accordance with R.I. Gen. Laws § 27-4.5-3, the appointed actuary shall prepare a regulatory asset adequacy issues summary, the contents of which are specified in § 9.7(C) of this Part. The regulatory asset adequacy issues summary will be submitted no later than March 15 of the year following the year for which a statement of actuarial opinion based on asset adequacy is required. The regulatory asset adequacy issues summary is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.

B.Details of the Memorandum Section Documenting Asset Adequacy Analysis

When an actuarial opinion is provided, the memorandum shall demonstrate that the analysis has been done in accordance with the standards for asset adequacy referred to in § 9.5(D) of this Part and any additional standards under this Regulation. It shall specify:

1.For reserves:

a.Product descriptions including market description, underwriting and other aspects of a risk profile and the specific risks the appointed actuary deems significant;

b.Source of liability in force;

c.Reserve method and basis;

d.Investment reserves;

e.Reinsurance arrangements;

f.Identification of any explicit or implied guarantees made by the general account in support of benefits provided through a separate account or under a separate account policy or contract and the methods used by the appointed actuary to provide for the guarantees in the asset adequacy analysis;

g.Documentation of assumptions to test reserves for the following:

(1)Lapse rates (both base and excess);

(2)Interest crediting rate strategy;

(3)Mortality;

(4)Policyholder dividend strategy;

(5)Competitor or market interest rate;

(6)Annuitization rates;

(7)Commissions and expenses; and

(8)Morbidity.

h.The documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.

2.For assets:

a.Portfolio descriptions, including a risk profile disclosing the quality, distribution and types of assets;

b.Investment and disinvestment assumptions;

c.Source of asset data;

d.Asset valuation bases; and

e.Documentation of assumptions made for:

(1)Default costs;

(2)Bond call function;

(3)Mortgage prepayment function;

(4)Determining market value for assets sold due to disinvestment strategy; and

(5)Determining yield on assets acquired through the investment strategy.

f.The documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.

3.Analysis basis:

a.Methodology;

b.Rationale for inclusion or exclusion of different blocks of business and how pertinent risks were analyzed;

c.Rationale for degree of rigor in analyzing different blocks of business (include in the rationale the level of “materiality” that was used in determining how rigorously to analyze different blocks of business);

d.Criteria for determining asset adequacy (include in the criteria the precise basis for determining if assets are adequate to cover reserves under “moderately adverse conditions” or other conditions as specified in relevant actuarial standards of practice);

e.Whether the impact of federal income taxes was considered and the method of treating reinsurance in the asset adequacy analysis;

4.Summary of material changes in methods, procedures, or assumptions from prior year’s asset adequacy analysis;

5.Summary of Results; and

6.Conclusion(s)

C.Details of the Regulatory Asset Adequacy Issues Summary

1.The regulatory asset adequacy issues summary shall include:

a.Descriptions of the scenarios tested (including whether those scenarios are stochastic or deterministic) and the sensitivity testing done relative to those scenarios. If negative ending surplus results under certain tests in the aggregate, the actuary should describe those tests and the amount of additional reserve as of the valuation date which, if held, would eliminate the negative aggregate surplus values. Ending surplus values shall be determined by either extending the projection period until the in force and associated assets and liabilities at the end of the projection period are immaterial or by adjusting the surplus amount at the end of the projection period by an amount that appropriately estimates the value that can reasonably be expected to arise from the assets and liabilities remaining in force.

b.The extent to which the appointed actuary uses assumptions in the asset adequacy analysis that are materially different than the assumptions used in the previous asset adequacy analysis;

c.The amount of reserves and the identity of the product lines that had been subjected to asset adequacy analysis in the prior opinion but were not subject to analysis for the current opinion;

d.Comments on any interim results that may be of significant concern to the appointed actuary. For example, the impact of the insufficiency of assets to support he payment of benefits and expenses and the establishment of statutory reserves during one or more interim periods;

e.The methods used by the actuary to recognize the impact of reinsurance on the company’s cash flows, including both assets and liabilities, under each of the scenarios tested; and

f.Whether the actuary has been satisfied that all options whether explicit or embedded, in any asset or liability (including but not limited to those affecting cash flows embedded in fixed income securities) and equity-like features in any investments have been appropriately considered in the asset adequacy analysis.

2.The regulatory asset adequacy issues summary shall contain the name of the company for which the regulatory asset adequacy issues summary is being supplied and shall be signed and dated by the appointed actuary rendering the actuarial opinion.

D.Conformity to Standards of Practice. The memorandum shall include a statement:

a."Actuarial methods, considerations and analyses used in the preparation of this memorandum conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis for this memorandum."

E.Use of Assets Supporting the Interest Maintenance Reserve and the Asset Valuation Reserve

a.An appropriate allocation of assets in the amount of the interest maintenance reserve (IMR), whether positive or negative, shall be used in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the asset valuation reserve (AVR); these AVR assets may not be applied for any other risks with respect to reserve adequacy. Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent not used for risk analysis and reserve support.

b.The amount of the assets used for the AVR shall be disclosed in the table of reserves and liabilities of the opinion and in the memorandum. The method used for selecting particular assets or allocated portions of assets shall be disclosed in the memorandum.

F.Documentation. The appointed actuary shall retain on file, for at least seven (7) years, sufficient documentation so that it will be possible to determine the procedures followed, the analyses performed, the bases for assumptions and the results obtained.

History

Amendment — effective from 2025-04-11 to current
Periodic Refile — effective from 2022-01-04 to 04/11/2025
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Amendment — effective from 2004-09-21 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 09/21/2004

230-RICR-20-45-9 § 9.8 Severability

History

Amendment — effective from 2025-04-11 to current
Periodic Refile — effective from 2022-01-04 to 04/11/2025
Technical Revision — effective from 2010-08-26 to 01/04/2022
Amendment — effective from 2010-08-26 to 08/26/2010
Amendment — effective from 2004-09-21 to 08/26/2010
Periodic Refile — effective from 2001-12-19 to 09/21/2004

230-RICR-20-45-10 Captive Insurance Financial Regulation

230-RICR-20-45-10 § 10.1 Authority

This Regulation is promulgated pursuant to R.I. Gen. Laws §§ 27-43-10 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-10 § 10.2 Purpose

The purpose of this Regulation is to set forth the financial and reporting requirements which the director deems necessary for the Regulation of captive insurance companies, as authorized by the Captive Insurance Company Act, R.I. Gen. Laws § 27-43-1, et seq. References herein to "company" shall mean captive insurance company or companies, unless otherwise specified.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-10 § 10.3 Definitions

A.“Captive Insurance Company”, “Industrial Insured Captive Insurance Company”, “Subsidiary Captive Insurance Company” and “Parent” shall have the meanings ascribed to them in R.I. Gen. Laws § 27-43-1.

B.“Director” means the Director of the Department of Business Regulation

C.“Pure Captive Insurance Company” means a Subsidiary Captive Insurance Company

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-10 § 10.4 Annual and Quarterly Reporting Requirements

A.Captive insurance companies shall annually file a statement of condition as provided in R.I. Gen. Laws § 27-12-1; provided, however, that the commissioner may, upon written request of the captive insurance company, allow a pure or subsidiary captive insurance company or industrial insured captive insurance company to file a modified statement.

1.The modified statement shall be prepared using generally accepted accounting principles, unless the Director approves the use of statutory accounting principles, with any useful or necessary modifications or adaptations thereof required or approved or accepted by the Director for the type of insurance and kinds of insurers to be reported upon, and as supplemented by additional information required by the commissioner. The form of report shall be that prescribed by the Director as "Captive Annual Statement -- Subsidiary (Pure) or Industrial Insured."

2.Any subsidiary or pure captive insurance company may make written application for filing the required report on a fiscal year-end provided, however, that its parent organization is on the same fiscal year end. If an alternative reporting date is granted:

a.The annual report is due sixty (60) days after the fiscal year-end; and

b.In order to provide sufficient detail to support the premium tax return, the subsidiary or pure captive insurance company shall file prior to March 1 of each year for each calendar year-end, pages 1, 2, 3, and 5 of the "Captive Annual Statement -- Subsidiary (Pure) or Industrial Insured," verified by oath of two of its executive officers.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-10 § 10.5 Severability

If any section, term, or provision of this Regulation shall be adjudged invalid for any reason, that judgement shall not effect, impair, or invalidate any remaining section, term, or provision, which shall remain in full force and effect.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-45-11 Corporate Governance

230-RICR-20-45-11 § 11.1 Authority

This regulations is promulgated pursuant to the authority granted R.I. Gen. Laws § 27-1.2-4.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-01 to 01/04/2022
Technical Revision — effective from 2017-01-01 to 01/01/2017
Adoption — effective from 2017-01-01 to 01/01/2017

230-RICR-20-45-11 § 11.2 Purpose

The purpose of this regulation is to set forth the procedures for filing and the required contents of the Corporate Governance Annual Disclosure (CGAD), deemed necessary by the Department to carry out the provisions of R.I. Gen. Laws § 27-1.2.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-01 to 01/04/2022
Technical Revision — effective from 2017-01-01 to 01/01/2017
Adoption — effective from 2017-01-01 to 01/01/2017

230-RICR-20-45-11 § 11.3 Definitions 11.3 Definitions {#sec-230-ricr-20-45-11-11.3-definitions omnilex-key=us-ri-regs-official--title-230--230-RICR-20-45-11#11.3 Definitions}

A.For the purpose of this Regulation the following definitions shall apply:

1.“Department” shall mean the Department of Business Regulation, Insurance Division.

2.“Insurance group.” For the purpose of this Act, the term “insurance group” shall mean those insurers and affiliates included within an insurance holding company system as defined in R.I. Gen. Laws §§ 27-35.

3.“Insurer.” The term “insurer” shall have the same meaning as set forth in R.I. Gen. Laws § 27-54.1-1(5), except that it shall not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.

4.“Senior Management.” The term “senior management” shall mean any corporate officer responsible for reporting information to the board of directors at regular intervals or providing this information to shareholders or regulators and shall include, for example and without limitation, the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), Chief Operations Officer (“COO”), Chief Procurement Officer (“CPO”), Chief Legal Officer (“CLO”), Chief Information Officer (“CIO”), Chief Technology Officer (“CTO”), Chief Revenue Officer (“CRO”), Chief Visionary Officer (“CVO”), or any other “C” level executive.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-01 to 01/04/2022
Technical Revision — effective from 2017-01-01 to 01/01/2017
Adoption — effective from 2017-01-01 to 01/01/2017

230-RICR-20-45-11 § 11.4 Filing Procedures

A.An insurer, or the insurance group of which the insurer is a member, required to file a CGAD by the R.I. Gen Laws § 27-1.2-3, shall, no later than June 1 of each calendar year, submit to the Commissioner a CGAD that contains the information described in § 11.5 of this Part.

B.The CGAD must include a signature of the insurer’s or insurance group’s chief executive officer or corporate secretary attesting to the best of that individual’s belief and knowledge that the insurer or insurance group has implemented the corporate governance practices and that a copy of the CGAD has been provided to the insurer’s or insurance group’s Board of Directors (hereafter “Board”) or the appropriate committee thereof.

C.The insurer or insurance group shall have discretion regarding the appropriate format for providing the information required by these regulations and is permitted to customize the CGAD to provide the most relevant information necessary to permit the Commissioner to gain an understanding of the corporate governance structure, policies and practices utilized by the insurer or insurance group.

D.For purposes of completing the CGAD, the insurer or insurance group may choose to provide information on governance activities that occur at the ultimate controlling parent level, an intermediate holding company level and/or the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance. The insurer or insurance group is encouraged to make the CGAD disclosures at the level at which the insurer’s or insurance group’s risk appetite is determined, or at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised, or the level at which legal liability for failure of general corporate governance duties would be placed. If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting.

E.Notwithstanding § 11.4(A) of this Part, and as outlined in Section 3 of the Corporate Governance Annual Disclosure Model Act, if the CGAD is completed at the insurance group level, then it must be filed with the lead state of the group as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the NAIC. In these instances, a copy of the CGAD must also be provided to the chief regulatory official of any state in which the insurance group has a domestic insurer, upon request.

F.An insurer or insurance group may comply with § 11.4 of this Part by referencing other existing documents (e.g., ORSA Summary Report, Holding Company Form B or F Filings, Securities and Exchange Commission (SEC) Proxy Statements, foreign regulatory reporting requirements, etc.) if the documents provide information that is comparable to the information described in § 11.5 of this Part. The insurer or insurance group shall clearly reference the location of the relevant information within the CGAD and attach the referenced document if it is not already filed or available to the regulator.

G.Each year following the initial filing of the CGAD, the insurer or insurance group shall file an amended version of the previously filed CGAD indicating where changes have been made. If no changes were made in the information or activities reported by the insurer or insurance group, the filing should so state.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-01 to 01/04/2022
Technical Revision — effective from 2017-01-01 to 01/01/2017
Adoption — effective from 2017-01-01 to 01/01/2017

230-RICR-20-45-11 § 11.5 Contents of Corporate Governance Annual Disclosure

A.The insurer or insurance group shall be as descriptive as possible in completing the CGAD, with inclusion of attachments or example documents that are used in the governance process, since these may provide a means to demonstrate the strengths of their governance framework and practices.

B.The CGAD shall describe the insurers or insurance group’s corporate governance framework and structure including consideration of the following.

1.The Board and various committees thereof ultimately responsible for overseeing the insurer or insurance group and the level(s) at which that oversight occurs (e.g., ultimate control level, intermediate holding company, legal entity, etc.). The insurer or insurance group shall describe and discuss the rationale for the current Board size and structure; and

2.The duties of the Board and each of its significant committees and how they are governed (e.g., bylaws, charters, informal mandates, etc.), as well as how the Board’s leadership is structured, including a discussion of the roles of Chief Executive Officer (CEO) and Chairman of the Board within the organization.

C.The insurer or insurance group shall describe the policies and practices of the most senior governing entity and significant committees thereof, including a discussion of the following factors:

1.How the qualifications, expertise and experience of each Board member meet the needs of the insurer or insurance group.

2.How an appropriate amount of independence is maintained on the Board and its significant committees.

3.The number of meetings held by the Board and its significant committees over the past year as well as information on director attendance.

4.How the insurer or insurance group identifies, nominates and elects members to the Board and its committees. The discussion should include, for example:

a.Whether a nomination committee is in place to identify and select individuals for consideration.

b.Whether term limits are placed on directors.

c.How the election and re-election processes function.

d.Whether a Board diversity policy is in place and if so, how it functions.

5.The processes in place for the Board to evaluate its performance and the performance of its committees, as well as any recent measures taken to improve performance (including any Board or committee training programs that have been put in place).

D.The insurer or insurance group shall describe the policies and practices for directing Senior Management, including a description of the following factors:

1.Any processes or practices (i.e., suitability standards) to determine whether officers and key persons in control functions have the appropriate background, experience and integrity to fulfill their prospective roles, including:

a.Identification of the specific positions for which suitability standards have been developed and a description of the standards employed.

b.Any changes in an officer’s or key person’s suitability as outlined by the insurer’s or insurance group’s standards and procedures to monitor and evaluate such changes.

2.The insurer’s or insurance group’s code of business conduct and ethics, the discussion of which considers, for example:

a.compliance with laws, rules, and regulations; and

b.proactive reporting of any illegal or unethical behavior.

3.The insurer’s or insurance group’s processes for performance evaluation, compensation and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description shall include sufficient detail to allow the Commissioner to understand how the organization ensures that compensation programs do not encourage and/or reward excessive risk taking. Elements to be discussed may include, for example:

a.The Board’s role in overseeing management compensation programs and practices.

b.The various elements of compensation awarded in the insurer’s or insurance group’s compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid;

c.How compensation programs are related to both company and individual performance over time;

d.Whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels;

e.Any clawback provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted;

f.Any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees.

4.The insurer’s or insurance group’s plans for CEO and Senior Management succession.

E.The insurer or insurance group shall describe the processes by which the Board, its committees and Senior Management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer’s business activities, including a discussion of:

1.How oversight and management responsibilities are delegated between the Board, its committees and Senior Management;

2.How the Board is kept informed of the insurer’s strategic plans, the associated risks, and steps that Senior Management is taking to monitor and manage those risks;

3.How reporting responsibilities are organized for each critical risk area. The description should allow the Commissioner to understand the frequency at which information on each critical risk area is reported to and reviewed by Senior Management and the Board. This description may include, for example, the following critical risk areas of the insurer:

a.Risk management processes (An ORSA Summary Report filer may refer to its ORSA Summary Report pursuant to the Risk Management and Own Risk and Solvency Assessment Model Act);

b.Actuarial function;

c.Investment decision-making processes;

d.Reinsurance decision-making processes;

e.Business strategy/finance decision-making processes;

f.Compliance function;

g.Financial reporting/internal auditing; and

h.Market conduct decision-making processes.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-01 to 01/04/2022
Technical Revision — effective from 2017-01-01 to 01/01/2017
Adoption — effective from 2017-01-01 to 01/01/2017

230-RICR-20-45-11 § 11.6 Severability Clause

If any provision of this regulation, or the application thereof to any person or circumstance, is held invalid, such determination shall not affect other provisions or applications of these regulations which can be given effect without the invalid provision or application, and to that end the provisions of these regulations are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-01 to 01/04/2022
Technical Revision — effective from 2017-01-01 to 01/01/2017
Adoption — effective from 2017-01-01 to 01/01/2017

230-RICR-20-45-11 Corporate Governance

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-01 to 01/04/2022
Technical Revision — effective from 2017-01-01 to 01/01/2017
Adoption — effective from 2017-01-01 to 01/01/2017

Subchapter 50 Insurance producers and other non-insurer licensees

230-RICR-20-50-1 Surplus Lines Brokers (formerly Insurance Regulation 11)

230-RICR-20-50-1 § 1.1 Authority

A.This Part is promulgated pursuant to R.I. Gen. Laws Chapter 27-3.

History

Amendment — effective from 2025-03-12 to current
Periodic Refile — effective from 2022-01-04 to 03/12/2025
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2011-01-13 to 08/25/2018
Amendment — effective from 2008-12-14 to 01/13/2011
Amendment — effective from 2002-12-04 to 12/14/2008
Periodic Refile — effective from 2001-12-19 to 12/04/2002

230-RICR-20-50-1 § 1.2 Purpose

A.The purpose of this Part is to outline requirements for Rhode Island Surplus Line Brokers. This Part should be read in conjunction with the requirements contained in R.I. Gen. Laws Chapter 27-3.

History

Amendment — effective from 2025-03-12 to current
Periodic Refile — effective from 2022-01-04 to 03/12/2025
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2011-01-13 to 08/25/2018
Amendment — effective from 2008-12-14 to 01/13/2011
Amendment — effective from 2002-12-04 to 12/14/2008
Periodic Refile — effective from 2001-12-19 to 12/04/2002

230-RICR-20-50-1 § 1.3 Definitions

A.As used in this Part:

1.“Approved surplus line insurer” means an insurer which has satisfied the Department’s requirements, pursuant to R.I. Gen. Laws § 27-3-40, and has been placed by the Department on a list maintained by the Department of Surplus Line Insurers which may issue policies in Rhode Island.

2.“Broker” means an individual who holds a valid and current Surplus Line Broker’s license issued by the Department at the time the insurance is placed with an Approved Surplus Line Insurer.

3.“Diligent effort” means submission of the risk(s) by the Broker, or a licensed Producer working with the Broker, to no fewer than three (3) Licensed Insurers.

4.“Department” means the Department of Business Regulation, Division of Insurance.

5.“Insurance producer” or “Producer” means an individual or entity licensed pursuant to R.I. Gen. Laws Chapter 27-2.4.

6.“Licensed insurer” means an insurer who is licensed to issue insurance in Rhode Island pursuant to R.I. Gen. Laws Chapters 27-1 and 27-2.

7.“Procurable” means that the insurance can be obtained from a Licensed Insurer.

8.“Tax administrator” means the governmental official charged with collecting tax from licensed surplus line brokers and/or insurers.

9.“Unauthorized insurer” means an insurer that is neither licensed to issue insurance in Rhode Island nor on the Department’s list of Approved Surplus Line Insurers.

History

Amendment — effective from 2025-03-12 to current
Periodic Refile — effective from 2022-01-04 to 03/12/2025
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2011-01-13 to 08/25/2018
Amendment — effective from 2008-12-14 to 01/13/2011
Amendment — effective from 2002-12-04 to 12/14/2008
Periodic Refile — effective from 2001-12-19 to 12/04/2002

230-RICR-20-50-1 § 1.4 Licensing Requirements

A.A resident Broker’s license may only be held by a person who holds a Property & Casualty Insurance Producer license issued pursuant to R.I. Gen. Laws Chapter 27-2.4. Brokers are subject to all provisions applicable to licensed Insurance Producers in Rhode Island as well as the additional requirements contained in this Part and R.I. Gen. Laws Chapter 27-3. In order to obtain a Broker’s license a resident Producer licensed in Rhode Island must submit an as prescribed by the Department and processed by the National Insurance Producer Register (“NIPR”).

B.In accordance with R.I. Gen. Laws § 27-2.4-10(d) any person licensed as a surplus line broker in his or her home state shall be eligible for a nonresident surplus line broker license. Nonresident surplus line brokers must submit an application as prescribed by the Department and processed by the National Insurance Producer Register (“NIPR”).

C.The biennial fee for a Broker's license is one hundred dollars ($100). Fees for other services associated with licensing shall be set by regulation.

History

Amendment — effective from 2025-03-12 to current
Periodic Refile — effective from 2022-01-04 to 03/12/2025
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2011-01-13 to 08/25/2018
Amendment — effective from 2008-12-14 to 01/13/2011
Amendment — effective from 2002-12-04 to 12/14/2008
Periodic Refile — effective from 2001-12-19 to 12/04/2002

230-RICR-20-50-1 § 1.5 General Rules

A.A licensed Broker may place policies of insurance with insurers who are on the Department’s list of Approved Surplus Line Insurers only when the specific conditions of R.I. Gen. Laws § 27-3-38(c) exist. Under no circumstances shall life, health, accident or disability insurance be placed with any insurer not licensed in Rhode Island, including an Approved Surplus Line Insurer.

B.A Broker shall not place risks with or effect insurance with Unauthorized Insurers. A Broker who places a risk with an Unauthorized Insurer will be subject to penalty, including but not limited to revocation of license pursuant to R.I. Gen. Laws § 42-14-16, and will be personally liable on the insurance contract pursuant to R.I. Gen. Laws § 27-16-1.2(d).

C.Submission of risks to Licensed Insurers is always required prior to placement with an Approved Surplus Line Insurer. The Broker must undertake a Diligent Effort to procure the full amount of insurance from Licensed Insurers. The Diligent Effort requires that the Broker identify the Licensed Producers or officers of the Licensed Insurers which have declined the specific risk.

D.A form substantially similar to that provided in a bulletin promulgated for that purpose must be completed in its entirety, prior to coverage being obtained from the Approved Surplus Line Insurer and prior to signature by the Broker and the insured, with all required information provided. The form may be modified to allow for electronic signatures in accordance with the Electronic Transactions Act R.I. Gen. Laws Chapter 42-127.1.

E.For any policy renewed, continued, or extended by the same insurer, no affidavit shall be required to be completed for any policy of insurance or coverage under a policy procured by the Broker, for which the Broker has previously completed an affidavit; provided however, prior to renewing, continuing, or extending any policy, the Broker must confirm that the insurer is on the Department’s list of Approved Surplus Line Insurers in this state.

F.No insurance will be deemed not procurable from a Licensed Insurer, and therefore eligible for placement with an Approved Surplus Line Insurer, if the proposed form of contract cannot be lawfully issued by Licensed Insurers.

G.Mere rate differential shall not be grounds for placing a particular risk with an Approved Surplus Line Insurer when a Licensed Insurer would accept such risk at a different rate.

H.The fact that a Broker does not hold an agent's agreement with a Licensed Insurer that will accept the risk is not sufficient justification for placing the risk with an Approved Surplus Line Insurer.

I.Brokers may charge fees in addition to commissions only when such fees are not included in premium, provided that such fees are reasonable and appropriate in order to cover underwriting expenses that are unique to a surplus lines agency. Such fees must be fully disclosed in detail to the insured, whether directly or through another licensed producer, in writing prior to the sale. Documentation evidencing the disclosure of fees must be retained by the Broker or licensed producer for a period of three (3) years following the expiration of the policy sold. The Department may, at the expense of the Broker, examine the operations of a Broker to determine that fees charged are reasonable and appropriate for the services performed or the expenses incurred. This provision shall not be construed to limit the authority of the Department with respect to examination of insurers or any other licensee of the Department, granted in this or any other statute or Regulation of the State of Rhode Island.

J.Pursuant to R.I. Gen. Laws § 27-3-38(f), every application form for insurance from a surplus lines insurer, every affidavit form executed by the insured, and every policy (on its front and declarations pages) issued by the surplus lines insurer, shall contain in ten (10) point type the following notice:

NOTICE

THIS INSURANCE CONTRACT HAS BEEN PLACED WITH AN INSURER NOT LICENSED TO DO BUSINESS IN THE STATE OF RHODE ISLAND BUT APPROVED AS A SURPLUS LINES INSURER. THE INSURER IS NOT A MEMBER OF THE RHODE ISLAND INSURERS INSOLVENCY FUND. SHOULD THE INSURER BECOME INSOLVENT, THE PROTECTION AND BENEFITS OF THE RHODE ISLAND INSURERS INSOLVENCY FUND ARE NOT AVAILABLE.

1.Brokers may comply with this section by including an endorsement as a second declarations page if the notice has not been included in the policy by the insurer.

2.The Requirement to include the notice in the front of the policy is complied with if the notice is included in a cover letter or on the first page of the policy.

3.The notice on the application must be included if the application is being made to a surplus lines insurer. If the producer has an application form completed by the insured to be presented to both the licensed market and, if declined, to the surplus line market the application does not fall under this requirement.

History

Amendment — effective from 2025-03-12 to current
Periodic Refile — effective from 2022-01-04 to 03/12/2025
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2011-01-13 to 08/25/2018
Amendment — effective from 2008-12-14 to 01/13/2011
Amendment — effective from 2002-12-04 to 12/14/2008
Periodic Refile — effective from 2001-12-19 to 12/04/2002

230-RICR-20-50-1 § 1.6 Affidavits

A.The Broker and the insured shall execute affidavits on each risk, other than those risks exempted by R.I. Gen. Laws § 27-3-38(c) and § 1.5(E) of this Part, placed with an Approved Surplus Line Insurer in a form substantially similar to that provided in a bulletin promulgated for that purpose.

B.If the Affidavit provided in a bulletin promulgated for that purpose is modified to allow for electronic transactions all of the following must be included in the form provided in a bulletin promulgated for that purpose or the affidavit will not be considered substantially similar:

1.A statement by the surplus line broker that (s)he has conducted a diligent search and has been unable to place the insurance with a licensed insurer;

2.A statement by the surplus line broker identifying the three insurers that declined the risk;

3.A statement by the surplus line broker identifying the risk insured, the company issuing the policy, the amount of insurance, the line of business, the policy number, term and expiration date and the premium. The line of business shall be identified as one of the following: automobile, homeowner, commercial property, commercial automobile, medical malpractice, workers compensation, other personal and other commercial;

4.A statement from the insured indicating that he has been provided with all of the information in §§ 1.6(B)(1), (2) and (3) of this Part above and containing the following in all caps, minimum 10-point type, immediately before the insured’s signature:

NOTICE

C.The Broker's record shall be open to the examination of the Department and/or the Tax Administrator at all reasonable times. Records should be maintained in accordance with Subchapter 60 Part 4 of this Chapter.

D.Rhode Island does not accept “courtesy filings.” The Broker who places or procures the insurance shall be the signatory on the Affidavit. All persons, regardless of state of residence, may apply to be a Broker.

History

Amendment — effective from 2025-03-12 to current
Periodic Refile — effective from 2022-01-04 to 03/12/2025
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2011-01-13 to 08/25/2018
Amendment — effective from 2008-12-14 to 01/13/2011
Amendment — effective from 2002-12-04 to 12/14/2008
Periodic Refile — effective from 2001-12-19 to 12/04/2002

230-RICR-20-50-1 § 1.7 Annual Report

A.Annually each licensed surplus line broker shall report to the Department the total number of policies and premium issued in the preceding calendar year in the form provided in a bulletin promulgated for that purpose.

B.Said reports shall be filed no later than April 1 of the next calendar year beginning on April 1, 2010.

C.Failure to file said report will constitute violation of this Part which may subject the broker to discipline, up to and including revocation of the broker and insurance producer licenses.

History

Amendment — effective from 2025-03-12 to current
Periodic Refile — effective from 2022-01-04 to 03/12/2025
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2011-01-13 to 08/25/2018
Amendment — effective from 2008-12-14 to 01/13/2011
Amendment — effective from 2002-12-04 to 12/14/2008
Periodic Refile — effective from 2001-12-19 to 12/04/2002

230-RICR-20-50-1 § 1.8 Tax

A.Prior to license renewal the Department will obtain confirmation from the Tax Administrator that the Broker has paid a tax of four per cent (4%) on the gross premiums charged the insured by the insurers for policies invoiced on or after July 1, 2010 and three percent (3%) for policies invoiced prior to July 1, 2010, less the amount of such premiums returned to such insureds for risks placed pursuant to the Broker’s license. The Department will not renew the license of any Broker for whom the Tax Administrator does not provide such confirmation.

History

Amendment — effective from 2025-03-12 to current
Periodic Refile — effective from 2022-01-04 to 03/12/2025
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2011-01-13 to 08/25/2018
Amendment — effective from 2008-12-14 to 01/13/2011
Amendment — effective from 2002-12-04 to 12/14/2008
Periodic Refile — effective from 2001-12-19 to 12/04/2002

230-RICR-20-50-1 § 1.9 Severability

A.If any section, term, or provision of this Part should be adjudged invalid for any reason, that judgment should not effect, impair, or invalidate any remaining section, term, or provision, which shall remain in full force and effect.

History

Amendment — effective from 2025-03-12 to current
Periodic Refile — effective from 2022-01-04 to 03/12/2025
Amendment — effective from 2018-08-25 to 01/04/2022
Amendment — effective from 2011-01-13 to 08/25/2018
Amendment — effective from 2008-12-14 to 01/13/2011
Amendment — effective from 2002-12-04 to 12/14/2008
Periodic Refile — effective from 2001-12-19 to 12/04/2002

Subchapter 55 Insurance Company Licensing

230-RICR-20-55-1 Standards for Foreign Insurer Company Licensing

230-RICR-20-55-1 § 1.1 Authority

This Part is promulgated pursuant to R.I. Gen. Laws § 42-14-17.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 06/23/2002
Amendment — effective from 2002-06-23 to 06/23/2002
Periodic Refile — effective from 2001-12-19 to 06/23/2002

230-RICR-20-55-1 § 1.2 Purpose

A.The purpose of this Part is to set standards to assist the Insurance Commissioner in determining whether a foreign insurance company is eligible to be considered for a license to transact insurance business within the State of Rhode Island as provided for in R.I. Gen. Laws Chapter 27-2.

B.It is in the public interest to set standards whereby foreign insurance companies will be considered for licensure within the State of Rhode Island. The Insurance Commissioner deems it in the public interest to set standards for consideration of those foreign insurance companies which will serve the best interest of the citizens of the State of Rhode Island.

C.The following standards must be met by any foreign Life and Health or Property and Casualty insurance company seeking to be licensed to transact insurance business within the State of Rhode Island. Other types of companies (e.g. Health Maintenance Organizations, Title Insurers, Fraternal Societies, Captives, Risk Retention Groups, Surplus Lines Insurers, Reciprocal Exchanges and Authorized or Accredited Reinsurers) should contact the Chief Insurance Examiner of the Rhode Island Department of Business Regulation, Division of Insurance (“Department”) for specific instructions when applying.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 06/23/2002
Amendment — effective from 2002-06-23 to 06/23/2002
Periodic Refile — effective from 2001-12-19 to 06/23/2002

230-RICR-20-55-1 § 1.3 Conditions

A.To be eligible to be considered for licensure within the State of Rhode Island, all foreign insurance companies must file an application following the standards established by the National Association of Insurance Commissioners’ Uniform Certificate of Authority Application (NAIC UCAA). Such applications must be filed using the NAIC UCAA’s Expansion Application. Each application will undergo a rigorous financial and operational review to determine that the applicant company has a positive financial history and that its presence in the State of Rhode Island will not be detrimental to the residents of this State.

B.Consideration will be given to the company’s proposed plan of operation, its ownership and management staff, the company’s affiliations with other Rhode Island licensed insurance companies, and its recent history of ratings by A.M. Best or other appropriate rating agencies. The review process will particularly consider the company’s financial history as indicated by Insurance Regulatory Information System (IRIS) and Financial Analysis Solvency Tools (FAST) ratios, revenues, net incomes or losses, capital gains or losses (realized and unrealized), changes in capital and surplus, changes in assets and liabilities, and the trend of its Risk-Based Capital ratio. Due consideration will also be given to commentaries contained in the most recent independent Certified Public Accountant’s Report, Actuarial Opinion, Management Discussion and Analysis Report, and the most recent Examination Report provided by the State of domicile.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 06/23/2002
Amendment — effective from 2002-06-23 to 06/23/2002
Periodic Refile — effective from 2001-12-19 to 06/23/2002

230-RICR-20-55-1 § 1.4 Procedure

Complete foreign Expansion Applications will be reviewed in chronological order, based on the date when each was first recorded as complete and received. The Commissioner reserves the right to consider for licensure foreign Property and Casualty insurance companies other than on the chronological basis as set forth above when said foreign Property and Casualty insurance companies demonstrate to his or her satisfaction that they will commit themselves to the writing of certain lines of business in a significant volume, satisfying the needs of the Rhode Island consumer, provided, however, that said foreign Property and Casualty insurance companies meet the criteria as set forth in this Part.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 06/23/2002
Amendment — effective from 2002-06-23 to 06/23/2002
Periodic Refile — effective from 2001-12-19 to 06/23/2002

230-RICR-20-55-1 § 1.5 Filing Requirements

A.Foreign insurance companies seeking a Rhode Island Certificate of Authority must submit those items listed in the NAIC’s UCAA Expansion Application. When completing an application for a Rhode Island Certificate of Authority, applicant companies should particularly follow the Rhode Island specific items in Sections II and III of the NAIC UCAA Manual for the Expansion Application.

B.The Insurance Commissioner reserves the right to require any applicant company to furnish additional material or information deemed necessary in the course of this Department’s review.

C.In addition to the specific requirements for filing an Expansion Application, a foreign insurance company must file the following information and/or documents for the Commissioner's consideration:

1.A foreign insurance company may not transact business in Rhode Island until it has appointed, in writing, the Insurance Commissioner as attorney to receive service of process (to be accompanied by a certified copy of the resolution of its Board of Directors authorizing such appointment).

2.A Retaliatory Statement must be completed by the applicant company’s State of domicile Insurance Department/Division for submission to the Department.

3.If the applicant company’s State of domicile insurance holding company disclosure requirements and standards are substantially similar to the requirements of R.I. Gen. Laws Chapter 27-35, the applicant shall submit only an affidavit attesting to that “substantial similarity” and shall not submit a full Form B filing. If such an affidavit cannot be provided, the Form B filing should be submitted with a cover letter explaining the absence of “substantial similarity.”

4.R.I. Gen. Laws § 27-34-6 requires that all Property and Casualty insurers shall be and remain members of the Rhode Island Insurers’ Insolvency Fund.

5.R.I. Gen. Laws § 31-33-8 and Subchapter 05 Part 8 of this Title, Rhode Island Automobile Insurance Plan (formerly Insurance Regulation 98), require that all automobile insurers must participate in the Rhode Island Automobile Insurance Plan (“Rhode Island Assigned Risk Plan”). A company applying for a Rhode Island Certificate of Authority that will include those lines of business must submit a statement on company letterhead, signed by the appropriate company official and certifying that the company will become a member of the Rhode Island Automobile Insurance Plan upon approval and issuance of its Rhode Island Certificate of Authority.

6.R.I. Gen. Laws § 27-33-2 and Subchapter 05 Part 11 of this Chapter, Basic Property Insurance Inspection and Placement Program, require that all insurers licensed to write those classes of insurance listed in R.I. Gen. Laws §§ 27-8-1 and 27-8-3 on a direct basis, must participate in the basic property insurance program established in Rhode Island, the Rhode Island Joint Reinsurance Association (“RI FAIR Plan”). A company applying for a Rhode Island Certificate of Authority that will include those lines of business must submit a statement on company letterhead, signed by the appropriate company official and certifying that the company will become a member of the Rhode Island Joint Reinsurance Association upon approval and issuance of its Rhode Island Certificate of Authority.

7.Under R.I. Gen. Laws § 42-14.1-1 and Subchapter 10 Part 1 of this Chapter, Medical Malpractice Joint Underwriting Association (formerly Insurance Regulation 21), all insurers licensed to write “personal injury liability insurance” on a direct basis are, by operation of law, members of the Medical Malpractice Joint Underwriting Association of Rhode Island (MMJUA).

8.R.I. Gen. Laws § 27-34.3-6(a) requires that all Life or Health insurers shall be and remain members of the Rhode Island Life and Health Insurance Guaranty Association.

9.A foreign life company planning to include variable life and/or variable annuity authority must also submit a written opinion as to whether the applicant company’s State of domicile Regulation provides a degree of protection to policyholders and the public which is substantially equal to that provided by R.I. Gen. Laws Chapter 27-32.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 06/23/2002
Amendment — effective from 2002-06-23 to 06/23/2002
Periodic Refile — effective from 2001-12-19 to 06/23/2002

230-RICR-20-55-1 § 1.6 Waiver

Whenever a court of competent jurisdiction approves a rehabilitation plan which would create a new company to replace a foreign insurance company that was properly licensed in Rhode Island, or when any State requires the formation of a shell company to facilitate the redomestication of a foreign insurance company that was properly licensed in Rhode Island, to a State other than Rhode Island, the Insurance Commissioner may, at his or her discretion, waive any or all of the requirements of this part and permit the new company to be licensed.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 06/23/2002
Amendment — effective from 2002-06-23 to 06/23/2002
Periodic Refile — effective from 2001-12-19 to 06/23/2002

230-RICR-20-55-1 § 1.7 Severability

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 01/04/2022
Technical Revision — effective from 2002-06-23 to 06/23/2002
Amendment — effective from 2002-06-23 to 06/23/2002
Periodic Refile — effective from 2001-12-19 to 06/23/2002

230-RICR-20-55-2 Alien Insurers Port of Entry

230-RICR-20-55-2 § 2.1 Definitions

A."Alien insurance company" means any insurance company incorporated or organized under the laws of any country other than the United States.

B."Authorized control level risk based capital" means the number determined under the risk-based capital formula in accordance with the provisions of R.I. Gen. Laws Chapter 27-4.6.

C."Commissioner" means the Director of the Department of Business Regulation.

D."Domestic insurer" means any insurance company incorporated under the authority of this state.

E."License" means the approval granted under § 2.3 of this Part.

F."State" means any state, commonwealth, territory or possession of the United States and the District of Columbia.

G."Trusteed assets" means the assets in a trust account which the Commissioner requires be established and maintained by an alien insurance company.

H."Trusteed surplus" means the aggregate value of the Alien Insurance Company's general state deposits and Trusteed Assets deposited with a trustee in compliance with §§ 2.4 and 2.5 of this Part, plus accrued investment income thereon where such income is collected by the states for trustees, less the aggregate net amount of all of its reserves and other liabilities in the United States as determined in accordance with § 2.6 of this Part, all as adjusted by any other amounts deemed appropriate by the Commissioner.

I."United States" means the several states, commonwealths, territories and possessions of the United States and the District of Columbia.

J."United States branch" means the business unit through which business is transacted within the United States by an Alien Insurance Company and the assets and liabilities of the Alien Insurance Company within the United States pertaining to such business.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-55-2 § 2.2 Scope

A.This Part applies to any Alien Insurance Company that seeks the approval of the Commissioner to be treated as a Domestic Insurer of this state pursuant to R.I. Gen. Laws § 27-59-2. Any Alien Insurance Company that has received the Commissioner's authorization to be treated as a Domestic Insurer of this state shall transact all of its United States business through a United States Branch which has been approved pursuant to the requirements of this Part. The United States Branch shall also be subject to all state laws and regulations applicable to an insurer domiciled in this state unless otherwise provided.

B.Any Alien Insurance Company that has received the Commissioner's authorization to be treated as a Domestic Insurer of this state shall be required to use the State of Rhode Island as its state of entry to transact insurance business in the United States.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-55-2 § 2.3 Authorization for Entry

A.Before authorizing an Alien Insurance Company through its United States Branch to enter this state and be treated as a Domestic Insurer of this state, the Commissioner shall require the Alien Insurance Company to:

1.Submit to the Commissioner a copy of

a.Its charter and by-laws, if any, currently in force, and such other documents necessary to show the kinds of business which it is empowered to do in its domiciliary jurisdiction, attested to as accurate and complete by the insurance supervisory official in its domiciliary jurisdiction;

b.A full statement, subscribed and affirmed as true under the penalties of perjury by two officers or equivalent responsible representatives in such manner as the Commissioner shall prescribe, of its financial condition as of the close of its latest fiscal year, showing its assets, liabilities, income, disbursements, business transacted and other facts required to be shown in its annual statement, as reported to the insurance supervisory official in its domiciliary jurisdiction; and

c.An English language translation, as necessary, of any of the documents required herein;

2.Submit to an examination of the Alien Insurance Company's affairs at its principal office within the United States; provided however, the Commissioner in his/her discretion may accept a report of the insurance supervisory official of the insurer's domiciliary jurisdiction;

3.Qualify as an insurer licensed to do business in this state in accordance with all applicable statutes and regulations;

4.Establish a trust account, pursuant to the terms of a trust agreement approved by the Commissioner, with a qualified United States financial institution, in a manner and in an amount required under §§ 2.4 and 2.5 of this Part. For purposes of this Part, a qualified United States financial institution shall be defined as in R.I. Gen. Laws § 27-1.1-3;

5.Complete and submit to the Commissioner an application on the form(s) prescribed by the Commissioner; and

6.Satisfy the requirements of all other applicable rules, regulations and statutes and submit any and all information requested by the Commissioner.

B.Any Alien Insurance Company that has satisfied the requirements of § 2.3(A) of this Part shall be granted approval to be treated as a Domestic Insurer of this state in whole or in part and granted a License to transact all of its United States business through its United States Branch.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-55-2 § 2.4 Maintenance of Trust Account

Trusteed Assets shall at all times be in an amount equal to the United States Branch's reserves and other liabilities plus the minimum capital and surplus or Authorized Control Level Risk Based Capital, whichever is greater, required to be maintained by a Domestic Insurer licensed to do the same kind(s) of insurance.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-55-2 § 2.5 Requirements for Trust Agreement

A.The deed of trust and all amendments thereto shall be authenticated in such form and manner as the Commissioner may prescribe and shall not be effective unless approved by the Commissioner upon finding that:

1.A deed of trust and its amendments are sufficient in form and in conformity with law;

2.The trustee(s) are eligible and duly appointed to serve as such; and

3.The deed of trust is adequate to protect the interests of the beneficiaries of the trust.

B.The deed of trust and all amendments thereto shall contain provisions which:

1.Vest legal title to Trusteed Assets in the trustee(s), and their successors lawfully appointed;

2.Require that all assets deposited in the trust shall be continuously kept within the United States;

3.Provide for substitution of a new trustee(s) subject to the approval of the Commissioner in the event of a vacancy by death, resignation or otherwise;

4.Require that the trustee(s) shall continuously maintain a record at all times sufficient to identify the assets of such fund;

5.Require that the Trusteed Assets shall consist of cash and/or investments, including accrued investment income thereon if collectible by the trustee(s), eligible for investment in the same manner as the funds of Domestic Insurers;

6.Require that the trust shall be for the exclusive benefit, security and protection of the policyholders, or policyholders and creditors, of the United States Branch and that it shall be maintained as long as there is outstanding any liability of the Alien Insurance Company arising out of its insurance transactions in the United States; and

7.Provide, in substance, that no withdrawals of Trusteed Assets, other than as specified §§ 2.5(C) and (D) of this Part, shall be made or permitted by the trustee or trustees without the prior written approval of the Commissioner except to:

a.Make deposits required by law in any state for the security or benefit of all policyholders, or policyholders and creditors, of the United States Branch;

b.Substitute other assets permitted by law which assets are at least equal in value and quality to those withdrawn, upon the specific written direction of the United States manager when duly empowered and acting pursuant to either general or specific written authority previously given or delegated by the board of directors of the Alien Insurance Company; or

c.Transfer such assets to an official liquidator or rehabilitator pursuant to an order of a court of competent jurisdiction.

C.The deed of trust may provide that statutory net income, earnings, dividends or interest accumulations of the assets of the trust account may be paid over to the United States manager of the United States Branch upon request, provided that the total Trusteed Assets shall not thereby be less than the amount required to be maintained pursuant to § 2.4 of this Part.

D.The deed of trust may provide for the withdrawal of Trusteed Assets for deposit in another state in which the insurer is authorized to do business, if, in lieu of approval by the Commissioner, the deed of trust requires prior written approval of the insurance supervising official of that state for withdrawal of Trusteed Assets, provided that the total Trusteed Assets would not thereby be less than the amount required to be maintained pursuant to § 2.4 of this Part. In any event the deed of Trust shall require the United States Branch to promptly notify the Commissioner in writing of the nature and extent of all withdrawals.

E.The Commissioner may from time to time approve or require modifications of, or variations in, any deed of trust, which in the Commissioner's judgment are not prejudicial to the interests of the people of this state or the United States policyholders and creditors of the United States Branch.

F.The Commissioner may from time to time:

1.Require the trustee(s) to file a statement, in such form as the Commissioner may prescribe, certifying the assets of the trust fund and the amounts thereof;

2.Make examinations of the Trusteed Assets of any Alien Insurance Company licensed under this Part at the insurer's expense; and

3.Make such other and further examinations of the licensed Alien Insurance Company as the Commissioner deems necessary and advisable.

G.Refusal or neglect of any trustee(s) to comply with the requirements of this Part shall be grounds for the Commissioner to require that the Alien Insurance Company remove said trustee(s) and appoint a substitute trustee(s) acceptable to the Commissioner.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-55-2 § 2.6 Reporting Requirements

A.In addition to all other requirements of this Part, every Alien Insurance Company that has been granted a License shall, not later than the first day of March in each year and forty-five (45) days after the end of each of the first three (3) calendar year quarters, file with the Commissioner and with the National Association of Insurance Commissioners:

1.Annual and quarterly statements of the business transacted within the United States and the assets held by or for it within the United States for the protection of policyholders and creditors within the United States, and of the liabilities incurred against such assets. The forms shall not contain any statement in regard to its assets and business elsewhere unless said forms are filed as a supplement to the statements required herein. The statements shall be in the same format required of an insurer domiciled in Rhode Island and licensed to write the same kind(s) of insurance;

2.A statement of Trusteed Surplus, in such form as the Commissioner may prescribe, as of the end of the same period covered by the statement filed pursuant to § 2.6(A)(1) of this Part. In determining the net amount of the United States Branch's liabilities in the United States to be reported in the statement of Trusteed Surplus, the United States Branch shall make adjustments to total liabilities reported on the accompanying annual or quarterly statement as prescribed by the Commissioner; and

3.Any additional information that the Commissioner may require relating to the total business or assets, or any portion thereof, of the Alien Insurance Company.

B.The annual statement and Trusteed Surplus statement shall be signed and verified by the United States manager, attorney-in-fact, or a duly empowered assistant United States manager, of the United States Branch. The items of securities and other property held under a deed of trust as Trusteed Assets shall be certified in the Trusteed Surplus statement by the United States trustee(s).

C.Every report on examination of a United States Branch shall include a Trusteed Surplus statement as of the date of examination in addition to the general statement of the financial condition of the United States Branch.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-55-2 § 2.7 Additional Requirements

A.Every Alien Insurance Company that has been granted a License pursuant to § 2.3 of this Part shall meet the following requirements:

1.At the request of the Commissioner the Alien Insurance Company shall from time to time

a.Provide satisfactory proof, either in the Alien Insurance Company's charter or by a duly certified resolution of its board of directors, or otherwise as the Commissioner may require, that the Alien Insurance Company is not authorized to engage in any insurance business in contravention of the provisions of this Part or applicable laws; and

b.Provide satisfactory proof by a duly certified resolution of its board of directors, or otherwise as the Commissioner may require, that the Alien Insurance Company has not engaged in any insurance business in contravention of the provisions of this Part or applicable laws.

2.No Alien Insurance Company licensed hereunder shall be permitted to do any kind of insurance business, or any combination of kinds of insurance business, in this state, which are not permitted to be done by April 15, 1998 Domestic Insurers licensed in this state unless in the judgment of the Commissioner the doing of such kind or combination of kinds of insurance business will not be prejudicial to the best interests of the people of this state;

3.No Alien Insurance Company shall be licensed hereunder if it does anywhere within the United States any kind of business other than an insurance business, and the business necessarily or properly incidental to an insurance business thereto which it is authorized to do in this state; and

4.An Alien Insurance Company shall keep complete and accurate books and records of its United States Branch business, which books and records shall at all times be open to inspection by person(s) invested by law with the rights of inspection. All such books and records shall be maintained in its principal office within this state.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-55-2 § 2.8 Authority of Commissioner

Whenever it appears to the Commissioner after reasonable notice and hearing that an Alien Insurance Company licensed hereunder has failed to comply with any requirements or limitations of this Part, any other requirements or limitations imposed by the Commissioner, or any other applicable law or regulation of this state, or whenever the Commissioner has determined that the continued operation of any Alien Insurance Company licensed hereunder will or may be hazardous to the policyholders, creditors or general public, the Commissioner may proceed against the Alien Insurance Company licensed hereunder, and/or its United States Branch and/or its Trusteed Assets pursuant to R.I. Gen. Laws Chapters 27-12.2, 27-14.1, 27-14.2, 27-14.3 and 27-14.4 and any other applicable laws and/or regulations.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

Subchapter 60 Miscellaneous

230-RICR-20-60-1 Consumer Credit Insurance

230-RICR-20-60-1 § 1.1 Purpose and Authority

The purpose of this Part is to protect the interests of debtors and the public in this state by providing a system of rate, policy form, and operating standards for the transaction of credit life and credit accident and health, and credit unemployment insurance. This Part interprets and implements R.I. Gen. Laws Chapter 27-30.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.2 Definitions

A.As used in this Part:

1.“Affiliate” has the same meaning as defined in R.I. Gen. Laws § 27-35-1.

2.“Closed-end credit” means a credit transaction that does not meet the definition of open-end credit.

3.“Control” has the same meaning as defined in R.I. Gen. Laws § 27-35-1.

4.“Evidence of individual insurability” means a statement furnished by the debtor, as a condition of insurance becoming effective that relates specifically to the health status or to the health or medical history of the debtor.

5.“Loss ratio” means incurred claims divided by the sum of earned premiums and imputed interest earned on unearned premiums.

6.“Open-end credit” means credit extended by a creditor under an agreement in which:

a.The creditor reasonably contemplates repeated transactions;

b.The creditor imposes a finance charge from time to time on an outstanding unpaid balance; and

c.The amount of credit that may be extended to the debtor during the term of the agreement (up to any limit set by the creditor) is generally made available to the extent that any outstanding balance is repaid.

7.“Person” has the same meaning as defined in R.I. Gen. Laws § 27-35-1.

8.“Preexisting condition” means any condition for which the insured debtor received medical advice, consultation or treatment within six (6) months before the effective date of the coverage and from which the insured debtor becomes disabled within six (6) months after the effective date of this coverage.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.3 Rights and Treatment of Debtors

A.Multiple Plans of Insurance. If a creditor makes available to the debtors more than one plan of consumer credit life insurance every debtor must be informed of each plan for which the debtor is eligible and of the premium or insurance charge for each.

B.Substitution. When a creditor requires insurance as additional security for a debt, the debtor shall be given the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by the debtor or of procuring and furnishing the required coverage through any insurer authorized to transact insurance business in this state. If this subsection is applicable, the debtor shall be informed by the creditor of the right to provide alternative coverage before the transaction is completed.

C.Termination of group consumer credit insurance policy.

1.If a debtor is covered by a group consumer credit insurance policy providing for the payment of single premiums to the insurer, or any other premium payment method which prepays coverage beyond one month, then provision shall be made by the insurer that in the event of termination of the policy for any reason, insurance coverage with respect to any debtor insured under such policy shall be continued for the entire period for which the single premium has been paid.

2.If a debtor is covered by a group consumer credit insurance policy providing for the payment of premiums to the insurer on a monthly basis, then the policy shall provide that, in the event of termination of such policy, termination notice shall be given to the insured debtor at least thirty (30) days prior to the effective date of termination except where replacement of the coverage by the same or another insurer in the same or greater amount takes place without lapse of coverage. The insurer shall provide or cause to be provided this required information to the debtor.

3.Remittance on Premiums. If the creditor adds identifiable insurance charges or premiums for consumer credit insurance to the debt, and any direct or indirect finance, carrying, credit, or service charge is made to the debtor on such insurance charges or premiums, the creditor must remit and the insurer shall collect the premium within sixty (60) days after it is added to the debt.

4.Refinancing of the Debt. If the debt is discharged due to refinancing prior to scheduled maturity, the insurance in force shall be terminated before any new insurance may be issued in connection with the refinanced debt. In all cases of termination prior to scheduled maturity, a refund of all unearned premium or unearned insurance charges paid by the debtor shall be paid or credited to the debtor as provided in § 1.9 of this Part. In any refinancing of the debt, the effective date of coverage as respects any policy provision shall be deemed to be the first date on which the debtor became insured under the policy with respect to the debt which was refinanced, at least to the extent of the amount and term of the debt outstanding at the time of refinancing of the debt.

5.Maximum Aggregate Provisions. A provision in an individual policy or group certificate that sets a maximum limit on total claim payments must apply only to that individual policy or group certificate.

6.Prepayment of Debt. If a debtor prepays the debt in full then any consumer credit insurance covering the debt shall be terminated and an appropriate refund of the consumer credit insurance premium shall be paid or credited to the debtor in accordance with § 1.9 of this Part. However, if the prepayment is a result of death or any other lump sum consumer credit insurance payment, no refund shall be required for the coverage under which the lump sum was paid. If a claim under credit accident and health coverage or credit unemployment coverage is in progress at the time of prepayment, the amount of refund may be determined as if the prepayment did not occur until the payment of benefits terminates. No refund need be paid during any period of disability for which credit accident and health benefits are payable or during any period of unemployment for which credit unemployment benefits are payable. A refund shall be computed as if prepayment occurred at the end of the disability period or at the end of the unemployment period.

7.If a creditor has opened a line of credit for a debtor and, under R.I. Gen. Laws §§ 27-30-4(a)(5) or (6), is charging for this line of credit rather than the amount of debt in the event of the death of the debtor, the insured amount due is the amount of the established amount of credit against which premium was last charged.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.4 Determination of Reasonableness of Benefits in Relation to Premium Charge

A. Benefits provided by consumer credit insurance policies must be reasonable in relation to the premiums charged. This requirement is satisfied if the premium rate charged develops or may reasonably be expected to develop a loss ratio, of not less than sixty percent (60%). With the exception of deviations approved under § 1.11 of this Part, the rates shown in §§ 1.6 and 1.7 of this Part, as adjusted pursuant to § 1.10 of this Part, shall be presumed to satisfy this standard. Anticipated losses that develop or are expected to develop a loss ratio of not less than sixty percent (60%) shall be presumed reasonable. Any insurer filing a deviation in accordance with § 1.11 of this Part must satisfy the sixty percent (60%) loss ratio standard on their total consumer credit insurance business, including that of affiliated insurers, for each type of insurance defined in R.I. Gen. Laws Chapter 27-30 for which the deviation is being filed.

B. Nonstandard Coverage. If any insurer files for approval of any form providing coverage different than that described in §§ 1.6 through 1.8 of this Part, the insurer shall demonstrate to the satisfaction of the Commissioner that the premium rates to be charged for such coverage are

1.reasonably expected to develop a loss ratio not less than sixty percent (60%), or

2.actuarially consistent with the rates used for standard coverages.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.5 Limitation on Compensation

A.An insurer shall not pay compensation in excess of thirty percent (30%) of the net written prima facie premium of which not more than twenty-five percent (25%) of net written prima facie premium may be paid to a creditor.

BFor the purpose of § 1.5(A) of this Part, prima facie premium means premium using the premium rates set out in §§ 1.6 and 1.7 of this Part, or actuarially consistent premium rates for plans not described in §§ 1.6 and 1.7 of this Part, without any adjustment pursuant to § 1.10 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.6 Credit Life Insurance Rates

A.Premium Rate. Subject to the conditions and requirements in §§ 1.6(B) and 1.11 of this Part, the prima facie rates shown below are considered to meet the requirements of § 1.4 of this Part, and may be used without filing additional actuarial support.

1.Monthly outstanding balance basis: Sixty six cents ($.66) per month per one thousand ($1,000) of outstanding insured debt on single life and one dollar and five cents ($1.05) per month per $1,000 of outstanding insured debt on joint life if premiums are payable on a monthly outstanding balance basis.

2.Single premium basis: If the premium is charged on a single premium basis, the rate shall be computed according to the following formula or according to a formula approved by the commissioner which produces rates substantially the same as those produced by the following formula:

nOp It

Sp = ? ( _____ x _____ x (vt - 1 ))

t = 1 10 Ii

v = -----------

1 + (dis)

Sp = Single Premium per $100 of initial consumer credit life insurance coverage.

Op = $0.66 or $1.05, the prima facie consumer credit life insurance premium rate for monthly outstanding balance coverage from § 1.6(A)(1) of this Part.

It = The scheduled amount of insurance for month t.

Ii = Initial amount of insurance. For a net insurance policy, Ii equals the initial principal balance of the loan.

dis = .0020, representing an annual discount rate of 1.924 percent for interest plus 0.4 percent for mortality.

n = The number of months in the term of the insurance.

3.If the benefits provided are other than those described in the introduction to this subsection, premium rates for such benefits shall be actuarially consistent with the rates provided in §§ 1.6(A)(1) and (2) of this Part.

B.The premium rate in § 1.6(A) of this Part shall apply to contracts providing credit life insurance that are offered to all eligible debtors, that do not require evidence of individual insurability, from any eligible debtor electing to purchase coverage within thirty (30) days of the date the debtor becomes eligible and that contain the provisions below:

1.Coverage for death by whatever means caused, except that coverage may exclude death resulting from:

a.War or any act of war;

b.Suicide within six (6) months after the effective date of the coverage; or,

c.Subject to the provisions of § 1.6(B)(1) of this Part, a preexisting condition or conditions.

2.For the purpose of § 1.6(B)(1)(c) of this Part:

a.Preexisting condition means any condition for which the debtor received medical advice or treatment within six (6) months preceding the effective date of coverage;

b.No preexisting condition exclusion shall apply unless death is caused by or substantially contributed to by the preexisting condition and unless death occurs within six (6) months following the effective date of coverage; and,

c.A preexisting condition exclusion shall apply only if and to the extent that the amount of coverage to which it would otherwise apply (in the absence of this limitation) exceeds $1,000.

3.For the exclusions listed in §§ 1.6(B)(1) and (2) of this Part, the effective date of coverage for each part of the insurance attributable to a different advance or a charge to the plan account is the date on which the advance or charge occurs.

4.At the option of the insurer and in lieu of a preexisting condition exclusion on insurance written in connection with open-ended consumer credit, a provision may be included to limit the amount of insurance payable on death due to natural causes to the balance as it existed six (6) months prior to the date of death if there has been one or more increases in the outstanding balance during the six-month period and if evidence of individual insurability has not been required in the six-month period prior to the date of death. This provision applies only if and to the extent that the amount of coverage to which it would otherwise apply (in the absence of this limitation) exceeds $1,000.

5.An age restriction providing that no insurance will become effective on debtors on or after the attainment of age sixty-six (66) and that all insurance will terminate upon attainment by the debtor of age sixty-six (66).

C.Application of Rates:

1.If the insurer, its agent, or the application form for credit life insurance does not request or require that the debtor provide evidence of insurability, then the premium rates deemed reasonable will be the prima facie rates in § 1.6(A) of this Part.

2.Except as provided in § 1.6(C)(3) of this Part, if the insurer, its agent, or the application form for credit life insurance requests or requires that the debtor provide evidence of insurability and the initial amount of insurance is $15,000 or less, then the premium rates deemed reasonable will be the rates in § 1.6(A) of this Part multiplied by 90 percent (.90).

3.If the insurer, its agent, or the application form for credit life insurance requests or requires that the debtor provide evidence of insurability and the initial amount of insurance is above $15,000 or the applicant elects to purchase coverage more than thirty (30) days after the date the debtor became eligible under a group plan of insurance, then the premium rates deemed reasonable will be the prima facie rates in § 1.6(A) of this Part. For policies insuring open lines of credit, the insurer may require evidence of insurability for advances which increase the outstanding debt above $15,000.

D.Insurers may use the same application forms for credit life insurance whether or not underwriting questions are asked pursuant to § 1.6(C) of this Part. The commissioner will presume that any application form for which all relevant underwriting questions have been left unanswered represents a policy which has not been underwritten and for which prima facie rates are permissible. A form for which any relevant underwriting questions have been answered or filled in represents a policy for which premium decreases pursuant to § 1.6(C) of this Part are required. Insurers should maintain in their files their rules for those circumstances where underwriting questions shall be asked. Those rules shall be communicated to and followed by the insurer’s agents or other producers.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.7 Credit Accident and Health Insurance

1.If premiums are payable on a single-premium basis for the duration of the coverage the prima facie rate per $100 of initial insured debt for single accident and health is as set forth in the table below (rates for monthly periods other than those listed shall be interpolated or extrapolated):

Original Number

of Equal

Monthly

Installments

14 Day

Non-

Retroactive

Policies

14 Day

Retroactive

Policies

30 Day

Non

Retroactive

Policies

30 Day

Retroactive

Policies

0.90

1.32

1.02

1.50

2.19

1.70

1.90

2.61

2.14

2.21

2.91

2.46

2.50

3.22

2.76

2.78

3.50

3.05

1.02

1.70

2.14

108

2.46

120

2.76

There are no prima facie rates for these categories nor for loans in excess of one hundred twenty (120) months. Subject to approval by the Commissioner, such loans may be insured on any monthly premium basis that can be actuarially demonstrated to produce an anticipated loss ratio of at least sixty percent (60%).

2.If premiums are paid on the basis of a premium rate per month per thousand of outstanding insured gross debt, these premiums shall be computed according to the following formula or according to a formula approved by the Commissioner which produces rates actuarially consistent with the single premium rates in § 1.7(A)(1) of this Part:

10 SPn

OPn = ___________________________

{? (vt - 1 x ( n-t+1 ))}

t = 1 n

where v =

1 + (dis)

Where SPn = Single Premium Rate per $100 of initial insured debt repayable in n equal monthly installments as shown in § 1.7(A)(1) of this Part.

OPn = Monthly Outstanding Balance Premium Rate per $1,000.

n = The number of months in the term of the insurance.

dis = .0016, representing an annual discount rate of 1.924 percent for interest.

3.If the coverage provided is a constant maximum indemnity for a given period of time, the actuarial equivalent of §§ 1.7(A)(1) and (2) of this Part shall be used.

4.If the coverage provided is a combination of a constant maximum indemnity for a given period of time after which the maximum indemnity begins to decrease in even amounts per month, an appropriate combination of the premium rate for a constant maximum indemnity for a given period of time and the premium rate for a maximum indemnity which decreases in even amounts per month shall be used.

5.The outstanding balance rate for credit accident and health insurance may be either a term specified rate or may be a single composite term outstanding balance rate.

B.Subject to the conditions and requirements in §§ 1.7(A) and 1.11 of this Part, the prima facie rates for credit accident and health insurance shown below are considered to meet the requirements of § 1.4 of this Part in the situation where the insurance is written on an open-end loan. These prima facie rates and the formulae used to calculate them may be used without filing additional actuarial support. Other formulae to convert from a closed-end credit rate to an open-end credit rate may be used if approved by the commissioner.

1.If the maximum benefit of the insurance equals the net debt on the date of disability, the term of the loan is calculated according to the formula: 1/(minimum payment percent). The prima facie rate is determined by applying the calculated term to the rates shown in § 1.7(A) of this Part. A composite minimum payment percentage may be used in place of the minimum payment percentage for a specific credit transaction.

2.If the maximum benefit of the insurance equals the outstanding balance of the loan on the date of disability plus any interest accruing on that amount during disability, the term of the insurance (n) is estimated by using the following formula:

n = ln{1-(1000i/x)}/ln(v)

where:

i = interest rate on the account or a composite interest rate used for the type of policy;

x = monthly payment per $1000 of coverage consistent with the term calculated above; and,

v = 1/(1 + i).

The calculated value of the term is used to look up an initial rate in § 1.7(1) of this Part. The final prima facie rate is calculated by multiplying the initial rate by:

the adjustment n/an

where:

n is the term calculated above; and

an = ( 1 - v )/i.

C.If the accident and health coverage is sold on a joint basis (involving two people), the rate for the joint coverage shall be filed with the commissioner prior to use.

D.If the benefits provided are other than those described in §§ 1.7(A) or 1.7(B) of this Part above, rates for those benefits shall be actuarially consistent with rates provided in §§ 1.7(A) and 1.7(B) of this Part.

E.The premium rates in § 1.7(A) of this Part shall apply to contracts providing credit accident and health insurance that are offered to all eligible debtors, that do not require evidence of individual insurability from any eligible debtor electing to purchase coverage within thirty (30) days of the date the debtor becomes eligible and that contain the provisions below:

1.Coverage for disability by whatever means caused, except that coverage may be excluded for disabilities resulting from:

a.normal pregnancy;

b.war or any act of war;

c.elective surgery;

d.intentionally self-inflicted injury;

e.sickness or injury caused by or resulting from the use of alcoholic beverages or narcotics (including hallucinogens) unless they are administered on the advice of and taken as directed, by a licensed physician other than the insured;

f.flight in any aircraft other than a commercial scheduled aircraft;

g.a preexisting condition.

2.For the exclusion listed in § 1.7(F)(3) of this Part, the effective date of coverage for each part of the insurance attributable to a different advance or a charge to the plan account is the date on which the advance or charge occurs.

3.A definition of disability providing that for the first twelve (12) months of disability, total disability shall be defined as the inability to perform the essential functions of the insured’s own occupation. Thereafter, it shall mean the inability of the insured to perform the essential functions of any occupation for which he or she is reasonably suited by virtue of education, training or experience.

4.No employment requirement more restrictive than one requiring that the debtor be employed full-time on the effective date of coverage and for at least twelve (12) consecutive months prior to the effective date of coverage. “Full time” means a regular work week of not less than thirty (30) hours.

6.A daily benefit equal in amount to one-thirtieth (1/30th) of the monthly benefit payable under the policy.

F.Application of Rates:

2.Except as provided in § 1.7(B) of this Part, if the insurer, its agent, or the application form for credit life insurance requests or requires that the debtor provide evidence of insurability and the initial amount of insurance is $15,000 or less, then the premium rates deemed reasonable will be the rates in § 1.7(A) of this Part multiplied by 90 percent (.90).

3.If the insurer, its agent, or the application form for credit life insurance requests or requires that the debtor provide evidence of insurability and the initial amount of insurance is above $15,000 or the applicant elects to purchase coverage more than thirty (30) days after the date the debtor became eligible under a group plan of insurance, then the premium rates deemed reasonable will be the prima facie rates in § 1.7(A) of this Part. For policies insuring open lines of credit, the insurer may require evidence of insurability for advances which increase the outstanding debt above $15,000.

G. Insurers may use the same application forms for credit accident and health insurance whether or not underwriting questions are asked pursuant to § 1.7(F) of this Part. The commissioner will presume that any application form for which all relevant underwriting questions have been left unanswered represents a policy which has not been underwritten and for which prima facie rates are permissible. A form for which any relevant underwriting questions have been answered or filled in represents a policy for which premium decreases pursuant to § 1.7(F) of this Part are required. Insurers should maintain in their files their rules for those circumstances where underwriting questions shall be asked. Those rules shall be communicated to and followed by the insurer’s agents or other producers.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.8 Credit Unemployment Insurance Rates

A.Each insurer filing rates for credit unemployment insurance shall include in its rate filing with the commissioner the appropriate rate formula upon which its rates are based, including a provision for anticipated losses. Anticipated losses that develop or are expected to develop a loss ratio of not less than sixty percent (60%) shall be presumed reasonable. Anticipated losses may include an amount for fluctuation in loss due to catastrophe based on the experience of at least the latest nine (9) policy years or as long as the company has been writing this line of business.

B.Credit unemployment insurance policies must contain benefits at least as favorable to insureds as the provisions below:

1.Coverage for unemployment for any reason, except that coverage may be excluded for:

a. voluntary forfeiture of salary, wage or other employment income;

b.resignation;

c. retirement;

d. general strike;

e. illegal walk out;

f. war;

g. separation from the military;

h. willful misconduct or criminal misconduct or unlawful behavior; and

i. disability caused by injury, sickness or pregnancy.

2.For credit unemployment insurance which provides for a monthly benefit in the event of unemployment, benefits must start after a waiting period of not longer than thirty (30) days but need not be retroactive to the first day of unemployment and must have a maximum benefit period that is no shorter than six (6) months.

C.Credit unemployment insurance policies may not contain eligibility requirements more restrictive than the restrictions below:

1.Exclusion from qualification for coverage:

a.self employed individuals;

b.workers in seasonal or temporary jobs, defined as jobs designed to last six (6) consecutive months or less; and,

c.debtors who have been notified either orally or in writing of any layoff or of employment termination either now or within the next sixty (60) days. This exclusion must be disclosed to all prospective insureds.

2.No employment requirement more restrictive than one requiring that the debtor be employed full-time on the effective date of coverage for at least twelve (12) consecutive months prior to the effective date of coverage. “Full time” means a regular work week of not less than thirty (30) hours.

3.An age restriction providing that no insurance will become effective on debtors on or after the attainment of age sixty-six (66) and that all insurance will terminate upon attainment by the debtor of age sixty-six (66).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.9 Refund Formulas

A.In the event of termination, no charge for credit insurance may be made for the first fifteen (15) days of a month and full month may be charged for sixteen (16) days or more of a month.

B.The requirements of the Consumer Credit Insurance Law that refund formulas be filed with the Commissioner shall be considered fulfilled if the refund formulas are set forth in the individual policy or group certificate filed with the Commissioner.

C.No refund of five dollars ($5) or less need be made.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.10 Experience Reports and Adjustment of Prima Facie Rates

A.Each insurer doing insurance business in this state shall annually file with the commissioner and the National Association of Insurance Commissioners (NAIC) Support and Services Office a report of consumer credit insurance written on a calendar year basis. The report shall utilize the Credit Insurance Supplement—Annual Statement Blank as approved by the NAIC, and shall contain data separately for each state, rather than an allocation of the company’s countrywide experience. The filing shall be made in accordance with and no later than the due date in the Instructions to the Annual Statement.

B.The commissioner will, on a triennial basis, review the loss ratio standards set forth in § 1.4 of this Part and the prima facie rates set forth in §§ 1.6 and 1.7 of this Part and determine therefrom the rate of expected claims on a statewide basis, compare such rate of expected claims with the rate of actual claims for the preceding three (3) years determined from the incurred claims and earned premiums at prima facie rates reported in the Annual Statement Supplement or other available source, and publish the adjusted actual statewide prima facie rates to be used by insurers during the next triennium. The rates will reflect the difference between:

1.actual claims based on experience; and

2.expected claims based on the loss ratio standards set forth in § 1.4 of this Part applied to the prima facie rates set forth in §§ 1.6 and 1.7 of this Part.

C.The commissioner will, on a triennial basis, review the discount rates for interest included in the formulae in § 1.7(A)(2) of this Part, and adjust those discount rates to equal the average of the rates being paid at that time on three-year United States Treasury Notes as reported in the Wall Street Journal on the last day of sale in the most recent three (3) calendar years.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.11 Use of Rates -- Direct Business Only

A.Use of Prima Facie Rates. An insurer that files rates or has rates on file that are equivalent to the prima facie rates shown in §§ 1.6 and 1.7 of this Part, to the extent adjusted pursuant to § 1.10 of this Part, may use those rates without further proof of their reasonableness.

B.Use of Rates Higher Than Prima Facie Rates. An insurer may file for approval of and use rates that are higher than the prima facie rates shown in §§ 1.6 and 1.7 of this Part, to the extent adjusted pursuant to § 1.10 of this Part, as long as the filed rates are consistent with the provisions of § 1.4 of this Part.

C.If rates higher than the prima facie rates shown in §§ 1.6 and 1.7 of this Part, to the extent adjusted pursuant to § 1.10 of this Part, are filed for approval, the filing shall specify the account or accounts to which the rates apply. The rates may be:

1.Applied uniformly to all accounts of the insurer; or

2.Applied on an equitable basis approved by the commissioner to only one or more accounts of the insurer for which the experience has been less favorable than expected; or

3.Applied according to a case-rating procedure on file with the commissioner.

D.Approval Period of Deviated Rates

A deviated rate will be in effect for a period of time not longer than the experience period used to establish the rate (i.e. one year, two years or three years). An insurer may file for a new rate before the end of a rate period, but not more often than once during any twelve-month period.

2.Notwithstanding the provision of § 1.11(A) of this Part, if an account changes insurers, the rate approved to be used for the account by the prior insurer is the maximum rate that may be used by the succeeding insurer for the remainder of the rate approval period approved for the prior insurer or until a new rate is approved for use on the account, if sooner.

E.Use of Rates Lower Than Filed Rates. An insurer may at any time use a rate for an account that is lower than its filed rate without notice to the commissioner.

F.Glossary of Terms and Definitions as Used in § 1.11 of this Part:

1.“Experience” means “earned premiums” and “incurred losses during the experience period.

2.“Experience period” means the most recent period of time for which earned premiums and incurred losses are reported, but not for a period longer than three (3) full years.

3.“Incurred losses” means total claims paid during the experience period, adjusted for the change in claim reserve.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.12 Supervision of Consumer Credit Insurance Operations

A.Each insurer transacting credit insurance in this state shall be responsible for conducting a thorough periodic review of creditors with respect to their credit insurance business with such creditors to assure compliance with the insurance laws of this state and the Part promulgated by the Commissioner.

B.Written records of such reviews shall be maintained by the insurer for review by the Insurance Commissioner in accordance with Part 4 of this Subchapter.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.13 Prohibited Transactions

A.The following practices, when engaged in by insurers in connection with the sale or placement of credit insurance, or as an inducement thereto, shall constitute unfair methods of competition and shall be subject to the Unfair Trade Practices Act of this State.

1.The offer or grant by an insurer to a creditor of any special advantage or any service not set out in either the group insurance contract or in the agency contract, other than the payment of agent’s commissions;

2.Agreement by an insurer to deposit with a bank or financial institution money or securities of the insurer with the design or intent that the same shall affect or take the place of a deposit of money or securities which otherwise would be required of the creditor by the bank or financial institution as a compensating balance or offsetting deposit for a loan or other advancement; and

3.Deposit by an insurer of money or securities without interest or at a lesser rate of interest than is currently being paid by the creditor, bank or financial institution to other depositors of like amounts for similar durations. This subsection shall not be construed to prohibit the maintenance by an insurer of such demand deposits or premium deposit accounts as are reasonably necessary for use in the ordinary course of the insurer’s business.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.14 Readability

A.The commissioner shall not approve any form unless the policy or certificate is written in non-technical, readily understandable language, using words of common everyday usage:

1.Each insurer is required to test the readability of its policies or certificates by use of the Flesch Readability Formula, as set forth in Rudolf Flesch, The Art of Readable Writing, (1949, as revised 1974);

2.A total readability score of forty (40) or more on the Flesch scale is required;

3.All policies or certificates within the scope of this section shall be filed with the commissioner, accompanied by a certification setting forth the Flesch score and certifying the compliance with the guidelines set forth in this Section.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.15 Severability

If any provision or clause of this Part or the application thereof to any person or situation is held invalid, such invalidity shall not affect any other provision or application of the Part which can be given effect without the invalid provision or application, and to this end the provisions of this Part are declared severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-1 § 1.16 Effective Date

A.This regulation shall take effect November 1, 2010 as to premium rates.

B.Approval of all forms not in compliance with this Regulation is hereby withdrawn as of November 1, 2010. No such form may be issued after said date unless it has been submitted to and approved by the Commissioner subsequent to June 1, 2010 or unless a rider approved subsequent to such date has been attached bringing such form into compliance with this Regulation.

C.Any deviations thought to be appropriate by an insurer as a result of promulgation of this regulation shall be filed in accordance with the provisions of § 1.11 of this Part no later than July 1, 2010.

D.Certificates, notices of proposed insurance and premium rates in connection with existing group policies shall conform to the requirements of this regulation not later than the anniversary date of the group policy next following the effective date of this regulation.

E.Any group policy issued to replace an existing group policy of consumer credit insurance or an amendment to an existing group policy of consumer credit insurance shall be ignored for the purposes of determining the anniversary date if the change is made on or after May 1, 2010.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-06-30 to 01/04/2022
Technical Revision — effective from 2010-06-30 to 06/30/2010
Amendment — effective from 2010-06-30 to 06/30/2010
Periodic Refile — effective from 2002-01-02 to 06/30/2010

230-RICR-20-60-2 § 2.1 Purpose

The purpose of this Part is to provide a method of securing insurance under consent-to-rate filings in accordance with R.I. Gen. Laws §§ 27-6-14, 27-7.1-6.2, 27-9-13, 27-44-6(e) and 2003 Pub. Laws Chapter 410, at rates in excess of those filed with and approved by the Department while assuring that those rates are not excessive or unfairly discriminatory.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Periodic Refile — effective from 2001-12-19 to 04/15/2009

230-RICR-20-60-2 § 2.2 Authority

This Part is issued pursuant to the authority vested in the Insurance Commissioner by R.I. Gen. Laws §§ 27-6-44, 27-9-12, 27-44-19 and 42-14-17. This Part shall not apply to “Special Commercial Risks” as defined by R.I. Gen. Laws § 27-65-1.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Periodic Refile — effective from 2001-12-19 to 04/15/2009

230-RICR-20-60-2 § 2.3 Definitions

A.“Consent to Rate” means an agreement filed with and approved by the Department between an insurer and an insured to issue an insurance policy at rates in excess of those on file with the Department. No insurer may Consent to Rate to a premium lower than filed rates for an individual insured. Individual risks priced according to a filed scheduled rating plan do not constitute “Consent to Rate.”

B.“Department” means the Insurance Division of the Department of Business Regulation.

C."Insurer" means an insurance company chartered, licensed, or authorized to do an insurance business in the state pursuant to Title 27 of the Rhode Island General Laws or 2003 P.L. ch. 410.

D."Risk" means any applicant seeking insurance in accordance with R.I. Gen. Laws §§ 27-6-14, 27-7.1-6.2, 27-9-13, 27-44-6(e) and 2003 Pub. Laws Chapter 410.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Periodic Refile — effective from 2001-12-19 to 04/15/2009

230-RICR-20-60-2 § 2.4 Requirements for Filing

A.Each insurer submitting a consent-to-rate filing for an individual risk shall include the following information as a minimum:

1.The location of the risk;

2.The type of insurance;

3.The limits of liability;

4.A description of what is being insured;

5.The filed rates for the classification, plus limits;

6.The percentage of increase above the filed rates;

7.The increased rates, plus limits;

8.Premium at filed and increased rates and limits;

9.Reason for issuance and acceptance of risk at rates in excess of those filed

10.A statement from the insurer as to the reason(s) that required a deviation from the filed rates.

B.Any risk that is to be insured for a period of thirty (30) days or more, and which will develop a premium of ten thousand dollars ($10,000) or more during its policy term, must include in the statement the actual experience of the risk subject to the most recent two (2) year period as a minimum period and five (5) years as a maximum period preceding the desired effective date of the policy.

C.The actual experience shall include the number of claims paid and the amount of damages paid for each claim, and may also include the number of claims incurred and/or awaiting settlement for which reserves have been established and the amount of such reserves.

D.A consent-to-rate filing submitted for a corporate risk to be insured for a period of thirty (30) days or more and which will develop a premium of ten thousand dollars ($10,000) or more during its policy term shall contain a letter from the risk manager or President or Board of Directors of the corporation authorizing the filing.

E.Any risk which is to be insured for a period of thirty (30) days or more and which will develop a premium of ten thousand dollars ($10,000) or more during its policy term shall submit the consent-to-rate filing to the Department no less than twenty (20) days prior to the desired effective date of the policy.

F.The Department will inform the insurer at least ten (10) days prior to the effective date of the policy if the consent to rate is not accepted prior to the effective date of the policy. If no such notice is received the insurer may issue the insurance policy based upon the consent to rate.

G.The original consent-to-rate shall be filed with the Department electronically via SERFF.

H.Copies of the consent to rate shall be retained by the producer, if applicable, and the insurer. The consent-to-rate must contain the applicant/risks agreement indicating acceptance of the rate proposed for the coverage.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Periodic Refile — effective from 2001-12-19 to 04/15/2009

230-RICR-20-60-2 § 2.5 Severability

If any provision of this Part or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Part which can be given effect without the invalid provision or application, and to that end the provisions of this Part are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-04-15 to 01/04/2022
Amendment — effective from 2009-04-15 to 04/15/2009
Periodic Refile — effective from 2001-12-19 to 04/15/2009

230-RICR-20-60-3 Rate Hearing Procedures on Property and Casualty and Worker’s Compensation Insurance Filings

230-RICR-20-60-3 § 3.1 Authority

This Part is promulgated in accordance with R.I. Gen. Laws Chapters 27-6, 27-7.1, 27-9 and 27-44.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.2 Purpose

The purpose of this Part is to establish the hearing procedures that pertain to fire and marine, and property and casualty and workers’ compensation insurance Rate filings.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.3 Definitions

A.As used in this Part:

1."Director" means the "Director of the Department of Business Regulation."

2.“Filer” means the carrier or licensed rating or advisory organization making a property and casualty or workers’ compensation insurance rate filing.

3.“Hearing Officer” means that person or persons designated by the Director to serve as his or her designee with regard to a specific rate hearing.

4."Intervenor" means a person granted status to intervene in a proceeding as provided by these rules.

5."Licensed rating organization" means an organization referred to in R.I. Gen. Laws Chapter 27-9.

6."Party" means the Filer; the office of the Attorney General (the "Attorney General"); and any person or entity that is granted intervenor status by the Hearing Officer.

7."Person" means any individual, partnership, corporation, association, governmental subdivision, or public or private organization of any character other than an agency;

8."Prospective loss costs" means that portion of a "rate" that does not include provisions for expenses (other than loss adjustment expenses) or profit and are based on historical aggregate losses and loss adjustment expenses adjusted through development to their ultimate value and projected through trending to a future point in time.

9."Rate" means the cost of insurance per exposure unit, whether expressed as a single number or as a "prospective loss cost" and an adjustment to account for the treatment of expenses, profits and variations in loss experience, prior to any application of individual risk variations based on loss or expense considerations.

10."Rate filing" means those filings provided either "prospective loss costs" or the final "rate" of either an insurance company or "licensed rating or advisory organization".

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.4 Scope and Purpose

A.The provisions of this Part shall apply to all insurance Rate Filings subject to the requirements of R.I. Gen. Laws Chapters 27-6, 27-7.1, 27-9 and 27-44 provided such Rate Filings are the subject of a hearing pursuant to the statute. When the circumstances of a particular proceeding require more detailed procedures than those set forth in this Part, additional procedures that assure expeditious review may be ordered by the Director or Hearing Officer applicable to that particular proceeding.

B.This Part shall be read in conjunction with any and all other procedural Parts adopted by the Department. In the event of a conflict, the provision of this Part shall control in rate hearings subject to its provisions.

C.The purposes of this Part are as follows:

1.To expedite the orderly conduct and disposition of property and casualty and workers’ compensation insurance rate hearings.

2.To enable all parties to discover the positions of all other parties with respect to each filing prior to the actual hearing.

3.To guarantee that an impartial Hearing Officer will preside at all hearings.

4.To encourage and promote settlement of all procedural matters relating to each filing without the necessity of formal adversary proceedings.

5.To limit any final decision of the Director to evidence contained in the record, stipulations of fact, and matters officially noticed; and

6.To provide for a final decision on a filing within one hundred twenty (120) days from the filing date referred to in § 3.8(B) of this Part.

D.In computing any period of time prescribed or allowed by this Part or by order of the Director, the day of the act, event, or default after which the designated period of time begins to run is not to be included and Saturdays, Sundays and State holidays shall be counted only when the period described is more than seven (7) days. The last day of the period so computed is to be included unless it is a Saturday, a Sunday, or a legal holiday, in which event the period runs until the end of the next day which is not a Saturday, a Sunday, or a holiday. Where the time period within which an action must be taken is specified by statute, the terms of the statute control and the provisions of this paragraph shall not apply.

E.When by this Part or by a notice or order issued by the Director or Hearing Officer, an act is required or allowed to be done at, before, or within a specified time, the Director or Hearing Officer, for cause shown, may at any time, in his or her discretion, with or without request, motion or notice, order the period enlarged before the expiration of the period originally prescribed or as extended by a previous order, provided that time limits or periods that apply to other Persons affected by the resulting change or delay are also adjusted appropriately. Requests for enlargement of time that are filed after expiration of the period originally prescribed or as extended by previous order will be granted only in exceptional circumstances.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.5 Costs of Hearing

A.The filer is responsible to pay the reasonable and customary fees of any and all experts retained by the Department to assist in the hearing process. Any dispute over the amount of the fees, which will be billed directly by the consultant to the Filer and paid directly by the Filer to the consultant, shall be referred to the Hearing Officer for resolution.

B.The filer is responsible to have present a stenographer at every hearing and have a stenographic transcript of all proceeding relating to the Rate hearing made. The Hearing Officer shall be provided with the original of the stenographic record which shall become part of the official transcript of the Rate hearing. The Filer is responsible to pay the costs of the stenographer and the transcripts required under this section.

C.The Hearing Officer may order the Filer to pay such other costs directly related to the Rate hearing as are reasonable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.6 Hearing Officer

A.The Director, authorized by law to adjudicate insurance Rate hearings, may delegate his or her authority to hear the case to a Hearing Officer.

B.If the Director intends to appoint a Hearing Officer other than the designated departmental Hearing Officer, said appointment must be made and notice given to all parties not later than the pre-hearing conference and if no pre-hearing conference is held pursuant to § 3.11(H) of this Part, not later than ten (10) days prior to the hearing.

C.If the Filer, in good faith, shall timely present a sufficient affidavit of personal bias, lack of independence, disqualification by law, or other reason for disqualification, the Director may then disqualify said Hearing Officer and designate another Hearing Officer to preside. Any denial of such a request must be in writing setting forth the reasons for such denial.

D.No Party shall engage in direct communication with a Hearing Officer relating to the matters of law or fact to be heard by the Hearing Officer without the permission or attendance of all other parties to the proceeding. This prohibition does not apply to any matters of procedure or any issue outside of the Rate application currently before the Hearing Officer, including Rates for other lines which have not yet been filed or which are not subject to hearing and alternative filings which the carrier may make upon withdrawal of the filing subject to the hearing.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.7 Intervenors

A.An application for Intervenor status shall be made to the Director or Hearing Officer in writing. The application shall contain a statement explaining how the applicant is or may be, a member of a class which is or may be, substantially and directly affected by the proceeding.

B.An application for Intervenor status may be filed at any time after the filing date but shall be filed within the time permitted for Intervenor applications by an order of the Director which is publicly noticed. Any Person who applies for Intervenor status after the deadline set by the Director shall be permitted to intervene only upon a compelling demonstration of good cause, and shall be subject to any established hearing schedule.

C.The Director or Hearing Officer may permit interested individuals to make comments on the record as to the matters before the Director or Hearing Officer. Such comments made by the witnesses may be subject to cross examination, and the Director or Hearing Officer is entitled to give such public testimony the appropriate weight that he or she determines. Such determination shall be dependent upon the expertise and knowledge of the witness.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.8 Filing, Motions and Requests

A.All Rate Filings shall be submitted to the Insurance Division of the Department in accordance with the provisions of R.I. Gen. Laws Chapters 27-6, 27-7.1, 27-9 and 27-44, or as the laws governing such filing shall be amended from time to time.

B.Upon the receipt of any filing subject to this Part, the document and any material accompanying it will be inspected by the Department. If the document is found by the Department to be defective or insufficient, the Department shall inform the Person filing it of the defect or omission within thirty (30) days of receipt of the filing, and shall further specify what additional information the Filer must provide to remove the defect or insufficiency. The defective or insufficient documents will not be deemed to be filed. The defective or insufficient documents will be retained by the Department marked to indicate that it is not deemed filed. Within thirty (30) days of submission of additional material by the filing Party in response to the notice of defect, the Department shall determine whether the defect or omissions have been corrected and notify the filing Party of the determination. The filing date for such a document shall be deemed to be the date on which the last document that removed any defect or made the filing complete was received by the Department.

C.Every motion or request for an order or ruling of any kind by the Director or Hearing Officer shall be in writing, unless made on the record during a hearing to which the request or motion is related. Every request or motion shall include or be accompanied by a clear and detailed statement of the facts that support the order or other action sought. The statement supporting the request or motion should also include any arguments with respect to policy or law that have a bearing on the request. Copies of every request or motion shall be served on every Party to the proceeding by the requesting or moving Party.

D.Requests or motions and their supporting papers should be clearly labeled on the first page with a title that includes "motion" or "request", a short description of the action or order requested, and a caption sufficient to identify the matter to which the request or motion relates. If legal arguments are advanced, the supporting statement accompanying the motion shall include citations to all supporting authorities relied upon by the moving Party.

E.Any Party opposing a motion or request shall file a statement in opposition to the motion or request within ten (10) days after service of the motion or request, unless some other period is established by the Director or Hearing Officer.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.9 Discovery

A.The Director and Department staff shall have all authority granted to them by statute to obtain information in any proceeding, and the provisions of this Section shall not be construed to limit that authority in any way.

B.All parties shall have the right to serve informational requests upon any Party, subject to the following terms and procedures.

1.Informational requests shall be in writing, unless made on the record in a pre-hearing or hearing, and specifically directed to a Party or Parties. A copy of each request shall be provided to the Director or Hearing Officer and all parties to the proceeding.

2.Not later than the earlier of the pre-hearing conference or thirty (30) days prior to the hearing, the Department, Attorney General and all Intervenors shall serve their discovery requests upon the Filer. Additional information requests may be served on the Filer if the initial discovery request was made in a timely manner.

3.Informational requests shall be relevant to the issues involved in the pending proceeding, and shall not be unduly burdensome or repetitious.

4.Objections to an information request shall be filed with the Director or Hearing Officer no later than ten (10) days after it is received, unless some other period is prescribed by order.

5.Each informational request shall be answered within thirty (30) days after its receipt or such other period as may be ordered by the Director or Hearing Officer, except as to any part of a request to which specific and timely objection is made. In cases where timely objection has been made and the objection is subsequently overruled, the requested information shall be provided within thirty (30) days of receipt of the Director's or Hearing Officer's ruling on the objection or such other period as may be provided in that ruling.

6.A copy of the responsive material shall be provided to the Director or Hearing Officer and to each Party. Responsive material does not become part of the record of hearing unless offered and admitted.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.10 Prefiled Testimony and Exhibits

A.The prefiling of each Party's direct case, including testimony and exhibits, shall be required in any property and casualty or workers’ compensation insurance Rate proceeding. If any Party other than the Filer does not desire to present a direct case, such Party shall so inform the Director or Hearing Officer not later than the pre-hearing conference. Notwithstanding the foregoing, a Party not desiring to present a direct case may, not later than ten (10) days prior to the commencement of the final hearing, move to request to file direct testimony and exhibits in accordance herewith. Prefiling shall be subject to a schedule established by the Director or Hearing Officer by order issued preceding a prehearing conference or otherwise, and shall be subject to the following further provisions:

1.Parties to the case shall file with the Director or Hearing Officer, in such number of copies as the Director or Hearing Officer may order, all testimony and exhibits of each witness whom they propose to present in support of their direct cases. Two (2) copies of such testimony and exhibits shall be served on each Party at the time that such testimony and exhibits are filed with the Director or Hearing Officer. If the prefiled direct testimony described in this paragraph is filed prior to the decision by the Director or Hearing Officer regarding petitions to intervene, additional copies of such testimony and exhibits shall be served on each proposed Intervenor within two (2) days of the date that the Party filing the testimony and exhibits receives notice of the petition to intervene.

2.Prefiled testimony shall be in writing and shall be presented in double-spaced print or typescript in the form of questions and answers that would render similar oral testimony admissible. Prefiled exhibits may be attached to the testimony, provided that they are referred to, identified, and introduced in the prefiled testimony. Prefiled written testimony shall have numbered pages and include line numbers on each page, in the left hand margin, except as otherwise permitted by the Director or Hearing Officer. Each Party may file an opening statement with its prefiled testimony and exhibits containing a narrative summary of the testimony and exhibits and the fact(s) that they are intended to establish.

3.A witness while under oath, may supplement, correct and explain his or her prefiled testimony and exhibits by filing amendments thereto in writing or by oral testimony. Such supplementation, correction and explanation shall not substantially alter the subject matter of the testimony unless a change of circumstance which is clearly identifiable has developed, except to the extent that information which was not available and which could not have been obtained through the exercise of due diligence at the time of preparation of the testimony may affect the nature of the presentation. Prefiled testimony shall be introduced into the record by the oral testimony of the witness under oath, after which it may be offered as an exhibit, with the same effect as if the testimony had been given orally in its entirety. Each witness presenting prefiled direct testimony shall be subject to oral cross-examination. Re-direct examination will be conducted orally and will be limited to matters raised during cross-examination. Objection to prefiled testimony or exhibits may be made at the time that testimony or exhibits are offered at the oral hearing.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.11 Pre-Hearing Conference

A.The purpose of the pre-hearing conference is to provide an opportunity for the consideration of facts, arguments, and other issues as well as consideration of the means by which the hearing procedure may be facilitated and the disposition of the proceedings expedited.

B.At the prehearing conference the Director or Hearing Officer shall set a date by which the parties (other than the Filer) shall deliver to the Filer, the Hearing Officer and all Intervenors their written comments on the filing, stating areas of disagreement, if any, their proposed alternatives, if any, and their own recommendation as to the extent of Rate level adjustment on which each would be prepared to agree.

C.Reasonable means to be considered by the parties in order to expedite the orderly conduct and disposition of the hearing include the following:

1.The simplification or clarification of the issues;

2.The exchange and acceptance of service of exhibits proposed to be offered in evidence;

3.The obtaining of stipulations as to undisputed facts and documents;

4.To the extent practicable, the settling of all procedural matters prior to hearing.

D.The public hearing shall be held with the goal of delivering a Decision to the Filer within one hundred twenty days (120) of the filing. Any informational requests shall be answered thirty (30) days prior to the hearing or such other period as may be ordered by the Director or Hearing Officer.

E.All parties shall attend the prehearing conference fully prepared to discuss all issues involved in the proceeding. Any Party may request other parties and the Department to be accompanied by their consultants.

F.At the conclusion of the pre-hearing conference, a pre-hearing order shall be prepared to document the discussion. The pre-hearing order will become part of the Department's record of the filing pursuant to the provisions of R.I. Gen. Laws § 42-35-9. The pre-hearing order shall be in writing.

G.Failure of a Party to attend the conference after being served with due notice thereof shall constitute a waiver of all objections to any order, ruling or settlement which results from the conference.

H.If the parties and the Department agree, no pre-hearing conference shall be held and the final hearing shall commence within thirty (30) days of receipt of the reports called for in § 3.11(B) of this Part above.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.12 Public Hearing

A.After public notice as provided in R.I. Gen. Laws §§ 27-9-10, 27-6-11, 27-7.1-5.1 and 6.1 or 27-44-7 as the case may be, the Director or Hearing Officer shall hold a public hearing.

B.Hearings will be held before the Director or Hearing Officer in accordance with this Part.

C.The parties have the right to be represented by counsel admitted to practice in the State of Rhode Island, to be present, and to participate. The right to participate shall include the right to present evidence and argument on all relevant issues, to call and examine witnesses, to cross-examine the author of any documents prepared by or on behalf of or for the use of the Department and offered in evidence, and to cross-examine any Person present and testifying. Those individuals employed by the Director pursuant to R.I. Gen. Laws § 27-9-52 may appear at any hearing and shall have the right to participate in any proceedings on the same basis as the parties may have, subject to the aforesaid.

D.All witnesses shall swear that their testimony is whole and truthful or shall make a solemn affirmation to the effect in lieu thereof.

E.The Director or Hearing Officer may admit evidence which possesses probative value commonly accepted by reasonable and prudent persons in the conduct of their affairs, giving effect to the rules of privilege recognized by law, and excluding incompetent, immaterial, and unduly repetitious evidence. Documentary evidence may be received in the form of copies or excerpts or by incorporation by a reference. Upon request, parties shall be given an opportunity to compare the copies with the originals.

F.Objections to evidentiary offers may be made and shall be noted in the records.

G.At any stage of the hearing, the Director or Hearing Officer may require that further evidence be submitted upon such terms or conditions as the Director or Hearing Officer deems proper.

H.When evidence to be presented consists of technical matters or figures so numerous as to make the presentation difficult to follow, it shall be presented in exhibit form, supplemented and explained by oral testimony.

I.Notice may be taken of judicially cognizable facts. Parties shall be notified either before or during the hearing or by reference in preliminary reports or otherwise of the material noted, including any staff memoranda or data. Parties shall be afforded an opportunity to contest the material so noted.

J.A complete record of the proceedings shall be made and at the close of the hearing, expedited transcripts shall be ordered. Costs of the transcripts for the Department and the Attorney General shall be borne by the Filer.

K.All hearings once commenced shall continue on successive work days until completed, unless the Hearing Officer rules otherwise.

L.At the conclusion of the evidence, the Director or Hearing Officer may permit the parties to argue orally or to submit written briefs within five (5) days of receipt of the transcript of the hearing.

M.All hearings shall be open to the public.

N.Any written evaluation of evidence produced by an actuary or other expert engaged by the Department which is available prior to the conclusion of the presentation of the evidence shall be available to the parties at or prior to the close of the hearings.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.13 Final Decision

A.As soon as is practicable after the hearing is concluded, but in no event later than thirty (30) days after receipt of the transcript of proceedings, the Hearing Officer or Director shall enter the final decision of the Hearing Officer or Director and the Director shall enter his order. The final decision and/or order shall be served upon the parties forthwith by regular mail, postage pre-paid.

B.The Decision shall be effective immediately unless a specific effective date is specified in the Decision. Any Party requesting a stay of the Decision shall do so in accordance with R.I. Gen. Laws § 42-35-15(c).

C.The final decision shall be based exclusively on:

1.The competent evidence and arguments presented during the course of the hearing and made a part of the record;

2.Stipulations of fact;

3.Briefs, if any; and

4.Matters officially noticed.

D.The decision and order shall contain:

1.An appropriate caption;

2.The appearance of the parties;

3.A short statement of the nature of the proceedings;

4.Complete references to the specific statutes or regulations at issue;

5.A list of exhibits admitted in evidence which may be part of the initial decision or attached as an appendix;

6.A review of the facts produced at the hearing in relation to the applicable law and covering all issues of fact and law raised in the proceedings;

7.Specific findings of contested fact which shall be designated as such and which shall not be set forth in statutory or conclusionary language;

8.Specific conclusions of law based upon the findings of fact and applicable constitutional principles, statutes, and rules or regulations;

9.An appropriate order based upon the findings and conclusions; and

E.In the event the Hearing Officer or Director has relied on any written evaluation of evidence produced by an actuary or other expert engaged by the Department, a copy of said written evaluation shall be appended to the decision and/or order.

F.If the order of the Director shall state that the Director shall accept a modified filing in compliance with said order, the Department shall process said modified filing expeditiously and, in no event later than thirty (30) days from the date of its acceptance of said modified filing, report to the Director its conclusions as to the compliance by the Filer of said modified filing, and upon the finding by the Director that such modified filing complies with the order of the Director, the Director shall approve said modified filing and it shall be effective as of the date of its acceptance.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.14 Extensions of Time Limits

A.Upon a finding by the Hearing Officer or Director that good cause exists, any of the time limits enumerated above may be extended.

B.Requests for extension of any period must be stipulated in writing prior to the expiration of the period. Stipulations of all parties are acceptable in lieu of a written request for extension.

C.Extensions shall not be granted if inattention or procrastination caused the delay, but shall be granted if the delay is attributable to honest mistake, accident, or any cause compatible with proper diligence.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.15 Rate Hearings on Existing Rates

In the event that the Director or a Hearing Officer shall hold any hearing on an existing Rate pursuant to the requirements of R.I. Gen. Laws Chapters 27-6, 27-7.1, 27-9, or 27-44, this Part shall apply. For purposes of this Section the "Filer" shall be the Party which filed the Rate, the filing date shall be the date on which notice of the hearing is received by the Filer and the effective date of an order by the Director shall be the effective date set forth in the order.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.16 Interpretation and Construction

A.This Part shall be interpreted as declaratory of the practice and procedures of the Department as it existed before their adoption except to the extent:

1.They are inconsistent with such practice and procedure;

2.Express provision appears in this Part to the contrary; or

3.As may result from necessary implication.

B.It is hereby declared to be the intention of the Department to provide by this Part for the prompt, fair, and orderly administration and enforcement of the statutes within its jurisdiction, and this Part shall be liberally construed and applied to affect this intention and the remedial purpose and policies of the Department.

C.Words in the singular number include the plural, and vice versa, except where the context otherwise requires or where a contrary result appears from necessary implication.

D.This Part shall apply to all complaints, investigations, and other proceedings begun after their effective date, so far as practicable, to all proceedings then pending to the extent permitted by law.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-3 § 3.17 Severability

If any provision of this Part or the application thereof to any Person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Part which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Part are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2005-11-02 to 01/04/2022
Technical Revision — effective from 2005-11-02 to 11/02/2005
Amendment — effective from 2005-11-02 to 11/02/2005
Periodic Refile — effective from 2001-12-19 to 11/02/2005

230-RICR-20-60-4 Record Retention

230-RICR-20-60-4 § 4.1 Authority

A.This Part is promulgated in accordance with R.I. Gen. Laws Chapters 27-9.1, 27-13.1 and 27-29. Nothing herein shall be construed to create or imply a private cause of action for violation of this Act.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.2 Purpose

A.This Part implements R.I. Gen. Laws Chapters 27-13.1 and 27-29 regarding the retention and maintenance of records required for market conduct purposes as contained in § 4.4 of this Part.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.3 Definitions

A.All definitions contained in R.I. Gen. Laws §§ 27-13.1-2 and 27-29-2 are hereby incorporated by reference. In addition, for purposes of this Part:

1.“Application and accompanying records” means any written or electronic application form, any enrollment form, any document or record thereof, used to add coverage under any existing policy, questionnaire, telephone interview form, paramedical interview form or any other document used to question or underwrite an applicant for any policy issued by an insurer or for any declination of coverage by an insurer.

2.“Claim file and accompanying records” means the file maintained so as to show clearly the inception, handling and disposition of each claim. The claim file shall be sufficiently clear and specific so that pertinent events and dates of these events can be reconstructed.

3.“Commissioner” means the Director of the Department of Business Regulation or his or her designee.

4.“Complaint” means a written communication primarily expressing a grievance.

5.“Declination” or “Declined underwriting file” means all written or electronic records concerning coverage for which an application has been completed and submitted to the insurer or its producer but the insurer has made a determination not to issue a policy or not to add additional coverage when requested.

6.“Examiner” means a market conduct examiner or any other examiner authorized or designated by the commissioner to conduct an examination pursuant to R.I. Gen. Laws Chapter 27-13.1.

7.“Grievance” for health insurance purposes, means a written complaint submitted by or on behalf of a covered person regarding the:

a.Claims payment, handling or reimbursement for health care services; or

b.Matters pertaining to the contractual relationship between a covered person and a health carrier.

8.“Inquiry” means a specific question, criticism or request made in writing to an insurer by an examiner.

9.“Related entity” means a person authorized to act on behalf of the insurer in connection with the business of insurance.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.4 Records Required for Market Conduct Purposes

A.An insurer or related entity licensed to do business in this state shall maintain its books, records and documents in a manner so that the commissioner can readily ascertain during an examination the insurer’s compliance with state insurance laws and rules and with the standards outlined in the NAIC Market Regulation Handbook, including, but not limited to, company operations and management, policyholder service, marketing, producer licensing, underwriting, rating, complaint/grievance handling, and claims practices.

B.For a health insurer, the insurer or related entity shall maintain its books, records, and documents in a manner so that the practices of the insurer regarding network adequacy, utilization review, quality assessment and improvement and provider credentialing may be ascertained during a market conduct examination.

C.These records shall be retained for the current year plus four (4) years.

D.The producer of record shall maintain a file for each policy sold, and the file shall contain all work papers and written communications in his or her possession pertaining to the policy documented therein. These records shall be retained for the current year plus four (4) years.

E.During an examination of the insurer, the insurer shall provide a copy of the written contract entered into with each third party vendor or service provider as requested by an examiner within the time frames set forth in § 4.11 of this Part.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.5. Policy Record File

A.A policy record file shall be maintained for each policy issued, and shall be maintained for the duration of the current policy term plus four (4) years, or for life insurance policies and annuity contracts, for the time the policy or contract is in force and four (4) years thereafter. Policy records shall be maintained so as to show clearly the policy period, basis for rating and any imposition of additional exclusions from or exceptions to coverage. If a policy is terminated, either by the insurer or the policyholder, documentation supporting the termination and account records indicating a return of premiums, if any, shall also be maintained. Policy records need not be segregated from the policy records of other states so long as the records are readily available to market conduct examiners as required under this Part.

B.Policy records shall include the following:

1.Any application and accompanying records for each contract. The application shall bear a clearly legible means by which an examiner can identify a producer involved in the transaction. The examiners shall be provided with information clearly identitifying the producer involved in the transaction.

2.Any declaration pages (the initial page and any subsequent pages), the insurance contract, any certificates evidencing coverage under a group contract, any endorsements or riders associated with a policy, any termination notices, and any written or electronic correspondence to or from the insured pertaining to the coverage. If any of these records has already been filed with the commissioner, a separate copy of the record need not be maintained in the individual policy files to which the record pertains, provided it is clear from the insurer’s other records or systems that the record applies to a particular policy and that any data contained in the record relating to the policy, as well as the actual policy issued to the insured, can be retrieved or recreated;

3.Any binder; and

4.Any guidelines, manuals or other information necessary for the reconstruction of the rating, underwriting, policy owner service and claims handling of the policy. The maintenance at the site of a market conduct examination of a single copy of each of the above shall satisfy this requirement. These types of records include, but are not limited to, the application, the policy form including any amendments or endorsements, rating manuals, underwriting rules, credit reports or scores, claims history reports, previous insurance coverage reports (e.g., MIB), questionnaires, internal reports, and underwriting and rating notes.

C.A declined underwriting file shall be maintained and shall include include an application, any documentation substantiating the decision to decline an issuance of a policy, any binder issued without the insurer issuing a policy, any documentation substantiating the decision not to add additional coverage when requested and, if required by law, any declination notification. Notes regarding requests for quotations that do not result in a completed application for coverage need not be maintained for purposes of this Part. The insurer shall retain declined underwriting files for the current year plus four (4) years.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.6 Claim File

A.A claim file and accompanying records shall be maintained for the calendar year in which the claim is closed plus four (4) years. The claim file shall be maintained so as to show clearly the inception, handling and disposition of each claim. The claim files shall be sufficiently clear and specific so that pertinent events and dates of these events can be reconstructed. A claim file shall, at a minimum, include the following items:

1.For property and casualty: the file or files containing the notice of claim, claim forms, proof of loss or other form of claim submission, settlement demands, accident reports, police reports, adjustors logs, claim investigation documentation, inspection reports, supporting bills, estimates and valuation worksheets, medical records, correspondence to and from insureds and claimants or their representatives, notes, contracts, declaration pages, certificates evidencing coverage under a group contract, endorsements or riders, work papers, any written communication, any documented or recorded telephone communication related to the handling of a claim, including the investigation, payment or denial of the claim, copies of claim checks or drafts, or check numbers and amounts, releases, all applicable notices, correspondence used for determining and concluding claim payments or denials, subrogation and salvage documentation, any other documentation created and maintained in a paper or electronic format, necessary to support claim handling activity, and any claim manuals or other information necessary for reviewing the claim.

2.For life and annuity: the file or files containing the notice of claim, claim forms, proofs of loss, medical records, correspondence to and from insureds and claimants or their representatives, claim investigation documentation, claim handling logs, copies of checks or drafts, check numbers and amounts, releases, correspondence, all applicable notices, and correspondence used for determining and concluding claim payments or denials, any written communication, any documented or recorded telephone communication related to the handling of a claim, including the investigation, and any other documentation, maintained in a paper or electronic format, necessary to support claim handling activity.

3.For health: the file or files containing the notice of claim, claim forms, medical records, bills, electronically submitted bills, proofs of loss, correspondence to and from insureds and claimants or their representatives, claim investigation documentation, health facility pre-admission certification or utilization review documentation, claim handling logs, copies of explanation of benefit statements, any written communication, any documented or recorded telephone communication related to the handling of a claim, including the investigation, copies of checks or drafts, or check numbers and amounts, releases, correspondence, all applicable notices, and correspondence used for determining and concluding claim payments or denials, and any other documentation, maintained in a paper or electronic format, necessary to support claim handling activity.

B.Where a particular document pertains to more than one file, insurers may satisfy the requirements of this Section by making available, at the site of an examination, a single copy of each document.

C.Documents in a claim file received from an insured, the insured’s agent, a claimant, the department or any other insurer shall bear the initial date of receipt by the insurer, date stamped in a legible form in ink, in an electronic format, or some other permanent manner. Unless the company provides the examiners with written procedures to the contrary, the earliest date indicated on a document will be considered the initial date of receipt.

D.If an insurer, as its regular business practice, places the responsibility for handling certain types of claims upon company personnel other than its claims personnel, the insurer need not duplicate its files for maintenance by claims personnel. These claims records shall be maintained as part of the records of the insurer’s operations and shall be readily available to examiners.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.7 Licensing Records

A.Records to be maintained relating to the insurer’s compliance with licensing requirements shall include the licensing records of each producer, adjuster or appraiser associated with the insurer. Licensing records shall be maintained so as to show clearly the licensing status of the producer, adjuster or appraiser at the time of solicitation, negotiation or procurement. It is incumbent upon the insurer to verify and keep track of the license expiration date and renew the license as required for each producer or adjuster associated with the insurer. A screenprint from the Producer Database (PDB) may serve to provide adequate proof only of a producer’s current licensing status.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.8 Complaint Records

A.The complaint records required to be maintained under R.I. Gen. Laws § 27-29-4(13) shall include a complaint log or register, or grievance log or register for health insurers, in addition to the actual written complaints. The complaint log or register shall show clearly the total number of complaints for the current year plus the immediately preceding four (4) years, the classification of each complaint by line of insurance and by complainant (i.e. insured, Division of Insurance, third party, etc.), the nature of each complaint, the insurer’s disposition of each complaint, and the complaint number assigned by the Division of Insurance, if applicable. If the insurer maintains the file in a computer format, the reference in the complaint log or register for locating the documentation shall be an identifier such as the policy number or other code. The codes shall be provided to the examiners at the time of an examination.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.9 Format of Records

A.Any record required to be maintained by an insurer may be created and stored in the form of paper, photograph, magnetic, mechanical or electronic medium; or any process that accurately forms a durable reproduction of the record, so long as the record is capable of duplication to a hard copy that is as legible as the original document. Documents that are produced and sent to an insured by use of a template and an electronic mail list shall be considered to be sufficiently reproduced if the insurer can provide proof of mailing of the document and a copy of the template. Documents that require the signature of the insured or insurer’s producer shall be maintained in any format listed above provided evidence of the signature is preserved in that format.

B.The maintenance of records in a computer-based format shall be archival in nature, so as to preclude the alteration of the record after the initial transfer to a computer format. Upon request of an examiner, all records shall be capable of duplication to a hard copy that is as legible as the original document. The records shall be maintained according to written procedures developed and adhered to by the insurer. The written procedures shall be made available to the commissioner during an examination.

C.Photographs, microfilms, or other image-processing reproductions of records shall be equivalent to the originals and may be certified as the same in actions or proceedings before the commissioner unless inconsistent with R.I. Gen. Laws Chapter 42-35.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.10 Location of Files

A.All records required to be maintained under this Part shall be kept in a location that will allow the records to be produced for examination within the time period required. When, under normal circumstances, someone other than the insurer maintains a required record or type of record, the other person’s responsibility to maintain the records shall be set forth in a written agreement, a copy of which shall be maintained by the insurer and shall be available to the examiners for purposes of examination.

B.If required by law or otherwise available, the insurer shall maintain disaster preparedness or disaster recovery procedures that include provisions for the maintenance or reconstruction of original or duplicate records at another location. These procedures shall be provided for review during the examination.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.11 Time Limits to Provide Records and to Respond to Examiners

A.Initial data requests should be submitted to a company at least thirty (30) days prior to the commencement of the on-site examination, desk audit or other form of review to provide ample time for the company to prepare the materials requested by the examining state. §§ 4.11(B) and (C) of this Part below apply to requests for supplemental data and information not anticipated at the time of the initial request as specified in § 4.11(A) of this Part. This Section will not apply to any examination designated by the Department as an “emergency” examination.

B.As a means to facilitate the examination and to aid in the examination in accordance with R.I. Gen. Laws § 27-13.1-3 an insurer shall provide any requested document or written response to an inquiry submitted by an examiner within five (5) working days, or such other time period as mutually agreed upon by the examiner and the insurer. When the requested document or response is not produced by the insurer within the specified time period, a violation shall be deemed to have occurred unless the insurer can demonstrate to the satisfaction of the commissioner that the requested record cannot reasonably be provided within the specified time period of the request.

C.The time period for when a response is due may be extended if that request consists of a data run, request for statistical information, or information that cannot logistically be obtained without additional time. Approval for such an extension must be obtained from the Division, in writing. That writing will then control the time period required for response.

D.Additional records requested by the commissioner shall be made available for the examination upon the date specified by the Examiner in Charge.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4.12 Confidential Materials

A.Original records required to be provided during a market conduct examination shall be returned to the insurer following the examination. If the records relate to an inquiry made by an examiner copies of the records shall become a part of the work papers of the examination. R.I. Gen. Laws §§ 27-13.1-5(f) and 38-2-2(4)(i)(W) shall govern the public access to the work papers of the examination.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-4 § 4. 13 Severability

A.If any provision of this Part or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Part which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Part are severable.

History

Technical Revision — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 01/04/2022
Technical Revision — effective from 2007-11-08 to 11/08/2007
Adoption — effective from 2007-11-08 to 11/08/2007

230-RICR-20-60-5 Civil Unions (formerly Insurance Regulation 118)

230-RICR-20-60-5 § 5.1 Authority

This Part is promulgated in accordance is promulgated in accordance with R.I. Gen. Laws §§ 15-3.1-6 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-09-05 to 01/04/2022
Adoption — effective from 2011-12-23 to 09/05/2018

230-RICR-20-60-5 § 5.2 Purpose

The purpose of this Part is to prohibit insurers from unfairly discriminating between married couples and parties to a civil union.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-09-05 to 01/04/2022
Adoption — effective from 2011-12-23 to 09/05/2018

230-RICR-20-60-5 § 5.3 Applicability and Scope

A. This Part applies to any person transacting the business of insurance in the State of Rhode Island.

B. Except as expressly provided herein, this Part applies to all insurance policies and contracts solicited, delivered, issued, or renewed in the state of Rhode Island.

C. This Part shall not be construed to affect the ability of a fraternal benefit society to determine the admission of its members as provided under R.I. Gen. Laws § 27-25-6 or to determine the scope of beneficiaries in accordance with R.I. Gen. Laws § 27-25-17. Further this Part shall not apply to a religious or denominational organization, or to an organization that has been established and is operating for charitable or educational purpose and which is operated, supervised or controlled by or in connection with a religious organization where compliance with this Part would violate R.I. Gen. Laws § 15-3.1-5.

D. Nothing herein shall be construed to prevent or prohibit a self-insured or self-funded entity from extending insurance to civil union spouses.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-09-05 to 01/04/2022
Adoption — effective from 2011-12-23 to 09/05/2018

230-RICR-20-60-5 § 5.4 Definitions

A.“Civil union” means a comprehensive statewide domestic partnership established pursuant to R.I. Gen. Laws § 15-3.1-1 et seq. or laws of another state.

B.“Department” means the Insurance Division of the Department of Business Regulation.

C.“Insurance policy” or “Insurance contract” includes but not be limited to any contract of insurance, indemnity, medical, dental, optometric, hospital service, suretyship, or annuity, issued, proposed for issuance, or intended for issuance by any insurer.

D.“Insurer” means any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds insurers, fraternal benefit society, hospital or medical service corporations, health maintenance organization, managed care organization, or any other legal entity engaged in the business of insurance including producers, brokers, appraisers and adjusters. For the purpose of this Part, insurance shall also include third party administrators and other agents and contractors of persons engaged in the business of insurance in Rhode Island.

E.“Party to a civil union” means a person who has established a civil union pursuant to applicable state law.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-09-05 to 01/04/2022
Adoption — effective from 2011-12-23 to 09/05/2018

230-RICR-20-60-5 § 5.5 Interpretation of Title 230

Pursuant to R.I. Gen. Laws § 15-3.1-6, parties to a civil union shall be included in any definition or use of the terms “marriage,” “spouse,” “family,” “immediate family,” “dependent,” “next of kin,” and any other terms that denotes a marital or spousal relationship, as those terms are used throughout this Title.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-09-05 to 01/04/2022
Adoption — effective from 2011-12-23 to 09/05/2018

230-RICR-20-60-5 § 5.6 Coverage Standards for Civil Unions

A.Insurance contracts and policies offered by insurers to married couples, spouses, and their families shall also be offered to parties to a civil union, and their families. Except as specifically provided herein, all insurance contracts and policies shall provide coverage to parties to a civil union and their families that is equivalent to coverage provided to married persons and their families. At the request of a civil union party, insurers shall endorse or amend any such policy or contract to include policy or contract language which is consistent with this Part.

B.Effective January 1, 2012, any party to a civil union wishing to change his or her insurance contract or policy into a joint contract or policy shall be entitled to make that change to the extent a married person would be allowed to change his or her policy, without incurring any penalty as the result of such change. Any such change may be subject to standard and routine underwriting of the party to be added to the policy or contract.

C. Insurers shall not use the fact that an applicant or insured is a party to a civil union as a means to include sexual orientation in the underwriting process or in the determination of insurability. Use of sexual orientation as an underwriting standard or practice or as an eligibility requirement constitutes an unfair trade practice that is prohibited by R.I. Gen. Laws § 27-29-4.

D.Nothing in this Part shall be construed to prohibit insurers from setting rates for insurance in accordance with reasonable classifications based on relevant actuarial data or actual cost experience unrelated to civil union status. Preferential rates or discounts offered to a married person shall also be made equally available to the parties to a civil union.

E.The existence of a civil union shall automatically create, for each party to a civil union, an insurable interest in the other party as that term is used in R.I. Gen. Laws § 27-4-27. Both parties in a civil union shall also automatically have an insurable interest in a child for whom one party in a civil union becomes the natural or adoptive parent during the term of a civil union.

F.An insurer shall not require any party to a civil union to produce proof of the existence of a valid civil union if that insurer does not also require married persons to produce proof of the existence of a valid marriage. Insurers may require an applicant to produce proof of the existence of a valid civil union only where the insurer would also require proof of the existence of a valid marriage under the same circumstances.

G.Insurers are not required to provide a benefit available to a married person to a party to a civil union, or amend an insurance policy or contract of a party to a civil union when application of federal law prohibits such action or limits the benefit to married person. If an insurer declines to provide a benefit or to amend an insurance contract because it determines that the application of federal law affects the provision of a benefit available to a married person to a party to a civil union, the insurer shall:

1.notify the party to a civil union of the declination and the specific reason why the insurer takes the position that federal law prohibits extension of the benefit and

2.notify the Department of its determination.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-09-05 to 01/04/2022
Adoption — effective from 2011-12-23 to 09/05/2018

230-RICR-20-60-5 § 5.7 Form Filings

A.All forms filed on or after December 23, 2011, will not be approved if the term “spouse” or “marriage” or any other synonym does not include parties to a civil union.

B.The Department will not require the re-filing of forms previously approved. Such forms shall be amended by operation of law to include parties to a civil union in the definition of “spouse” or “marriage” or any synonym to those terms.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-09-05 to 01/04/2022
Adoption — effective from 2011-12-23 to 09/05/2018

230-RICR-20-60-5 § 5.8 Severability

If any provision of this Part or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality of such provision shall not affect other provisions or applications of this Part which can be given effect without the invalid or unconstitutional provision or application, and to this end, the provisions of this Part are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-09-05 to 01/04/2022
Adoption — effective from 2011-12-23 to 09/05/2018

230-RICR-20-60-6 Financial Institution Insurance Sales

230-RICR-20-60-6 § 6.1 Statutory Authority

This Part is promulgated by the Department of Business Regulation (the "Department"), Insurance Division ("Division") pursuant to R.I. Gen. Laws §§ 27-58-4 and 42-14-17 to implement the Financial Institution Insurance Sales Act which was enacted on August 7, 1996 (the "Act"), and to ensure the soundness of the banking and insurance businesses. Unless otherwise specified, all statutory references herein are to the Rhode Island General Laws, as they may be amended from time to time.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-6 § 6.2 Definitions

A.Unless otherwise defined in the Act, for purposes of the Act and this Part, the following terms shall have the following meanings:

1."Affiliate" means any Company that controls, is controlled by, or is under common control with another Company.

2."Commissioner" means the Insurance Commissioner of the State of Rhode Island.

3.“Company" shall include any corporation, partnership, business trust, association or similar organization or entity, however formed.

4.A Company has "Control" if:

a.The Company directly or indirectly or acting through one or more other persons owns, controls, or has power to vote twenty-five percent (25%) or more of any class of voting securities of another entity,

b.The Company controls in any manner the election of a majority of the directors or trustees of another entity; or

c.The Department determines, after notice and opportunity for hearing, that the Company directly or indirectly exercises a controlling influence over the management or policies of another entity.

5."Department" means the Department of Business Regulation.

6."Financial institution" shall have the meaning given to it in R.I. Gen. Laws § 27-58-3, and shall also include the meaning given to it in R.I. Gen. Laws § 19-1-1.

7."Insurance" shall have the meaning given to it in R.I. Gen. Laws § 27-58-3, except that for purposes of the Act and this Part it shall not include insurance on property, which insurance is offered as security for a loan or extension of credit, the benefit of which may be used to pay the outstanding balance of such loan or extension of credit in the event such property is damaged or destroyed, commonly known as "credit property insurances."

8."Insurance producer" shall have the meaning given to it in R.I. Gen. Laws § 27-2.3-2(5).

9."Insurance transaction" means a contractual relationship wherein a Financial Institution delivers or renews an Insurance policy on behalf of an insurance company for which the Financial Institution is authorized to act as an Insurance Producer. The term does not include a transaction in which the act of the Financial Institution is an incidental component of the transaction, such as when the Financial Institution is named as a "loss payee" or "mortgagee" or in which the Financial Institution requires insurance as collateral for a loan or extension of credit.

10."Physical separation" means any distinctive manner of separation from the deposit gathering or lending area of a Financial Institution (including, for example, but not limited to a separate building or walls, doors or dividers within an area of the same building) which provides a separation which will minimize the likelihood of confusion on the part of the customers of the Financial Institution and would cause a reasonable customer to believe that the business being conducted at that physically separate location is a different business activity. In locations with only a single multi-purpose meeting room, the Financial Institution may satisfy the intent of the Act by clearly communicating to the customer the purpose for which the room is being used. In no circumstances shall the room be used for the taking of federally-insured deposits.

11."Solicit" means the act of Solicitation.

12."Solicitation" means a negotiation, effectuation, procurement, delivery, renewal, continuation or binding of or otherwise offering Insurance. The term does not include a referral to another employee of the Financial Institution or a reference to written materials such as pamphlets, brochures or business cards. The term also excludes discussions relating to Insurance made by an employee of the trust department of a Financial Institution while engaged in the business of providing estate planning or trust services.

13."Subsidiary" means, with respect to a Company,

a.Any Company twenty-five percent (25%) or more of whose voting shares is directly or indirectly owned or controlled by such Company, or is held by it with power to vote;

b.Any Company the election of a majority of whose directors is controlled in any manner by such Company; or

c.Any Company with respect to the management or policies of which such Company has the power, directly or indirectly, to exercise a controlling influence, as determined by the Department, after notice and opportunity for hearing.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-6 § 6.3 Examination of Financial Institutions

The Department shall have the authority under R.I. Gen. Laws Chapter 27-13.1 to examine the Insurance activities of a Financial Institution with respect to its compliance with this Part, the Act and the other provisions of Title 27. The provisions of R.I. Gen. Laws Chapter 27-13.1 shall govern the procedures for such examinations and the collection of fees therefor.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-6 § 6.4 Anti-Tying Provisions

A.In addition to those restrictions contained in R.I. Gen. Laws § 27-58-6, no Financial Institution may offer a banking product or service, or fly or vary the conditions of such offer on any of the following conditions:

1.That the customer purchase Insurance from any particular Insurance Producer;

2.That the customer obtain Insurance from the Financial Institution; or

3.That the customer shall not obtain Insurance from a competitor of the Financial Institution other than a condition or requirement that the Financial Institution shall reasonably impose in a credit transaction to assure the soundness of the credit.

B.A Solicitation may not be made while an application for or the underwriting of a loan or credit to the customer or prospective customer is pending, except that the following activities shall not be considered a violation of § 6.4 of this Part:

1.A Solicitation made in the ordinary course of a mass mailing by a Financial Institution; or

2.A Solicitation made by an employee of the Financial Institution when the employee has no knowledge after reasonable inquiry that an application for or the underwriting of a loan or credit to the customer or prospective customer is pending; provided, however, that for purposes of § 6.4(B)(2) of this Part only, the term "Solicitation" shall not include:

a.A negotiation, effectuation, procurement, delivery, renewal, continuation or binding of or otherwise offering Insurance as a result of an inquiry of or contact with the Financial Institution for such a purpose initiated by the customer or prospective customer of the Financial Institution, or

b.The renewal or continuation of an existing policy of Insurance between the Financial Institution and the customer.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-6 § 6.5 Disclosures

A.In addition to the requirements in R.I. Gen. Laws § 27-58-7, the disclosures required by the Act shall meet the following requirements:

1.The disclosures required by the Act shall be made to each customer or prospective customer no later than the beginning of a Solicitation;

2.A Financial Institution, for any loan for which Insurance is required, shall disclose in writing and on a separate document acknowledged by the customer, prior to the signing of a loan or mortgage application, that by law the purchase of Insurance from that Financial Institution cannot be required as a condition of loan or mortgage approval. The requirements of the proceeding sentence shall apply only to the lines of Insurance which the Financial Institution is licensed to sell. For all other Insurance Transactions, each customer purchasing Insurance shall acknowledge in writing and on a separate document their receipt of the disclosures required by the Act and this Part prior to the completion of such Insurance Transaction;

3.A Financial Institution which does not accept federally-insured deposits in the State of Rhode Island shall not be required to comply with the requirements of R.I. Gen. Laws §§ 27-58-7(i) and (ii); and

4.A Financial Institution may make a written request for a waiver to the Director or the Director's designee if compliance with R.I. Gen. Laws § 27-58-7 would cause a reasonable customer to believe that compliance would be contrary to the intent of the Act and this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-6 § 6.6 Non-Public Customer Information

A.Pursuant to R.I. Gen. Laws § 27-58-10, Non-public Customer Information shall:

1.Not be used by a Financial Institution to Solicit;

2.Not include information available to the Financial Institution through other sources even if the information could have been derived from the records.

3.Not include information whose use has been agreed or consented to by the Financial Institution's customer after prominent written disclosure on a separate document of the provisions of such agreement or consent to the customer.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-6 § 6.7 Severability

If any section, term or provision of this Part shall be adjudged invalid for any reason, that judgment shall not affect, impair, or invalidate any remaining section, term or provision, which shall remain in full force and effect.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Technical Revision — effective from 2001-12-19 to 12/19/2001
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 Privacy of Consumer Information (formerly Insurance Regulation 99)

230-RICR-20-60-7 § 7.1 Authority

This Part is promulgated pursuant to the authority granted by R.I. Gen. Laws §§ 27-58-4 and 27-58-10.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.2 Purpose and Scope

A.Purpose. This Part governs the treatment of nonpublic personal health information and nonpublic personal financial information about individuals by all insurance licensees of the Rhode Island Department of Business Regulation. This Part:

1.Requires a licensee to provide notice to individuals about its privacy policies and practices;

2.Describes the conditions under which a licensee may disclose nonpublic personal health information and nonpublic personal financial information about individuals to affiliates and nonaffiliated third parties; and

3.Provides methods for individuals to prevent a licensee from disclosing that information.

B.Scope. This Part applies to:

1.Nonpublic personal financial information about individuals who obtain or are claimants or beneficiaries of products or services primarily for personal, family or household purposes from licensees. This Part does not apply to information about companies or about individuals who obtain products or services for business, commercial or agricultural purposes.

2.All nonpublic personal health information.

3.Nothing in this Part shall be construed to modify, limit or supersede the operation of the Rhode Island Workers’ Compensation Act (R.I. Gen. Laws Chapter 28-29) and the health care provider’s obligation to provide information directly related to a claim for workers’ compensation benefits or any proceeding before the Workers’ Compensation Court, or any proceeding relating to workers’ compensation including, but not limited to, actions seeking benefits under the Longshore and Harbor Workers Compensation Act (33 U.S.C. § 901 et seq.) or the Police Officers and Firefighters Relief Statute (R.I. Gen. Laws Chapter 45-19)

C.Compliance. A licensee domiciled in this state that is in compliance with this Part in a state that has not enacted laws or regulations that meet the requirements of Title V of the Gramm-Leach-Bliley Act (Pub. Law 102-106) may nonetheless be deemed to be in compliance with Title V of the Gramm-Leach-Bliley Act in the other state.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.3 Rule of Construction

A.The examples in this Part and the sample clauses and Federal Model Privacy Form provided in the bulletin issued for such purpose are not exclusive. Compliance with an example or use of a sample clause or the Federal Model Privacy Form, to the extent applicable, constitutes compliance with this Part.

B.Licensees may rely on use of the Federal Model Privacy Form, consistent with the instructions provided in a bulletin issued for that purpose and available on the Departments website, as a safe harbor of compliance with the privacy notice content requirements of this Part. Use of the Federal Model Privacy Form is not required. Licensees may continue to use other types of privacy notices, including notices that contain the examples in this Part and/or the sample clauses provided in the bulletin issued for such purpose, provided that such notices accurately describe the Licensee’s privacy practices and otherwise meet the notice content requirements of this Part. However, while Licensees may continue to use privacy notices that contain the examples in this Part and/or the sample clauses, Licensees may not rely on use of privacy notices with the sample clauses as a safe harbor of compliance with the notice content requirements of this Part after July 1, 2019.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.4 Definitions

A.As used in this Part, unless the context requires otherwise:

1.“Affiliate” means a company that controls, is controlled by or is under common control with another company.

2.“Clear and conspicuous” means that a notice is reasonably understandable and designed to call attention to the nature and significance of the information in the notice. Examples:

a.Reasonably understandable. A licensee makes its notice reasonably understandable if it:

(1)Presents the information in the notice in clear, concise sentences, paragraphs and sections;

(2)Uses short explanatory sentences or bullet lists whenever possible;

(3)Uses definite, concrete, everyday words and active voice whenever possible;

(4)Avoids multiple negatives;

(5)Avoids legal and highly technical business terminology whenever possible; and

(6)Avoids explanations that are imprecise and readily subject to different interpretations.

b.Designed to call attention. A licensee designs its notice to call attention to the nature and significance of the information in it if the licensee:

(1)Uses a plain-language heading to call attention to the notice;

(2)Uses a typeface and type size that are easy to read;

(3)Provides wide margins and ample line spacing;

(4)Uses boldface or italics for key words; and

(5)In a form that combines the licensee’s notice with other information, uses distinctive type size, style, and graphic devices, such as shading or sidebars.

c.Notices on web sites. If a licensee provides a notice on a web page, the licensee designs its notice to call attention to the nature and significance of the information in it if the licensee uses text or visual cues to encourage scrolling down the page if necessary to view the entire notice and ensure that other elements on the web site (such as text, graphics, hyperlinks or sound) do not distract attention from the notice, and the licensee either:

(1)Places the notice on a screen that consumers frequently access, such as a page on which transactions are conducted; or

(2)Places a link on a screen that consumers frequently access, such as a page on which transactions are conducted, that connects directly to the notice and is labeled appropriately to convey the importance, nature and relevance of the notice.

3.“Collect” means to obtain information that the licensee organizes or can retrieve by the name of an individual or by identifying number, symbol or other identifying particular assigned to the individual, irrespective of the source of the underlying information.

4.“Company” means a corporation, limited liability company, business trust, general or limited partnership, association, sole proprietorship or similar organization.

5.“Consumer” means an individual who seeks to obtain, obtains or has obtained an insurance product or service from a licensee that is to be used primarily for personal, family or household purposes, and about whom the licensee has nonpublic personal financial information, or that individual’s legal representative. Examples:

a.An individual who provides nonpublic personal financial information to a licensee in connection with obtaining or seeking to obtain financial, investment or economic advisory services relating to an insurance product or service is a consumer regardless of whether the licensee establishes an ongoing advisory relationship.

b.An applicant for insurance prior to the inception of insurance coverage is a licensee’s consumer.

c.An individual who is a consumer of another financial institution is not a licensee’s consumer solely because the licensee is acting as agent for, or provides processing or other services to, that financial institution.

d.An individual is a licensee’s consumer if:

(1)The individual is a beneficiary of a life insurance policy underwritten by the licensee;

(2)The individual is a claimant under an insurance policy issued by the licensee;

(3)The individual is an insured or an annuitant under an insurance policy or an annuity, respectively, issued by the licensee; or

(4)The individual is a mortgagor of a mortgage covered under a mortgage insurance policy; and

(5)The licensee discloses nonpublic personal financial information about the individual to a nonaffiliated third party other than as permitted under §§ 7.15, 7.16 and 7.17 of this Part.

e.Provided that the licensee provides the initial, annual and revised notices under §§ 7.5, 7.6 and 7.9 of this Part to the plan sponsor, group or blanket insurance policyholder or group annuity contract holder, and further provided that the licensee does not disclose to a nonaffiliated third party nonpublic personal financial information about such an individual other than as permitted under §§ 7.15, 7.16 and 7.17 of this Part, an individual is not the consumer of the licensee solely because he or she is:

(1)A participant or a beneficiary of an employee benefit plan that the licensee administers or sponsors or for which the licensee acts as a trustee, insurer or fiduciary;

(2)Covered under a group or blanket insurance policy or group annuity contract issued by the licensee; or

(3)A beneficiary in a workers’ compensation plan.

f.The individuals described in §§ 7.4(A)(5)(e)((1)) through ((3)) of this Part above are consumers of a licensee if the licensee does not meet all the conditions of § 7.4(A)(5)(e) of this Part.

(1)In no event shall the individuals, solely by virtue of the status described in §§ 7.4(A)(5)(e)((1)) through ((3)) of this Part above, be deemed to be customers for purposes of this Part.

g.An individual is not a licensee’s consumer solely because he or she is a beneficiary of a trust for which the licensee is a trustee.

h.An individual is not a licensee’s consumer solely because he or she has designated the licensee as trustee for a trust.

6.“Consumer reporting agency” has the same meaning as in Section 603(f) of the federal Fair Credit Reporting Act (15 U.S.C. § 1681a(f)).

7.“Control” means:

a.Ownership, control or power to vote twenty-five percent (25%) or more of the outstanding shares of any class of voting security of the company, directly or indirectly, or acting through one (1) or more other persons;

b.Control in any manner over the election of a majority of the directors, trustees or general partners (or individuals exercising similar functions) of the company; or

c.The power to exercise, directly or indirectly, a controlling influence over the management or policies of the company, as the Director determines.

8.“Customer” means a consumer who has a customer relationship with a licensee.

9.“Customer relationship” means a continuing relationship between a consumer and a licensee under which the licensee provides one (1) or more insurance products or services to the consumer that are to be used primarily for personal, family or household purposes. Examples:

a.A consumer has a continuing relationship with a licensee if:

(1)The consumer is a current policyholder of an insurance product issued by or through the licensee; or

(2)The consumer obtains financial, investment or economic advisory services relating to an insurance product or service from the licensee for a fee.

b.A consumer does not have a continuing relationship with a licensee if:

(1)The consumer applies for insurance but does not purchase the insurance;

(2)The licensee sells the consumer travel insurance in an isolated transaction;

(3)The individual is no longer a current policyholder of an insurance product or no longer obtains insurance services with or through the licensee;

(4)The consumer is a beneficiary or claimant under a policy and has submitted a claim under a policy choosing a settlement option involving an ongoing relationship with the licensee;

(5)The consumer is a beneficiary or a claimant under a policy and has submitted a claim under that policy choosing a lump sum settlement option;

(6)The customer’s policy is lapsed, expired, or otherwise inactive or dormant under the licensee’s business practices, and the licensee has not communicated with the customer about the relationship for a period of twelve (12) consecutive months, other than annual privacy notices, material required by law or regulation, communication at the direction of a state or federal authority, or promotional materials;

(7)The individual is an insured or an annuitant under an insurance policy or annuity, respectively, but is not the policyholder or owner of the insurance policy or annuity; or

(8)For the purposes of this Part, the individual’s last known address according to the licensee’s records is deemed invalid. An address of record is deemed invalid if mail sent to that address by the licensee has been returned by the postal authorities as undeliverable and if subsequent attempts by the licensee to obtain a current valid address for the individual have been unsuccessful.

10.“Director” means the Director of the Rhode Island Department of Business Regulation or his or her designee.

11.“Financial institution” means any institution the business of which is engaging in activities that are financial in nature or incidental to such financial activities as described in Section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. § 1843(k)). Financial institution does not include:

a.Any person or entity with respect to any financial activity that is subject to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. § 1 et seq.);

b.The Federal Agricultural Mortgage Corporation or any entity charged and operating under the Farm Credit Act of 1971 (12 U.S.C. § 2001 et seq.); or

c.Institutions chartered by Congress specifically to engage in securitizations, secondary market sales (including sales of servicing rights) or similar transactions related to a transaction of a consumer, as long as the institutions do not sell or transfer nonpublic personal information to a nonaffiliated third party.

12.“Financial product or service” means a product or service that a financial holding company could offer by engaging in an activity that is financial in nature or incidental to such a financial activity under Section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. § 1843(k)).

a.Financial service includes a financial institution’s evaluation or brokerage of information that the financial institution collects in connection with a request or an application from a consumer for a financial product or service.

13.“Health care” means:

a.Preventive, diagnostic, therapeutic, rehabilitative, maintenance or palliative care, services, procedures, tests or counseling that:

(1)Relates to the physical, mental or behavioral condition of an individual; or

(2)Affects the structure or function of the human body or any part of the human body, including the banking of blood, sperm, organs or any other tissue; or

b.Prescribing, dispensing or furnishing to an individual drugs or biologicals, or medical devices or health care equipment and supplies.

14.“Health care provider” means a physician or other health care practitioner licensed, accredited or certified to perform specified health services consistent with state law, or a health care facility.

15.“Health information” means any information or data except age or gender, whether oral or recorded in any form or medium, created by or derived from a health care provider or the consumer that relates to:

a.The past, present or future physical, mental or behavioral health or condition of an individual;

b.The provision of health care to an individual; or

c.Payment for the provision of health care to an individual.

16.“Insurance product or service” means any product or service that is offered by a licensee pursuant to the insurance laws of this state.

a.Insurance service includes a licensee's evaluation, brokerage or distribution of information that the licensee collects in connection with a request or an application from a consumer for an insurance product or service.

17.“Licensee” means all licensed insurers, producers and other persons licensed or required to be licensed, or authorized or required to be authorized, or registered or required to be registered pursuant to R.I. Gen. Laws Title 27.

a.A licensee is not subject to the notice and opt out requirements for nonpublic personal financial information of this Part if the licensee is an employee, agent or other representative of another licensee (“the principal”) and:

(1)The principal otherwise complies with, and provides the notices required by, the provisions of this Part; and

(2)The licensee does not disclose any nonpublic personal information to any person other than the principal or its affiliates in a manner permitted by this Part.

b.Subject to § 7.4(A)(17)(c) of this Part below, “licensee” shall also include an approved surplus insurer that accepts business placed through a licensed surplus lines broker in this state, but only in regard to the surplus lines placements placed pursuant to R.I. Gen. Laws §§ 27-3-38 through 27-3-42.

c.A surplus lines broker or insurer shall be deemed to be in compliance with the notice and opt out requirements for nonpublic personal financial information of this Part provided:

(1)The broker or insurer does not disclose nonpublic personal financial information of a consumer or a customer to nonaffiliated third parties for any purpose, including joint servicing or marketing under § 7.15 of this Part, except as permitted by §§ 7.16 or 7.17 of this Part; and

(2)The broker or insurer delivers a notice to the consumer at the time a customer relationship is established on which the following is printed in sixteen (16) point type:

PRIVACY NOTICE

“Neither the U.S. brokers that handled this insurance nor the insurers that have underwritten this insurance will disclose nonpublic personal financial information concerning the buyer to nonaffiliates of the brokers or insurers except as permitted by law”.

18.“Nonaffiliated third party” means any person except:

a.A licensee’s affiliate; or

b.A person employed jointly by a licensee and any company that is not the licensee’s affiliate (but nonaffiliated third party includes the other company that jointly employs the person).

c.Nonaffiliated third party includes any company that is an affiliate solely by virtue of the direct or indirect ownership or control of the company by the licensee or its affiliate in conducting merchant banking or investment banking activities of the type described in Section 4(k)(4)(H) or insurance company investment activities of the type described in Section 4(k)(4)(I) of the federal Bank Holding Company Act (12 U.S.C. § 1843(k)(4)(H) and (I).)

19.“Nonpublic personal information” means nonpublic personal financial information and nonpublic personal health information.

20.“Nonpublic personal financial information” means:

a.Personally identifiable financial information; and

b.Any list, description or other grouping of consumers (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available.

cNonpublic personal financial information does not include:

(1)Health information;

(2)Publicly available information, except as included on a list described in § 7.4(A)(20)(b) of this Part above; or

(3)Any list, description or other grouping of consumers (and publicly available information pertaining to them) that is derived without using any personally identifiable financial information that is not publicly available. Examples of lists:

(AA)Nonpublic personal financial information includes any list of individuals’ names and street addresses that is derived in whole or in part using personally identifiable financial information that is not publicly available, such as account numbers.

(BB)Nonpublic personal financial information does not include any list of individuals’ names and addresses that contains only publicly available information, is not derived in whole or in part using personally identifiable financial information that is not publicly available, and is not disclosed in a manner that indicates that any of the individuals on the list is a consumer of a financial institution.

21.“Nonpublic personal health information” means health information:

a.That identifies an individual who is the subject of the information; or

b.With respect to which there is a reasonable basis to believe that the information could be used to identify an individual.

22.“Personally identifiable financial information” means any information:

a.A consumer provides to a licensee to obtain an insurance product or service from the licensee;

b.About a consumer resulting from a transaction involving an insurance product or service between a licensee and a consumer; or

c.The licensee otherwise obtains about a consumer in connection with providing an insurance product or service to that consumer. Personally identifiable financial information includes:

(1)Information a consumer provides to a licensee on an application to obtain an insurance product or service;

(2)Account balance information and payment history;

(3)The fact that an individual is or has been one of the licensee’s customers or has obtained an insurance product or service from the licensee;

(4)Any information about the licensee’s consumer if it is disclosed in a manner that indicates that the individual is or has been the licensee’s consumer;

(5)Any information that a consumer provides to a licensee or that the licensee or its agent otherwise obtains in connection with collecting on a loan or servicing a loan;

(6)Any information the licensee collects through an Internet cookie (an information-collecting device from a web server); and

(7)Information from a consumer report.

d.Information not included. Personally identifiable financial information does not include:

(1)Health information;

(2)A list of names and addresses of customers of an entity that is not a financial institution; and

(3)Information that does not identify a consumer, such as aggregate information or blind data that does not contain personal identifiers such as account numbers, names or addresses.

23.“Publicly available information” means any information that a licensee has a reasonable basis to believe is lawfully made available to the general public from:

a.Federal, state or local government records;

b.Widely distributed media; or

c.Disclosures to the general public that are required to be made by federal, state or local law.

d.Reasonable basis. A licensee has a reasonable basis to believe that information is lawfully made available to the general public if the licensee has taken steps to determine:

(1)That the information is of the type that is available to the general public; and

(2)Whether an individual can direct that the information not be made available to the general public and, if so, that the licensee’s consumer has not done so. Examples:

(AA)Government records. Publicly available information in government records includes information in government real estate records and security interest filings.

(BB)Widely distributed media. Publicly available information from widely distributed media includes information from a telephone book, a television or radio program, a newspaper or a web site that is available to the general public on an unrestricted basis. A web site is not restricted merely because an Internet service provider or a site operator requires a fee or a password, so long as access is available to the general public.

(CC)A licensee has a reasonable basis to believe that mortgage information is lawfully made available to the general public if the licensee has determined that the information is of the type included on the public record in the jurisdiction where the mortgage would be recorded.

(DD)A licensee has a reasonable basis to believe that an individual’s telephone number is lawfully made available to the general public if the licensee has located the telephone number in the telephone book or the consumer has informed you that the telephone number is not unlisted.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.5 Initial Privacy Notice to Consumers Required

A.Initial notice requirement. A licensee shall provide a clear and conspicuous notice that accurately reflects its privacy policies and practices to:

1.Customer. An individual who becomes the licensee’s customer, not later than when the licensee establishes a customer relationship, except as provided in § 7.5(E) of this Part, and

2.Consumer. A consumer, before the licensee discloses any nonpublic personal financial information about the consumer to any nonaffiliated third party, if the licensee makes a disclosure other than as authorized by §§ 7.16 and 7.17 of this Part.

B.When initial notice to a consumer is not required. A licensee is not required to provide an initial notice to a consumer under § 7.5(A)(2) of this Part if:

1.The licensee does not disclose any nonpublic personal financial information about the consumer to any nonaffiliated third party, other than as authorized by §§ 7.16 and 7.17 of this Part, and the licensee does not have a customer relationship with the consumer; or

2.A notice has been provided by an affiliated licensee, as long as the notice clearly identifies all licensees to whom the notice applies and is accurate with respect to the licensee and the other institutions.

C.When the licensee establishes a customer relationship.

1.General rule. A licensee establishes a customer relationship at the time the licensee and the consumer enter into a continuing relationship.

2.Examples of establishing customer relationship. A licensee establishes a customer relationship when the consumer:

a.Becomes a policyholder of a licensee that is an insurer when the insurer delivers an insurance policy or contract to the consumer, or in the case of a licensee that is an insurance producer or insurance broker, obtains insurance through that licensee; or

b.Agrees to obtain financial, economic or investment advisory services relating to insurance products or services for a fee from the licensee.

D.Existing customers. When an existing customer obtains a new insurance product or service from a licensee that is to be used primarily for personal, family or household purposes, the licensee satisfies the initial notice requirements of § 7.5(A) of this Part as follows:

1.The licensee may provide a revised policy notice, under § 7.9 of this Part, that covers the customer’s new insurance product or service; or

2.If the initial, revised or annual notice that the licensee most recently provided to that customer was accurate with respect to the new insurance product or service, the licensee does not need to provide a new privacy notice under § 7.5(A) of this Part.

E.Exceptions to allow subsequent delivery of notice.

1.A licensee may provide the initial notice required by § 7.5(A)(1) of this Part within a reasonable time after the licensee establishes a customer relationship if:

a.Establishing the customer relationship is not at the customer’s election; or

b.Providing notice not later than when the licensee establishes a customer relationship would substantially delay the customer’s transaction and the customer agrees to receive the notice at a later time.

2.Examples of exceptions.

a.Not at customer’s election. Establishing a customer relationship is not at the customer’s election if a licensee acquires or is assigned a customer’s policy from another financial institution or residual market mechanism and the customer does not have a choice about the licensee’s acquisition or assignment.

b.Substantial delay of customer’s transaction. Providing notice not later than when a licensee establishes a customer relationship would substantially delay the customer’s transaction when the licensee and the individual agree over the telephone to enter into a customer relationship involving prompt delivery of the insurance product or service.

c.No substantial delay of customer’s transaction. Providing notice not later than when a licensee establishes a customer relationship would not substantially delay the customer’s transaction when the relationship is initiated in person at the licensee’s office or through other means by which the customer may view the notice, such as on a web site.

F.Delivery. When a licensee is required to deliver an initial privacy notice by this Part, the licensee shall deliver it according to § 7.11 of this Part. If the licensee uses a short-form initial notice for non-customers according to § 7.7(D) of this Part, the licensee may deliver its privacy notice according to § 7.7(D)(3) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.6 Annual Privacy Notice to Customers Required

A.General rule. A licensee shall provide a clear and conspicuous notice to customers that accurately reflects its privacy policies and practices not less than annually during the continuation of the customer relationship. Annually means at least once in any period of twelve (12) consecutive months during which that relationship exists. A licensee may define the twelve (12) consecutive-month period, but the licensee shall apply it to the customer on a consistent basis.

1.Example. A licensee provides a notice annually if it defines the twelve (12) consecutive-month period as a calendar year and provides the annual notice to the customer once in each calendar year following the calendar year in which the licensee provided the initial notice. For example, if a customer opens an account on any day of year one (1), the licensee shall provide an annual notice to that customer by December 31 of year two (2).

B.Exception to general rule. A licensee that provides nonpublic personal information to nonaffiliated third parties only in accordance with §§ 7.15, 7.16, or 7.17 of this Part and has not changed its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed in the most recent disclosure sent to consumers in accordance with this Part or § 7.5 of this Part shall not be required to provide an annual disclosure under this Part until such time as the licensee fails to comply with any criteria described in this paragraph.

C.Termination of customer relationship. A licensee is not required to provide an annual notice to a former customer. A former customer is an individual with whom a licensee no longer has a continuing relationship. Examples:

1.A licensee no longer has a continuing relationship with an individual if the individual no longer is a current policyholder of an insurance product or no longer obtains insurance services with or through the licensee.

2.A licensee no longer has a continuing relationship with an individual if the individual’s policy is lapsed, expired or otherwise inactive or dormant under the licensee’s business practices, and the licensee has not communicated with the customer about the relationship for a period of twelve (12) consecutive months, other than to provide annual privacy notices, material required by law or regulation, or promotional materials.

3.For the purposes of this Part, a licensee no longer has a continuing relationship with an individual if the individual’s last known address according to the licensee’s records is deemed invalid. An address of record is deemed invalid if mail sent to that address by the licensee has been returned by the postal authorities as undeliverable and if subsequent attempts by the licensee to obtain a current valid address for the individual have been unsuccessful.

4.A licensee no longer has a continuing relationship with a customer in the case of providing real estate settlement services, at the time the customer completes execution of all documents related to the real estate closing, payment for those services has been received, or the licensee has completed all of its responsibilities with respect to the settlement, including filing documents on the public record, whichever is later.

D.Delivery. When a licensee is required by this Part to deliver an annual privacy notice, the licensee shall deliver it according to § 7.11 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.7 Information To Be Included In Privacy Notices

A.General rule. The initial, annual and revised privacy notices that a licensee provides under §§ 7.5, 7.6 and 7.9 of this Part shall include each of the following items of information, in addition to any other information the licensee wishes to provide, that applies to the licensee and to the consumers to whom the licensee sends its privacy notice:

1.The categories of nonpublic personal financial information that the licensee collects;

2.The categories of nonpublic personal financial information that the licensee discloses;

3.The categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal financial information, other than those parties to whom the licensee discloses information under §§ 7.16 and 7.17 of this Part;

4.The categories of nonpublic personal financial information about the licensee’s former customers that the licensee discloses and the categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal financial information about the licensee’s former customers, other than those parties to whom the licensee discloses information under §§ 7.16 and 7.17 of this Part;

5.If a licensee discloses nonpublic personal financial information to a nonaffiliated third party under § 7.15 of this Part (and no other exception in §§ 7.16 and 7.17 of this Part applies to that disclosure), a separate description of the categories of information the licensee discloses and the categories of third parties with whom the licensee has contracted;

6.An explanation of the consumer’s right under § 7.12(A) of this Part to opt out of the disclosure of nonpublic personal financial information to nonaffiliated third parties, including the methods by which the consumer may exercise that right at that time;

7.Any disclosures that the licensee makes under Section 603(d)(2)(A)(iii) of the federal Fair Credit Reporting Act (15 U.S.C. § 1681a(d)(2)(A)(iii)) (that is, notices regarding the ability to opt out of disclosures of information among affiliates);

8.The licensee’s policies and practices with respect to protecting the confidentiality and security of nonpublic personal financial information; and

9.Any disclosure that the licensee makes under § 7.7(B) of this Part.

B.Description of parties subject to exceptions. If a licensee discloses nonpublic personal financial information as authorized under §§ 7.16 and 7.17 of this Part, the licensee is not required to list those exceptions in the initial or annual privacy notices required by §§ 7.5 and 7.6 of this Part. When describing the categories of parties to whom disclosure is made, the licensee is required to state only that it makes disclosures to other affiliated or nonaffiliated third parties, as applicable, as permitted by law.

C.Examples.

1.Categories of nonpublic personal financial information that the licensee collects. A licensee satisfies the requirement to categorize the nonpublic personal financial information it collects if the licensee categorizes it according to the source of the information, as applicable:

a.Information from the consumer;

b.Information about the consumer’s transactions with the licensee or its affiliates;

c.Information about the consumer’s transactions with nonaffiliated third parties; and

d.Information from a consumer reporting agency.

2.Categories of nonpublic personal financial information a licensee discloses.

a.A licensee satisfies the requirement to categorize nonpublic personal financial information it discloses if the licensee categorizes the information according to source, as described in § 7.7(C)(1) of this Part, as applicable, and provides a few examples to illustrate the types of information in each category. These might include:

(1)Information from the consumer, including application information, such as assets and income and identifying information, such as name, address and social security number;

(2)Transaction information, such as information about balances, payment history and parties to the transaction; and

(3)Information from consumer reports, such as a consumer’s creditworthiness and credit history.

b.A licensee does not adequately categorize the information that it discloses if the licensee uses only general terms, such as transaction information about the consumer.

c.If a licensee reserves the right to disclose all of the nonpublic personal financial information about consumers that it collects, the licensee may simply state that fact without describing the categories or examples of nonpublic personal financial information that the licensee discloses.

3.Categories of affiliates and nonaffiliated third parties to whom the licensee discloses.

a.A licensee satisfies the requirement to categorize the affiliates and nonaffiliated third parties to which the licensee discloses nonpublic personal financial information about consumers if the licensee identifies the types of businesses in which they engage.

b.Types of businesses may be described by general terms only if the licensee uses a few illustrative examples of significant lines of business. For example, a licensee may use the term financial products or services if it includes appropriate examples of significant lines of businesses, such as life insurer, automobile insurer, consumer banking or securities brokerage.

c.A licensee also may categorize the affiliates and nonaffiliated third parties to which it discloses nonpublic personal financial information about consumers using more detailed categories.

4.Disclosures under exception for service providers and joint marketers. If a licensee discloses nonpublic personal financial information under the exception in § 7.15 of this Part to a nonaffiliated third party to market products or services that it offers alone or jointly with another financial institution, the licensee satisfies the disclosure requirement of § 7.7(A)(5) of this Part if it:

a.Lists the categories of nonpublic personal financial information it discloses, using the same categories and examples the licensee used to meet the requirements of § 7.7(A)(2) of this Part, as applicable; and

b.States whether the third party is:

(1)A service provider that performs marketing services on the licensee’s behalf or on behalf of the licensee and another financial institution; or

(2)A financial institution with whom the licensee has a joint marketing agreement.

5.Simplified notices. If a licensee does not disclose, and does not wish to reserve the right to disclose, nonpublic personal financial information about customers or former customers to affiliates or nonaffiliated third parties except as authorized under §§ 7.16 and 7.17 of this Part, the licensee may simply state that fact, in addition to the information it shall provide under §§ 7.7(A)(1), (A)(8), (A)(9) and (B) of this Part.

6.Confidentiality and security. A licensee describes its policies and practices with respect to protecting the confidentiality and security of nonpublic personal financial information if it does both of the following:

a.Describes in general terms who is authorized to have access to the information; and

b.States whether the licensee has security practices and procedures in place to ensure the confidentiality of the information in accordance with the licensee’s policy. The licensee is not required to describe technical information about the safeguards it uses.

D.Short-form initial notice with opt out notice for non-customers.

1.A licensee may satisfy the initial notice requirements in §§ 7.5(A) and 7.8(D) of this Part for a consumer who is not a customer by providing a short-form initial notice at the same time as the licensee delivers an opt out notice as required in § 7.8 of this Part.

2.A short-form initial notice shall:

a.Be clear and conspicuous;

b.State that the licensee’s privacy notice is available upon request; and

c.Explain a reasonable means by which the consumer may obtain that notice.

3.The licensee shall deliver its short-form initial notice according to § 7.11 of this Part. The licensee is not required to deliver its privacy notice with its short-form initial notice. The licensee instead may simply provide the consumer a reasonable means to obtain its privacy notice. If a consumer who receives the licensee’s short-form notice requests the licensee’s privacy notice, the licensee shall deliver its privacy notice according to § 7.11 of this Part.

4.Examples of obtaining privacy notice. The licensee provides a reasonable means by which a consumer may obtain a copy of its privacy notice if the licensee:

a.Provides a toll-free telephone number that the consumer may call to request the notice; or

b.For a consumer who conducts business in person at the licensee’s office, maintains copies of the notice on hand that the licensee provides to the consumer immediately upon request.

E.Future disclosures. The licensee’s notice may include:

1.Categories of nonpublic personal financial information that the licensee reserves the right to disclose in the future, but does not currently disclose; and

2.Categories of affiliates or nonaffiliated third parties to whom the licensee reserves the right in the future to disclose, but to whom the licensee does not currently disclose, nonpublic personal financial information.

F.Sample clauses and Federal Model Privacy Form Sample clauses illustrating some of the notice content required by this Part and the Federal Model Privacy Form which have been included in a bulletin issued for that purpose and available on the Department’s website.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.8 Form of Opt Out Notice to Consumers and Opt Out Methods

A.Form of opt out notice. If a licensee is required to provide an opt out notice under § 7.12(A) of this Part, it shall provide a clear and conspicuous notice to each of its consumers that accurately explains the right to opt out under § 7.12(A) of this Part. The notice shall state:

1.That the licensee discloses or reserves the right to disclose nonpublic personal financial information about its consumer to a nonaffiliated third party;

2.That the consumer has the right to opt out of that disclosure; and

3.A reasonable means by which the consumer may exercise the opt out right.

B.Examples.

1.Adequate opt out notice. A licensee provides adequate notice that the consumer can opt out of the disclosure of nonpublic personal financial information to a nonaffiliated third party if the licensee:

a.Identifies all of the categories of nonpublic personal financial information that it discloses or reserves the right to disclose, and all of the categories of nonaffiliated third parties to which the licensee discloses the information, as described in §§ 7.7(A)(2) and (3) of this Part, and states that the consumer can opt out of the disclosure of that information; and

b.Identifies the insurance products or services that the consumer obtains from the licensee, either singly or jointly, to which the opt out direction would apply.

2.Reasonable opt out means. A licensee provides a reasonable means to exercise an opt out right if it:

a.Designates check-off boxes in a prominent position on the relevant forms with the opt out notice;

b.Includes a reply form together with the opt out notice;

c.Provides an electronic means to opt out, such as a form that can be sent via electronic mail or a process at the licensee’s web site, if the consumer agrees to the electronic delivery of information; or

d.Provides a toll-free telephone number that consumers may call to opt out.

3.Unreasonable opt out means. A licensee does not provide a reasonable means of opting out if:

a.The only means of opting out is for the consumer to write his or her own letter to exercise that opt out right; or

b.The only means of opting out as described in any notice subsequent to the initial notice is to use a check-off box that the licensee provided with the initial notice but did not include with the subsequent notice.

4.Specific opt out means. A licensee may require each consumer to opt out through a specific means, as long as that means is reasonable for that consumer.

C.Same form as initial notice permitted. A licensee may provide the opt out notice together with or on the same written or electronic form as the initial notice the licensee provides in accordance with § 7.5 of this Part.

D.Initial notice required when opt out notice delivered subsequent to initial notice. If a licensee provides the opt out notice later than required for the initial notice in accordance with § 7.5 of this Part, the licensee shall also include a copy of the initial notice with the opt out notice in writing or, if the consumer agrees, electronically.

E.Joint relationships.

1.If two (2) or more consumers jointly obtain an insurance product or service from a licensee, the licensee may provide a single opt out notice. The licensees opt out notice shall explain how the licensee will treat an opt out direction by a joint consumer (as explained in § 7.8(E)(5) of this Part).

2.Any of the joint consumers may exercise the right to opt out. The licensee may either:

a.Treat an opt out direction by a joint consumer as applying to all of the associated joint consumers; or

b.Permit each joint consumer to opt out separately.

3.If a licensee permits each joint consumer to opt out separately, the licensee shall permit one (1) of the joint consumers to opt out on behalf of all of the joint consumers.

4.A licensee may not require all joint consumers to opt out before it implements any opt out direction.

5.Example. If John and Mary are both named policyholders on a homeowner’s insurance policy issued by a licensee and the licensee sends policy statements to John’s address, the licensee may do any of the following, but it shall explain in its opt out notice which opt out policy the licensee will follow:

a.Send a single opt out notice to John’s address, but the licensee shall accept an opt out direction from either John or Mary.

b.Treat an opt out direction by either John or Mary as applying to the entire policy. If the licensee does so and John opts out, the licensee may not require Mary to opt out as well before implementing John’s opt out direction.

c.Permit John and Mary to make different opt out directions. If the licensee does so:

(1)It shall permit John and Mary to opt out for each other;

(2)If both opt out, the licensee shall permit both of them to notify it in a single response (such as on a form or through a telephone call); and

(3)If John opts out and Mary does not, the licensee may only disclose nonpublic personal financial information about Mary, but not about John and not about John and Mary jointly.

F.Time to comply with opt out. A licensee shall comply with a consumer’s opt out direction as soon as reasonably practicable after the licensee receives it.

G.Continuing right to opt out. A consumer may exercise the right to opt out at any time.

H.Duration of consumer’s opt out direction.

1.A consumer’s direction to opt out under this Part is effective until the consumer revokes it in writing or, if the consumer agrees, electronically.

2.When a customer relationship terminates, the customer’s opt out direction continues to apply to the nonpublic personal financial information that the licensee collected during or related to that relationship. If the individual subsequently establishes a new customer relationship with the licensee, the opt out direction that applied to the former relationship does not apply to the new relationship.

I.Delivery. When a licensee is required to deliver an opt out notice by this Part, the licensee shall deliver it according to § 7.11 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.9 Revised Privacy Notices

A.General rule. Except as otherwise authorized in this Part, a licensee shall not, directly or through an affiliate, disclose any nonpublic personal financial information about a consumer to a nonaffiliated third party other than as described in the initial notice that the licensee provided to that consumer under § 7.5 of this Part, unless:

1.The licensee has provided to the consumer a clear and conspicuous revised notice that accurately describes its policies and practices;

2.The licensee has provided to the consumer a new opt out notice;

3.The licensee has given the consumer a reasonable opportunity, before the licensee discloses the information to the nonaffiliated third party, to opt out of the disclosure; and

4.The consumer does not opt out.

B.Examples.

1.Except as otherwise permitted by §§ 7.15, 7.16 and 7.17 of this Part, a licensee shall provide a revised notice before it:

a.Discloses a new category of nonpublic personal financial information to any nonaffiliated third party;

b.Discloses nonpublic personal financial information to a new category of nonaffiliated third party; or

c.Discloses nonpublic personal financial information about a former customer to a nonaffiliated third party, if that former customer has not had the opportunity to exercise an opt out right regarding that disclosure.

2.A revised notice is not required if the licensee discloses nonpublic personal financial information to a new nonaffiliated third party that the licensee adequately described in its prior notice.

C.Delivery. When a licensee is required to deliver a revised privacy notice by this Part, the licensee shall deliver it according to § 7.11 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.10 Privacy Notices to Group Policyholders

Unless a licensee is providing privacy notices directly to covered individuals described in §§ 7.4(A)(5)(e)((1)), ((2)) or ((3)) of this Part, a licensee shall provide initial, annual and revised notices to the plan sponsor, group or blanket insurance policyholder or group annuity contractholder, or workers’ compensation policyholder, in the manner described in §§ 7.5 through 7.9 of this Part, describing the licensee’s privacy practices with respect to nonpublic personal information about individuals covered under the policies, contracts or plans.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.11 Delivery

A.How to provide notices. A licensee shall provide any notices that this Part requires so that each consumer can reasonably be expected to receive actual notice in writing or, if the consumer agrees, electronically.

B.Examples.

1.Examples of reasonable expectation of actual notice. A licensee may reasonably expect that a consumer will receive actual notice if the licensee:

a.Hand-delivers a printed copy of the notice to the consumer;

b.Mails a printed copy of the notice to the last known address of the consumer separately, or in a policy, billing or other written communication;

c.For a consumer who conducts transactions electronically, posts the notice on the electronic site and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining a particular insurance product or service, or

d.For an isolated transaction with a consumer, such as the licensee providing an insurance quote or selling the consumer travel insurance, posts the notice and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining the particular insurance product or service.

2.Examples of unreasonable expectation of actual notice. A licensee may not, however, reasonably expect that a consumer will receive actual notice of its privacy policies and practices if it:

a.Only posts a sign in its office or generally publishes advertisements of its privacy policies and practices; or

b.Sends the notice via electronic mail to a consumer who does not obtain an insurance product or service from the licensee electronically.

C.Annual notices only. A licensee may reasonably expect that a customer will receive actual notice of the licensee’s annual privacy notice if:

1.The customer uses the licensee’s web site to access insurance products and services electronically and agrees to receive notices at the web site and the licensee posts its current privacy notice continuously in a clear and conspicuous manner on the web site; or

2.The customer has requested that the licensee refrain from sending any information regarding the customer relationship, and the licensee’s current privacy notice remains available to the customer upon request.

D.Oral description of notice insufficient. A licensee may not provide any notice required by this Part solely by orally explaining the notice, either in person or over the telephone.

E.Retention or accessibility of notices for customers.

1.For customers only, a licensee shall provide the initial notice required by § 7.5(A)(1) of this Part, the annual notice required by § 7.6(A) of this Part, and the revised notice required by § 7.9 of this Part so that the customer can retain them or obtain them later in writing or, if the customer agrees, electronically.

2.Examples of retention or accessibility. A licensee provides a privacy notice to the customer so that the customer can retain it or obtain it later if the licensee:

a.Hand-delivers a printed copy of the notice to the customer;

b.Mails a printed copy of the notice to the last known address of the customer; or

c.Makes its current privacy notice available on a web site (or a link to another web site) for the customer who obtains an insurance product or service electronically and agrees to receive the notice at the web site.

F.Joint notice with other financial institutions. A licensee may provide a joint notice from the licensee and one or more of its affiliates or other financial institutions, as identified in the notice, as long as the notice is accurate with respect to the licensee and the other institutions. A licensee also may provide a notice on behalf of another financial institution.

G.Joint relationships. If two (2) or more consumers jointly obtain an insurance product or service from a licensee, the licensee may satisfy the initial, annual and revised notice requirements of §§ 7.5(A), 7.6(A) and 7.9(A) of this Part, respectively, by providing one (1) notice to those consumers jointly.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.12 Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties

A.Conditions for disclosure.

1.Except as otherwise authorized in this Part, a licensee may not, directly or through any affiliate, disclose any nonpublic personal financial information about a consumer to a nonaffiliated third party unless:

a.The licensee has provided to the consumer an initial notice as required under § 7.5 of this Part;

b.The licensee has provided to the consumer an opt out notice as required in § 7.8 of this Part.

c.The licensee has given the consumer a reasonable opportunity, before it discloses the information to the nonaffiliated third party, to opt out of the disclosure; and

d.The consumer does not opt out.

2.Opt out definition. Opt out means a direction by the consumer that the licensee not disclose nonpublic personal financial information about that consumer to a nonaffiliated third party, other than as permitted by §§ 7.15, 7.16 and 7.17 of this Part.

3.Examples of reasonable opportunity to opt out. A licensee provides a consumer with a reasonable opportunity to opt out if:

a.By mail. The licensee mails the notices required in § 7.12(A)(1) of this Part to the consumer and allows the consumer to opt out by mailing a form, calling a toll-free telephone number or any other reasonable means within thirty (30) days from the date the licensee mailed the notices.

b.By electronic means. A customer opens an on-line account with a licensee and agrees to receive the notices required in § 7.12(A)(1) of this Part electronically, and the licensee allows the customer to opt out by any reasonable means within thirty (30) days after the date that the customer acknowledges receipt of the notices in conjunction with opening the account.

c.Isolated transaction with consumer. For an isolated transaction such as providing the consumer with an insurance quote, a licensee provides the consumer with a reasonable opportunity to opt out if the licensee provides the notices required in § 7.12(A)(1) of this Part at the time of the transaction and requests that the consumer decide, as a necessary part of the transaction, whether to opt out before completing the transaction.

B.Application of opt out to all consumers and all nonpublic personal financial information.

1.A licensee shall comply with this Part, regardless of whether the licensee and the consumer have established a customer relationship.

2.Unless a licensee complies with this Part, the licensee may not, directly or through any affiliate, disclose any nonpublic personal financial information about a consumer that the licensee has collected, regardless of whether the licensee collected it before or after receiving the direction to opt out from the consumer.

C.Partial opt out. A licensee may allow a consumer to select certain nonpublic personal financial information or certain nonaffiliated third parties with respect to which the consumer wishes to opt out.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.13 Limits on Redisclosure and Reuse of Nonpublic Personal Financial Information

A.Information the licensee receives under an exception. If a licensee receives nonpublic personal financial information from a nonaffiliated financial institution under an exception in §§ 7.16 or 7.17 of this Part, the licensee’s disclosure and use of that information is limited as follows:

1.The licensee may disclose the information to the affiliates of the financial institution from which the licensee received the information;

2.The licensee may disclose the information to its affiliates, but the licensee’s affiliates may, in turn, disclose and use the information only to the extent that the licensee may disclose and use the information; and

3.The licensee may disclose and use the information pursuant to an exception in §§ 7.16 or 7.17 of this Part, in the ordinary course of business to carry out the activity covered by the exception under which the licensee received the information.

4.Example. If a licensee receives information from a nonaffiliated financial institution for claims settlement purposes, the licensee may disclose the information for fraud prevention, or in response to a properly authorized subpoena. The licensee may not disclose that information to a third party for marketing purposes or use that information for its own marketing purposes.

B.Information a licensee receives outside of an exception. If a licensee receives nonpublic personal financial information from a nonaffiliated financial institution other than under an exception in §§ 7.16 or 7.17 of this Part, the licensee may disclose the information only:

1.To the affiliates of the financial institution from which the licensee received the information;

2.To its affiliates, but its affiliates may, in turn, disclose the information only to the extent that the licensee may disclose the information; and

3.To any other person, if the disclosure would be lawful if made directly to that person by the financial institution from which the licensee received the information.

4.Example. If a licensee obtains a customer list from a nonaffiliated financial institution outside of the exceptions in §§ 7.16 or 7.17 of this Part:

a.The licensee may use that list for its own purposes; and

b.The licensee may disclose that list to another nonaffiliated third party only if the financial institution from which the licensee purchased the list could have lawfully disclosed the list to that third party. That is, the licensee may disclose the list in accordance with the privacy policy of the financial institution from which the licensee received the list, as limited by the opt out direction of each consumer whose nonpublic personal financial information the licensee intends to disclose, and the licensee may disclose the list in accordance with an exception in §§ 7.16 or 7.17 of this Part, such as to the licensee’s attorneys or accountants.

C.Information a licensee discloses under an exception. If a licensee discloses nonpublic personal financial information to a nonaffiliated third party under an exception in §§ 7.16 or 7.17 of this Part, the third party may disclose and use that information only as follows:

1.The third party may disclose the information to the licensee’s affiliates;

2.The third party may disclose the information to its affiliates, but its affiliates may, in turn, disclose and use the information only to the extent that the third party may disclose and use the information; and

3.The third party may disclose and use the information pursuant to an exception in §§ 7.16 or 7.17 of this Part in the ordinary course of business to carry out the activity covered by the exception under which it received the information.

D.Information a licensee discloses outside of an exception. If a licensee discloses nonpublic personal financial information to a nonaffiliated third party other than under an exception in §§ 7.16 or 7.17 of this Part, the third party may disclose the information only:

1.To the licensee’s affiliates;

2.To the third party's affiliates, but the third party's affiliates, in turn, may disclose the information only to the extent the third party can disclose the information; and

3.To any other person, if the disclosure would be lawful if the licensee made it directly to that person.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.14 Limits on Sharing Account Number Information for Marketing Purposes

A.General prohibition on disclosure of account numbers. A licensee shall not, directly or through an affiliate, disclose, other than to a consumer reporting agency, a policy number or similar form of access number or access code for a consumer’s policy or transaction account to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to the consumer.

B.Exceptions. § 7.14(A) of this Part above does not apply if a licensee discloses a policy number or similar form of access number or access code:

1.To the licensee’s service provider solely in order to perform marketing for the licensee’s own products or services, as long as the service provider is not authorized to directly initiate charges to the account;

2.To a licensee who is a producer solely in order to perform marketing for the licensee’s own products or services; or

3.To a participant in an affinity or similar program where the participants in the program are identified to the customer when the customer enters into the program.

C.Examples.

1.Policy number. A policy number, or similar form of access number or access code, does not include a number or code in an encrypted form, as long as the licensee does not provide the recipient with a means to decode the number or code.

2.Policy or transaction account. For the purposes of this Part, a policy or transaction account is an account other than a deposit account or a credit card account. A policy or transaction account does not include an account to which third parties cannot initiate charges.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.15 Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing

A.General rule.

1.The opt out requirements in §§ 7.8 and 7.12 of this Part do not apply when a licensee provides nonpublic personal financial information to a nonaffiliated third party to perform services for the licensee or functions on the licensee’s behalf, if the licensee:

a.Provides the initial notice in accordance with § 7.5 of this Part; and

b.Enters into a contractual agreement with the third party that prohibits the third party from disclosing or using the information other than to carry out the purposes for which the licensee disclosed the information, including use under an exception in §§ 7.16 or 7.17 of this Part in the ordinary course of business to carry out those purposes.

2.Example. If a licensee discloses nonpublic personal financial information under this Part to a financial institution with which the licensee performs joint marketing, the licensee’s contractual agreement with that institution meets the requirements of § 7.15(A)(1)(b) of this Part if it prohibits the institution from disclosing or using the nonpublic personal financial information except as necessary to carry out the joint marketing or under an exception in §§ 7.16 or 7.17 of this Part in the ordinary course of business to carry out that joint marketing.

B.Service may include joint marketing. The services a nonaffiliated third party performs for a licensee under § 7.15(A) of this Part may include marketing of the licensee’s own products or services or marketing of financial products or services offered pursuant to joint agreements between the licensee and one or more financial institutions.

C.Definition of “joint agreement.” For purposes of this Part, “joint agreement” means a written contract pursuant to which a licensee and one (1) or more financial institutions jointly offer, endorse or sponsor a financial product or service.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.16 Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions

A.Exceptions for processing transactions at consumer’s request. The requirements for initial notice in § 7.5(A)(2) of this Part, the opt out in §§ 7.8 and 7.12, and service providers and joint marketing in § 7.15 of this Part do not apply if the licensee discloses nonpublic personal financial information as necessary to effect, administer or enforce a transaction that a consumer requests or authorizes, or in connection with:

1.Servicing or processing an insurance product or service that a consumer requests or authorizes;

2.Maintaining or servicing the consumer’s account with a licensee, or with another entity as part of a private label credit card program or other extension of credit on behalf of such entity;

3.A proposed or actual securitization, secondary market sale (including sales of servicing rights) or similar transaction related to a transaction of the consumer; or

4.Reinsurance or stop loss or excess loss insurance.

B.“Necessary to effect, administer or enforce a transaction” means that the disclosure is:

1.Required, or is one of the lawful or appropriate methods, to enforce the licensee’s rights or the rights of other persons engaged in carrying out the financial transaction or providing the product or service; or

2.Required, or is a usual, appropriate or acceptable method:

a.To carry out the transaction or the product or service business of which the transaction is a part, and record, service or maintain the consumer’s account in the ordinary course of providing the insurance product or service;

b.To administer or service benefits or claims relating to the transaction or the product or service business of which it is a part;

c.To provide a confirmation, statement or other record of the transaction, or information on the status or value of the insurance product or service to the consumer or the consumer’s agent or broker;

d.To accrue or recognize incentives or bonuses associated with the transaction that are provided by a licensee or any other party;

e.To underwrite insurance at the consumer’s request or for any of the following purposes as they relate to a consumer’s insurance: account administration, reporting, investigating or preventing fraud or material misrepresentation, processing premium payments, processing insurance claims, administering insurance benefits (including utilization review activities), participating in research projects or as otherwise required or specifically permitted by federal or state law; or

f.In connection with:

(1)The authorization, settlement, billing, processing, clearing, transferring, reconciling or collection of amounts charged, debited or otherwise paid using a debit, credit or other payment card, check or account number, or by other payment means;

(2)The transfer of receivables, accounts or interests therein; or

(3)The audit of debit, credit or other payment information.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.17 Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information

A.Exceptions to opt out requirements. The requirements for initial notice to consumers in § 7.5(A)(2) of this Part, the opt out in §§ 7.8 and 7.12 of this Part, and service providers and joint marketing in § 7.15 of this Part do not apply when a licensee discloses nonpublic personal financial information:

1.With the consent or at the direction of the consumer, provided that the consumer has not revoked the consent or direction;

2.To protect the confidentiality or security of a licensee’s records pertaining to the consumer, service, product or transaction;

a.To protect against or prevent actual or potential fraud or unauthorized transactions;

b.For required institutional risk control or for resolving consumer disputes or inquiries;

c.To persons holding a legal or beneficial interest relating to the consumer; or

d.To persons acting in a fiduciary or representative capacity on behalf of the consumer;

3.To provide information to insurance rate advisory organizations, guaranty funds or agencies, agencies that are rating a licensee, persons that are assessing the licensee’s compliance with industry standards, and the licensee’s attorneys, accountants and auditors;

4.To the extent specifically permitted or required under other provisions of law and in accordance with the federal Right to Financial Privacy Act of 1978 (12 U.S.C. §§ 3401 et seq.), to law enforcement agencies (including the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration, the Securities and Exchange Commission, the Secretary of the Treasury, with respect to 31 U.S.C. §§ 5311 et seq. Records and Reports on Monetary Instruments and Transactions and 12 U.S.C. §§ 1951 et seq. Financial Recordkeeping, a state insurance authority, and the Federal Trade Commission), self-regulatory organizations or for an investigation on a matter related to public safety;

5.To a consumer reporting agency in accordance with the federal Fair Credit Reporting Act (15 U.S.C. §§ 1681 et seq.) and the fair credit laws of this state; or from a consumer report reported by a consumer reporting agency;

6.In connection with a proposed or actual sale, merger, transfer or exchange of all or a portion of a business or operating unit if the disclosure of nonpublic personal financial information concerns solely consumers of the business or unit;

7.To comply with federal, state or local laws, rules and other applicable legal requirements;

a.To comply with a properly authorized civil, criminal or regulatory investigation, or subpoena or summons by federal, state or local authorities; or

b.To respond to judicial process or government regulatory authorities having jurisdiction over a licensee for examination, compliance or other purposes as authorized by law; or

8.For purposes related to the replacement of a group benefit plan, a group health plan or a group welfare plan.

B.Example of revocation of consent. A consumer may revoke consent by subsequently exercising the right to opt out of future disclosures of nonpublic personal financial information as permitted under § 7.8(G) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.18 When Authorization Required for Disclosure of Nonpublic Personal Health Information

A.A licensee shall not disclose nonpublic personal health information about a consumer or customer unless an authorization is obtained from the consumer or customer whose nonpublic personal health information is sought to be disclosed.

B.Nothing in this Part shall prohibit, restrict or require an authorization for the disclosure of nonpublic personal health information by a licensee for the performance of the following insurance functions by or on behalf of the licensee: claims administration; claims adjustment and management; detection, investigation or reporting of actual or potential fraud, misrepresentation or criminal activity; underwriting; policy placement or issuance; loss control; ratemaking and guaranty fund functions; reinsurance and excess loss insurance; risk management; case management; disease management; quality assurance; quality improvement; performance evaluation; provider credentialing verification; utilization review; peer review activities; actuarial, scientific, medical or public policy research; grievance procedures; internal administration of compliance, managerial, and information systems; policyholder service functions; auditing; reporting; database security; administration of consumer disputes and inquiries; external accreditation standards; the replacement of a group benefit plan or workers compensation policy or program; activities in connection with a sale, merger, transfer or exchange of all or part of a business or operating unit; any activity that permits disclosure without authorization pursuant to the federal Health Insurance Portability and Accountability Act privacy rules promulgated by the U.S. Department of Health and Human Services, 45 C.F.R. Part 160 and Subparts A and E of Part 164; disclosure that is required, or is one of the lawful or appropriate methods, to enforce the licensee’s rights or the rights of other persons engaged in carrying out a transaction or providing a product or service that a consumer requests or authorizes; and any activity otherwise permitted by law, required pursuant to governmental reporting authority, or to comply with legal process. Additional insurance functions may be added with the approval of the commissioner to the extent they are necessary for appropriate performance of insurance functions and are fair and reasonable to the interest of consumers.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.19 Authorizations

A.A valid authorization to disclose nonpublic personal health information pursuant to this Part shall be in written or electronic form and shall contain all of the following:

1.The identity of the consumer or customer who is the subject of the nonpublic personal health information;

2.A general description of the types of nonpublic personal health information to be disclosed;

3.General descriptions of the parties to whom the licensee discloses nonpublic personal health information, the purpose of the disclosure and how the information will be used;

4.The signature of the consumer or customer who is the subject of the nonpublic personal health information or the individual who is legally empowered to grant authority and the date signed; and

5.Notice of the length of time for which the authorization is valid and that the consumer or customer may revoke the authorization at any time and the procedure for making a revocation.

B.An authorization for the purposes of this Part shall specify a length of time for which the authorization shall remain valid, which in no event shall be for more than twenty-four (24) months.

C.A consumer or customer who is the subject of nonpublic personal health information may revoke an authorization provided pursuant to this Part at any time, subject to the rights of an individual who acted in reliance on the authorization prior to notice of the revocation.

D.A licensee shall retain the authorization or a copy thereof in the record of the individual who is the subject of nonpublic personal health information.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.20 Authorization Request Delivery

A request for authorization and an authorization form may be delivered to a consumer or a customer as part of an opt-out notice pursuant to § 7.12 of this Part, provided that the request and the authorization form are clear and conspicuous. An authorization form is not required to be delivered to the consumer or customer or included in any other notices unless the licensee intends to disclose protected health information pursuant to Section § 7.18(A) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.21 Relationship to Federal Rules

Irrespective of whether a licensee is subject to the federal Health Insurance Portability and Accountability Act privacy rule as promulgated by the U.S. Department of Health and Human Services, 45 C.F.R. Part 160 and Subparts A and E of Part 164 (the “federal rule”), if a licensee complies with all requirements of the federal rule except for its effective date provision, the licensee shall not be subject to the provisions §§ 7.18 through 7.22 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.22 Relationship to State Laws

Nothing in this article shall preempt or supersede existing state law related to medical records, health or insurance information privacy. Any disclosure of health information must comply with R.I. Gen. Laws Chapter 5-37.3.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.23 Protection of Fair Credit Reporting Act

Nothing in this Part shall be construed to modify, limit or supersede the operation of the federal Fair Credit Reporting Act (15 U.S.C. §§ 1681 et seq.), and no inference shall be drawn on the basis of the provisions of this Part regarding whether information is transaction or experience information under 15 U.S.C. § 1681a.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.24 Nondiscrimination

A.A licensee shall not unfairly discriminate against any consumer or customer because that consumer or customer has opted out from the disclosure of his or her nonpublic personal financial information pursuant to the provisions of this Part.

B.A Licensee shall not unfairly discriminate against a consumer or customer because that consumer or customer has not granted authorization for the disclosure of his or her nonpublic personal health information pursuant to the provisions of this regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.25 Violation

No licensee shall violate the provisions of this Part. The insurance regulatory authorities of this State are authorized to investigate any alleged violations of this Part and to impose fines and other sanctions as lawfully determined to be appropriate in accordance with the applicable laws of this State.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-7 § 7.26 Severability

If any Part or portion of this Part or its applicability to any person or circumstance is held invalid by a court, the remainder of the Part or the applicability of the provision to other persons or circumstances shall not be affected.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2018-05-14 to 01/04/2022
Amendment — effective from 2018-05-14 to 05/14/2018
Technical Revision — effective from 2001-12-19 to 05/14/2018
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-20-60-10 Life Settlements

230-RICR-20-60-10 § 10.1 Authority

This Part is promulgated in accordance with R.I. Gen. Laws § 27-72-12.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.2 Scope

This Part applies to the business of life settlements as defined by R.I. Gen. Laws § 27-72-2(3).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.3 Purpose

The purpose of this Part is to establish standards and procedures for the licensing of life settlement brokers and providers; to govern the conduct of life settlement brokers and providers and to establish standards for contract forms, disclosures and advertising in Rhode Island.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.4 Definitions

A.All definitions included in R.I. Gen. Laws § 27-72-2 are hereby incorporated as if fully set forth herein. As used in this Part:

1."Department " means the Department of Business Regulation, Insurance Division.

2.“Insurance Commissioner” or “Commissioner” means the Director of the Department of Business Regulation or his or her designee.

3.“NAIC” means the National Association of Insurance Commissioners.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.5 Broker Licensing and Conduct

A.No person may engage in or hold himself or herself out to be engaging in life settlement brokering in Rhode Island unless that person:

1.Holds a current valid license as a Rhode Island Life Settlement Broker, or

2.Obtains a license within the thirty (30) days of the activities requiring licensure as set forth in R.I. Gen. Laws § 27-72-3(d), or

3.Is licensed as an attorney, certified public accountant or financial planner accredited by a nationally recognized accreditation agency and who is retained to represent the owner and whose compensation is not paid directly or indirectly by the provider or any other person except the owner. Such persons may negotiate life settlement contracts on behalf of owners without having to obtain a license as a broker.

B.Every applicant for a broker license must submit an application to the Department. In order to be licensed, applicants must fulfill the requirements set forth in said application and pay the applicable fee to the Department.

1.Applicants shall submit a complete application providing all information requested by the application and any follow up information requested by the Department. The application is not considered complete until the Department receives all of the information it has requested.

2.Applicants shall pay the biennial license fee paid by insurance producers pursuant to Subchapter 40 Part 5 of this Chapter, Licensing and Renewal Fees.

3.An individual who holds a valid Rhode Island resident or nonresident insurance producer license with a life line of authority may, unless otherwise unqualified, obtain authority to act as a life settlement broker by adding a “life settlement” line of authority to his or her insurance producer license. The addition of the line of authority shall be made on an application form as designated by the Department. A fee of fifty dollars ($50) per applicant shall be assessed to add the line of authority. Renewal of the insurance producer’s license will constitute renewal of the life settlement broker license.

4.Business entities operating as life settlement brokers must obtain a separate business entity license as a life settlement broker whether or not the business entity holds a valid insurance producer license.

5.Business entities must complete the application provided by the Department and pay the biennial license fee paid by insurance producers pursuant to Subchapter 40 Part 5 of this Chapter, Licensing and Renewal Fees.

C.Every applicant for a renewal license must submit a complete renewal application to the Department. In order to be licensed, applicants must fulfill the requirements set forth in said application and pay the applicable fee to the Department.

1.A broker shall pay the renewal fee paid by insurance producers pursuant to Subchapter 40 Part 5 of this Chapter, Licensing and Renewal Fees, biennially for renewal of the license. Failure to renew the license shall result in an automatic revocation of the license.

2.An individual insurance producer who adds licensure as a life settlement broker shall renew his or her producer license as scheduled with no change in renewal due to the addition of the life settlement line of authority.

3.Individual license renewals shall be made on the birth month of the applicant beginning in the second year of licensure. For the first license renewal the license may be effective for less than a full twenty-four months. The full application and renewal fee must still be paid as Rhode Island does not prorate fees.

4.Brokers must complete fifteen (15) hours of life settlement training on a biennial basis unless the broker is also licensed as an insurance producer. Life settlement brokers holding an insurance producer license must only complete the continuing education requirements for the producers’ license.

D.A broker that is unable to comply with license renewal procedures due to military service or some other extenuating circumstance (e.g., a long-term medical disability) may request a waiver of those procedures. The life settlement broker may also request a waiver of any requirement, fine, or other sanction imposed for failure to comply with renewal procedures.

E.The Department may contract with non-governmental entities, including the NAIC or any affiliates or subsidiaries that the NAIC oversees, to perform any ministerial functions, including the collection of fees and data, related to licensing that the Department may deem appropriate.

F.A broker may not engage in any activity requiring licensure with any person not licensed as a life settlement broker or provider whose actions would require licensure as a life settlement broker or provider.

G.Brokers are considered insurance producers and, therefore, even if they hold only the life settlement line of authority they must comply with all provisions of R.I. Gen. Laws Chapter 27-2.4 including the requirement contained in R.I. Gen. Laws § 27-2.4-23 that resident producers maintain errors and omissions insurance.

H.Brokers must comply with R.I. Gen. Laws § 27-72-6(c) and Part 7 of this Subchapter concerning non-public personal information.

I.Brokers must comply with the requirements of R.I. Gen. Laws § 27-72-9 regarding disclosure to owners. If the broker does not complete the disclosure personally, the broker must assure that the provider provides complete disclosure. The broker will be responsible for lack of compliance if the provider has not satisfied the requirements of disclosure.

J.A life settlement broker is required to disclose to the owner the following no later than the date the life settlement contract is signed:

1.The name, business address, telephone number and other contact information of the Broker.

2.A full complete and accurate description of all offers, counter-offers, acceptances and rejections relating to the proposed life settlement contract.

3.A written disclosure of any affiliation or contractual arrangements between the broker and any person making an offer in connection with the proposed life settlement contract.

4.The name and amount of compensation received by each broker involved in the transaction.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.6 Provider Licensing

A.No person may act as or hold himself or herself out as a life settlement provider without first obtaining a license from the Department.

B.Every applicant for a provider license must submit an application to the Department. Applicants must fulfill the requirements set forth in the application and pay a fee of one thousand dollars ($1,000) to the Department. The items to be filed shall include:

1.A copy of the most recent audited financial statement, or if an audited financial statement is not available, the Department may accept a financial statement certified as true and accurate by the chief financial officer of the applicant. If the provider does not have a Chief Financial Officer it must so state and be certified by the Chief Executive Officer or President. The financial statement must demonstrate suitable fiscal soundness and capacity for the life settlement provider to operate and meet its obligations.

2.A copy of articles of incorporation and by-laws of the applicant.

3.A listing of officer and directors, NAIC Biographical Affidavits for each officer, director, partner or sole proprietor and a detailed description of ownership of the provider.

4.A detailed plan of operation that addresses:

a.A description of the organizational structure of the applicant and all affiliates.

b.A description of the procedures used by the applicant to ensure that life settlement proceeds will be sent to the owner within three business days.

c.A description of the procedures used by the applicant to ensure that the insured’s identity, identification data, financial and medical information are kept confidential.

d.A description of the applicants’ anti fraud program.

e.Copies of all contracts, applications and disclosure forms intended for use in Rhode Island. These documents must include the consumer disclosure form to be used with regard to every contract entered into in Rhode Island.

C.The Department may deny, at its sole discretion, a provider application for any of the following reasons:

1.Failure to provide complete or true and accurate information requested on the application.

2.A determination that the applicant is not competent and trustworthy or does not intend to transact its business in good faith.

3.A determination that the applicant does not have a good business reputation.

4.A determination that the applicant or any officer, director or employee thereof does not have the experience, training or education to be qualified as a life settlement provider.

D.Failure to file the annual report or pay the annual fee as set forth in § 10.10 of this Part shall result in immediate suspension of the license and shall be a basis to permanently revoke the license or take whatever other action is warranted pursuant to R.I. Gen. Laws §§ 27-72-6 and 42-14-16.

E.A life settlement provider who obtains a license during a calendar year is required to file an annual report for the partial year of operation and pay the full annual report fee. Application for a partial year of licensing requires a complete application and fee as the Department does not prorate license fees.

F.The Department may contract with non-governmental entities, including the NAIC or any affiliates or subsidiaries that the NAIC oversees, to perform any ministerial functions, including the collection of fees and data, related to licensing that the Department may deem appropriate.

G.All providers shall designate an agent for service of process within the state of Rhode Island and shall keep the Department informed of any changes in that designation.

H.A provider may not engage in activities requiring licensure with any person not licensed as a broker whose actions would require licensure as a broker.

I.Providers must comply with R.I. Gen. Laws § 27-72-6(c) and Part 7 of this Subchapter concerning non-public personal information.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.7 Conduct of All Licensees

A.A broker or provider doing business under any name other than the broker or providers’ legal name is required to notify and obtain the consent of the Department prior to using the assumed name.

B.A broker or provider shall inform the Department in writing of any change of address or name within thirty (30) days of the change.

C.If a broker or provider holds a professional license, including but not limited to an insurance or life settlement license, in any other state, he or she shall immediately notify the Department if his or her license is suspended or revoked or not renewed for any reason.

1.Within thirty (30) days of the initial pretrial hearing date, the broker or provider shall report to the Department any criminal prosecution of the broker or provider taken in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing, and any other relevant legal documents.

2.Within thirty (30) days of final administrative action the broker or provider shall report to the Department any administrative action taken against the broker or provider in another jurisdiction or by another governmental agency in this state. This report shall include all relevant legal documents.

D.Licensees shall comport themselves in accordance with all Rhode Island laws and regulations issued thereunder.

E.Records shall be maintained for at least three (3) years after the date of death of the insured and shall be open to examination by the Department at all times.

F.Providers and brokers each have a separate duty to assure that a disclosure form, in compliance with R.I. Gen. Laws § 27-72-9, is delivered to and signed by the owner no later than the date of the application for the life settlement contract.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.8 Life Settlement Contract Forms, Disclosures and Advertisements Filing Requirements

A.Providers shall file with and receive approved for every life settlement contract form, application form and disclosure form to be used with regard to life settlements contracts in Rhode Island. The forms shall contain the following minimum provisions.

1.Contract Forms. Life Settlement contracts shall contain all of the following:

a.A provision setting forth the requirements of R.I. Gen. Laws § 27-72-9(a)(5) describing the owner’s right of rescission and the actions which the owner must take to exercise that right;

b.A provision stating that failure to tender the life settlement contract proceeds to the owner by the date disclosed to the owner shall render the life settlement contract voidable by the owner for lack of consideration until the time the proceeds are tendered to and accepted by the owner;

c.A provision that the contract together with the application shall constitute the entire contract between the parties.

d.If the life settlement provider has agreed to continue any supplemental benefits under the life insurance policy, a provision setting forth the terms upon which such benefits will be continued.

2.Application Forms. Applications shall contain all of the following:

a.A prominently displayed notice informing the owner of the following:

(1)Receipt of payment pursuant to a life settlement contract may affect eligibility for public assistance programs such as Medicaid, supplementary social security income, food stamps or other governmental benefits or entitlements.

(2)Receipt of payment pursuant to a life settlement contract may be taxable.

(3)Entering into a life settlement contract could limit a persons ability to purchase future insurance.

(4)If the owner is asked by another person to buy a life insurance policy or if the owner plans to buy the life insurance policy with a primary purpose of selling it to another person, then this transaction may be prohibited by Rhode Island law.

b.An acknowledgement of receipt of the consumer information booklet.

(1)The application must contain the following statement:

(AA)“Any person who knowingly presents false information in an application for insurance or life settlement contract is guilty of a crime and may be subject to fines and confinement in prison”

(BB)The warning statement shall be placed immediately above the space provided for the signature of the person executing the application and shall be printed in type which will produce a warning statement of conspicuous size.

(2)All forms requiring a signature of an owner in connection with a life settlement transaction shall contain the statement and shall be in the format as set forth in §§ 10.8(A)(2)(b)((1))((AA)) and ((BB)) of this Part.

c.Disclosure Booklet. The provider or broker shall deliver a consumer information booklet to every applicant before the application for the life settlement contract is completed, and receipt of the consumer information booklet must be acknowledged by the applicant in writing. The consumer information booklet shall, at a minimum, include the following information.

(1)A description of how life settlements operate.

(2)A statement that offers should be obtained from several life settlement providers to make sure that the applicant has a competitive offer.

(3)The name, business address, telephone number and other contact information of each person or entity involved in the transaction including the broker, producer and independent third-party escrow agent, if any, and insurer along with a description of any affiliation between any of these parties.

(4)If a broker is used in conjunction with effecting a life settlement contract, the life settlement broker is required to disclose to the owner the following no later than the date the life settlement contract is signed:

(AA)The name, business address, telephone number and other contact information of the broker.

(BB)A full complete and accurate description of all offers, counter-offers, acceptances and rejections relating to the proposed life settlement contract.

(CC)A written disclosure of any affiliation or contractual arrangements between the broker and any person making an offer in connection with the proposed life settlement contract.

(DD)The name and amount of compensation received by each broker involved in the transaction.

(5)A description of possible alternatives to life settlements, including loans secured by the cash value of the life insurance policy, withdrawing some of the cash value and reducing the death benefit of the policy to lower future premiums. If the insured under the policy is terminally or chronically ill, the owner of the policy may be able to accelerate some or all of the death benefit during the lifetime of the insured if the policy provides an accelerated death benefit, together with a statement that the owner should seek advice from an insurance producer or other professional before using the cash value of the policy.

(6)That tax consequences may result from entering into a life settlement contract and that the applicant should consult with a qualified tax advisor.

(7)That the receipt of life settlement proceeds may affect eligibility for public assistance programs such as Medicaid, supplementary social security income, food stamps or other governmental benefits or entitlements and that the owner should consult the appropriate agency for more information.

(8)That the proceeds payable to the owner may not be exempt from the owner's creditors, personal representatives, trustees in bankruptcy and receivers in state and federal courts.

(9)The fact that entering into a life settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits to be forfeited and the owners should seek assistance from a profession financial advisor.

(10)The following language: “all medical, financial or personal information solicited or obtained by a provider or broker about an insured, including the insured’s identity or the identity of family members, a spouse or a significant other, may be disclosed as necessary to effect the life settlement contract between the owner and provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two (2) years"

(11)That the owner has the right to rescind a life settlement contract from the time of execution of the contract until fifteen (15) days after its execution by all parties or receipt of the disclosure document whichever is later and a description of what steps the owner must take to exercise this option.

(12)That the proceeds will be sent to the owner within three (3) business days after the provider has received the insurers acknowledgment that ownership of the policy has been transferred and the beneficiary has been designated.

(13)That the insured’s medical, financial or other personal information may be disclosed to certain other parties if the insured has provided written consent that the life settlement provider or its authorized representative may contact the insured within a certain specified frequency for the purpose of determining the insured’s health status.

(14)That, after a life settlement provider buys a life insurance policy, the policy may be resold to other parties.

(15)That if the owner is asked by another person to buy a life insurance policy or if the owner plans to buy a life insurance policy with a primary purpose of selling it to another person, then this transaction may be prohibited by Rhode Island Law.

(16)That the owner should consult a professional financial advisor, attorney or accountant to help the owner decide if a life settlement is the most suitable arrangement for the owner.

(17)That this disclosure is being delivered as a requirement of the Rhode Island Insurance Department.

B.The Department will reject any form filed if the Department, in its sole discretion, finds any of the following:

1.Fails to meet the requirements of R.I. Gen. Laws Chapter 27-72.

2.Is unreasonable.

3.Is contrary to the interests of the public.

4.Is otherwise misleading or unfair to the owner.

C.Advertising materials must be filed with the Department and may not be utilized until approved by the Department.

1.All advertisements must:

a.Be accurate, truthful and not misleading;

b.Not solicit or otherwise promote, directly or indirectly, the purchase of a policy for the sole purpose of or with an emphasis on settling the policy.

c.Not use the words “free”, “no cost” or words of similar meaning soliciting or otherwise promoting the purchase of an insurance policy.

2.All advertisements shall be maintained by the broker and provider for a period of five (5) years after the settlement of the insurance contract and produced to the Department upon request or during examination.

D.All forms, disclosures and advertisements shall be submitted to the Department via SERFF and the applicant shall pay a filing fee of $25 per form or piece of advertising. The filing fee shall be paid by Electronic Funds Transfer (EFT) via SERFF.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.9 Denial, Nonrenewal, Suspension or Revocation of Licenses

A.The Department may deny an application for a broker or provider or revoke or suspend a license, or deny renewal of a license for the following:

1.Failing to respond to any written inquiry (including electronic communications) from the Department within fifteen (15) days of receipt of such inquiry.

2.Providing incorrect, misleading, incomplete or materially untrue information in the license application.

3.Violating any Rhode Island law or regulation, subpoena or order of the Department or of another state’s insurance commissioner.

4.Obtaining or attempting to obtain a license through misrepresentation or fraud.

5.Being convicted of a felony.

6.Having admitted or been found to have committed any unfair insurance trade practice, fraud or fraudulent life settlement act.

7.Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness or financial irresponsibility in this state or in another place.

8.Having a life settlement license or insurance producer license or its equivalent, denied, suspended or revoked in any other state, province, district or territory.

9.Forging another’s name to any document.

10.Failing to comply with an administrative or court order imposing a child support obligation.

11.Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

12.Failure to pay an assessment made by the Department.

B.In addition to any of the above basis, the Department may deny or revoke a provider license if the department finds any of the following:

1.The provider is not fiscally sound to meet its obligations.

2.The provider demonstrates a pattern of unreasonably withholding payments of owners.

3.The provider does not have the capacity to operate as a life settlement provider and meet its obligations.

4.The provider has failed to file the annual report or pay the annual fee as required in § 10.10 of this Part.

5.The provider entered into a life settlement contract on an unapproved form.

C.In the event that the action by the Department is to deny an application for or not renew a license, the Department shall notify the applicant or licensee, in writing, the reason for the denial or non-renewal of the license. The applicant or licensee may make written demand upon the Department within ten (10) days for a hearing before the Department to determine the reasonableness of the Department’s action.

D.The license of a business entity may be suspended or revoked if the Department finds that an individual licensee’s violation was known or should have been known by one or more of the partners, officers or managers acting on behalf of the business entity and the violation was neither reported to the Department nor corrective action taken.

E.In addition to or in lieu of any applicable denial, suspension or revocation of a license, a person may, after hearing, be subject to a fine and/or any other appropriate remedies according to R.I. Gen. Laws § 42-14-16.

F.The Department shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by R.I. Gen. Laws Chapter 27-72, R.I. Gen. Laws § 42-14-16 and/or this Part against any person who is under investigation for or charged with a violation even if the person’s license or registration has been surrendered or has lapsed by operation of law.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10. 10 Provider Reporting Requirements

A.Each provider must file a report on an annual basis reporting information for the previous calendar year no later than March 1 of the succeeding year.

1.The first report is due on March 1, 2011 and will reflect the information for each provider from the effective date of R.I. Gen. Laws Chapter 27-72 to December 31, 2010.

B.The annual report shall be on a form designated by the Department and shall require disclosure of the following information regarding settlement of life insurance contracts issued to Rhode Island residents in the preceding year and settled within five (5) years of policy issuance.

1.Total number of policies settled.

2.Aggregate face amount of those policies.

3.Life settlement proceeds of those policies.

4.A breakdown by policy issue year.

5.The insurance companies whose polices were settled.

6.The identity of the brokers who participated in the settlement transactions.

C.With each annual filing a life settlement provider must pay a fee of five hundred dollars ($500) regardless of whether the provider has been licensed for the full year or a partial year prior to the report.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.11 Assessments

A.The Department may assess brokers and providers for the following:

1.To review contract forms and disclosures filed with the Department.

2.To review advertisements filed with the Department.

3.To review the annual report filed with the Department by providers pursuant to § 10.10 of this Part.

B.The Department shall make such assessments as it, in its sole discretion, deems necessary. For a particular activity the Department may choose to assess by any one or combination of the following methods:

1.Assess all participants in the life settlement market by market share determined by the number of or value of life settlement contracts in a given calendar year.

2.Assess all participants in the market equally.

3.Assess all providers and/or all brokers by either method.

4.Assess an individual licensee or a designated group of licensees.

C.The Department shall, in arriving at a determination of a method to be used, consider the purpose of the assessment and the licensees effected.

D.The Department has the discretion not to make an assessment; to assess less than all of the subjects it is authorized to assess and/or to assess on some occasions and not on others and no such action shall be a basis for objection to any future assessment.

E.The Department will bill the licensee thirty (30) days prior to the due date of an assessment by whatever means the department determines to be expedient.

F.Failure to pay an assessment within thirty (30) days or failure to pay examination fees assessed per R.I. Gen. Laws § 27-72-7(a), (e) and (k) shall be grounds for suspension or revocation of the license or for whatever additional and further administrative penalties are warranted pursuant to R.I. Gen. Laws § 42-14-16.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

230-RICR-20-60-10 § 10.12 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2010-07-01 to 01/04/2022
Technical Revision — effective from 2010-07-01 to 07/01/2010
Adoption — effective from 2010-07-01 to 07/01/2010

Chapter 30 Commercial Licensing

Subchapter 05 Auto Body

230-RICR-30-05-1 Automobile Body Shop Storage Rates

230-RICR-30-05-1 § 1.1 Authority

This Part is promulgated by the Department of Business Regulation (“Department”) pursuant to the authority granted in R.I. Gen. Laws § 5-38-27.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-1 § 1.2 Purpose

A.The purpose of this Part is to:

1.Provide definitions for terms related to the imposition of storage fees;

2.Establish reasonable maximum rates that may be charged by automobile body repair shops licensed pursuant to R.I. Gen. Laws § 5-38-1 et seq. for storage of automobiles;

3.Clarify different categories of storage fees and charges; and

4.Provide standard procedures for the notice and imposition of storage fees.

B.This Part applies to all automobile body repair shops licensed by the Department. This Part does not apply to non-consensual tows prior to the owner of the automobile signing an authorization to repair the vehicle. This Part does not require an automobile body repair shop to charge for storage nor does it prohibit an automobile body repair shop from charging less than the maximum rates established herein.

C.The purpose of this Part is also to provide insurers subject to R.I. Gen. Laws Title 27 with information and criteria for the imposition of storage fees and charges by licensed automobile body repair shops. While insurers must comply with Part 20-40-2 of this Title, any issues related to the payment of storage fees by insurers and the determination of unfair claims settlement practices must be directed to the Insurance Division of the Department for processing consistent with the statutes, regulations, and policies of the Insurance Division. Any violation of this Part by automobile body repair shops is subject to enforcement under § 1.9 of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-1 § 1.3 Definitions

A.“Day” means each calendar day in which the vehicle is on the premises of the automobile body repair shop for eight (8) hours or more.

B.“Storage” means vehicles stored in a secured, lighted area surrounded by a six-foot or higher fence, with a reasonable and operational security system.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-1 § 1.4 Maximum Rates of Storage

The maximum rates of Storage that may be charged by an automobile body repair shop for storage of a vehicle shall be consistent with the storage rate set for vehicle storage by the Division of Public Utilities and Carriers (“DPUC”) pursuant to its jurisdiction over tow away motor vehicle operations under R.I. Gen. Laws Chapters 39-12 and 39-12.1.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-1 § 1.5 Storage Charges Prohibited for Repaired Vehicles

A.Automobile body repair shops shall not charge Storage fees for vehicles to which repairs have been completed, unless the automobile body repair shop complies with §§ 1.5(B)(1) through 1.5(B)(3) of this Part.

B.Storage fees may only be charged for a vehicle to which repairs have been completed provided that:

The automobile body repair shop has given written notice to the vehicle owner, sent certified mail return receipt requested, of the completion of repairs, and of the automobile body repair shop’s right to charge Storage fees seven (7) days after the owner or a household member received notice as indicated by the return receipt of certified mail;
Storage fees shall commence on the seventh (7th) day after the owner or a household member received the written notice evidenced by return receipt from the post office;
If eight (8) days after receiving written notice from the automobile body repair shop as required in § 1.5(B)(1) of this Part, the owner has failed to contact the automobile body repair shop, then the automobile body repair shop must make all reasonable efforts to advise the title lienholder(s) of the vehicle in writing of the status of the vehicle.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-1 § 1.6 Storage for Totaled and Partially Repaired Vehicles

A.For a vehicle declared a total loss as a result of an insurer’s initial appraisal inspection, an automobile body repair shop may charge Storage fees.

B.Such Storage fees shall not be charged for any days on which the automobile body repair shop failed to permit an insurance carrier to conduct an appraisal inspection of the vehicle within three (3) business days after the insurance company’s oral or written request for such inspection.

C.For a vehicle declared a total loss as a result of an insurer’s supplemental appraisal inspection, an automobile body repair shop may charge Storage fees under the following circumstances:

1.If it has commenced repairs to a vehicle, after an appraisal completed by either an insurance company or its agent, and the vehicle is later deemed to be a total loss as a result of a supplemental appraisal by the insurer.

In such circumstances as described in § 1.6(C)(1) of this Part, Storage fees shall commence two (2) business days after the automobile body repair shop has requested a supplement in any reasonable manner required by the insurer, which supplement caused the vehicle to be deemed a total loss.

3.If an insurance company fails to complete the supplement within two (2) business days of proper notification by the shop, the shop may begin to charge Storage fees after the two (2) business days after the supplement was initially requested.

Storage fees may be disallowed for any days on which the automobile body repair shop failed to permit an insurance carrier to conduct an appraisal inspection of the vehicle within the three (3) business days after the insurance company’s oral or written request for such inspection.

5.An automobile body repair shop shall not charge Storage fees for days the shop performs any partial repairs of a vehicle.

D.For a vehicle declared a total loss for which no insurance company is responsible for payment of the loss, the repair shop must make all reasonable efforts to give written notice of the status of the vehicle to the title lienholder(s).

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-1 § 1.7 Insurance Representatives

A.Insurance representatives shall be allowed access by an automobile body repair shop to inspect any vehicle for photographs and vehicle identification number checks; an automobile body repair shop must permit such access within four (4) hours of such request.

B.Insurance representatives must be allowed, with or without appointment, to make an appraisal inspection of any vehicle as soon as practically possible, but in any event, not more than three (3) days following the insurance representative’s written or oral request to inspect. Storage fees may not be charged for more than three (3) days, if a vehicle is not made available for inspection within three (3) days of a request to inspect. Storage may not be charged for any day occurring between the day the insurance representative seeks access to the vehicle to make an appraisal inspection, and the day the automobile body repair shop permits the insurance representative to enter and conduct the appraisal inspection. For example, if the insurance representative seeks a Monday appointment and is not permitted on the premises to make an appraisal until Wednesday, the automobile body repair shop may not charge a Storage fee for Tuesday. If the insurance representative is unavailable before Wednesday, then Tuesday’s Storage fee may be charged.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-1 § 1.8 Stolen Vehicles

Upon obtaining custody of a stolen vehicle, an automobile body repair shop must send written notice, via registered mail, to the owner or insurer of the vehicle, that it has custody of the vehicle.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-1 § 1.9 Enforcement

Any violation of this Part by an automobile body repair shop shall be enforced by the Department pursuant to its authority under applicable law.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-1 § 1.10 Severability

If this Part or its application to any individual, entity, or circumstance is held to be invalid, such invalidity, shall not affect other provisions or application of this Part, which can be given effect without the invalid provision, and application, and to this end the provisions are declared to be severable.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2019-05-26 to 01/04/2022
Technical Revision — effective from 2009-09-24 to 05/26/2019
Technical Revision — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-09-24 to 09/24/2009
Amendment — effective from 2009-02-26 to 09/24/2009
EMERGENCY RULE Amendment — effective from 2009-02-25 to 09/24/2009
Periodic Refile — effective from 2001-12-19 to 02/26/2009

230-RICR-30-05-3 Motor Vehicle Glass Repair

230-RICR-30-05-3 § 3.1 Authority

This regulation is promulgated pursuant to the authority granted in R.I. Gen. Laws § 5-38.5-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.2 Purpose

The purpose of this Regulation is to establish standards and procedures for the issuance of Licenses for Motor Vehicle Glass Repair and Replacement, and to generally assist the Department in carrying out the administration and enforcement of the terms and provisions of the Act so that the public interest may be effectively served.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.3 Definitions

A.Terms defined in R.I. Gen. Laws § 5-38.5-3 are incorporated herein by reference unless modified herein.

B.For the purposes of these regulations, except as provided below, the following terms shall have the following meanings:

1.“Act” means R.I. Gen. Laws § 5-38.5-1 et seq., as amended.

“Aftermarket part,” as defined in R.I. Gen. Laws § 27-10.2-1, means a motor vehicle body replacement part, including a motor vehicle glass replacement part, that is not an original equipment manufacturer part.

3.“Agent” means an individual or group of individuals authorized by another to act on his, her or its behalf.

“Applicant” means a Person filing an application for a License.
“Department” means the Department of Business Regulation.
“Director” means the Director of the Department of Business Regulation.

7.“Licensee” means a Person holding a License.

“License” means a Motor Vehicle Glass Repair License issued by the Department to a Person engaged in the business of Motor Vehicle Glass Repair. However, automobile body repair shops that are licensed by the Department, pursuant to R.I. Gen. Laws § 5-38-1 et seq., are not required to have a Motor Vehicle Glass Repair License to conduct motor vehicle glass repair or replacement.

9.“Location,” as defined in R.I. Gen. Laws § 5-38.5-8, means any physical place of business at which a licensed motor vehicle glass repair shop has indoor facilities suitable to perform motor vehicle glass repair and replacement services, and shall not apply to locations where a licensed motor vehicle glass repair shop provides services on a mobile basis.

10.“Mobile service van” means any vehicle used by a motor vehicle glass repair shop.

“Motor vehicle” means any automobile, truck or other self-propelled vehicle of any type.

12.“Motor vehicle glass repair” means the business or act of repairing or replacing damaged or undamaged glass in motor vehicles for compensation.

13.“Motor vehicle glass repair shop” means a person or entity that, for compensation, or with the intention or expectation of receiving the same, repairs or replaces, or undertakes to repair or replace, motor vehicle glass, whether at a physical place of business or through a mobile-only service.

14.“Original equipment manufacturer part” or “OEM part,” as defined in R.I. Gen. Laws § 27-10.2-1, means a motor vehicle body replacement part manufactured by the manufacturer of the motor vehicle being repaired.

“Person” means any individual, association, partnership, firm, corporation, limited liability company, sole proprietorship, public or private association or any other legal entity, however formed, including the officers, directors and employees of any such entity.

16.“Repair bill,” as defined in R.I. Gen. Laws § 5-38.5-13, means the record that a Licensee must maintain for each motor vehicle upon which motor vehicle glass repair services were performed, not the information required to be produced to the consumer.

17.“Technician” means any individual employed (including owners, partners, independent contractors, and all other individuals whether paid or unpaid) by a motor vehicle glass repair shop who performs repairs or replaces motor vehicle glass.

18.“AGSC” means the “Auto Glass Safety Council.”

19.“AGRSS” means the “Auto Glass Replacement Safety Standard,” which is developed by AGSC and approved by ANSI.

20.“ANSI” means the “American National Standards Institute.”

21.“NWRA” means the “National Windshield Repair Association.”

22.“ROLAGS” means the “Repair of Laminated Automotive Glass Standard,” which is developed by NWRA and approved by ANSI.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.4 Licenses

A.License Required. No Person may engage in the business of Motor Vehicle Glass Repair without first obtaining a License from the Department, unless exempted by § 3.6(E) of this Part. All Licenses shall have a term of not more than three (3) years before a renewal application is required.

B.Application. Every Applicant for a License or renewal of an existing License must submit to the Department the following:

The completed application form adopted by the Department;

2.The name and address of the Applicant and, if the Applicant is not in charge of the operations, identify at least one natural person who is in charge of the operations on behalf of the Applicant;

3.The name and address of any person having a financial interest, direct or indirect, in the business to be conducted by the Applicant;

4.A designation of the person and address, including an electronic mail address, where the Department may send notices;

5.The license fee of three hundred dollars ($300.00) for each year the License is to be issued, with the total fee for the entire term of the License to be paid at the time of application for the License or renewal;

Evidence of financial responsibility, as further detailed in § 3.4(D) of this Part below;
Certification, under the penalty of perjury, that all technicians are certified as required by § 3.8 of this Part;

8.Certification, under the penalty of perjury, that the Applicant possesses and maintains in working order the equipment necessary:

a.To perform motor vehicle windshield glass stone chip repair; and

b.To perform motor vehicle glass replacement services.

9.Certification, under the penalty of perjury, of all required local, state and federal licenses and permits, including a state sales tax identification number and a federal tax identification number.

10.For new or transfer applicants ONLY, evidence of compliance with state and local zoning, fire, health and safety laws and regulations;

11.If using a mobile service van, whether on a mobile-only basis or as an extension of a physical location, evidence of registration and insurance as a commercial vehicle for each such van; and

12.If providing motor vehicle glass repair services on a mobile-only basis, evidence of access to indoor facilities (licensed or subject to regulation under R.I. Gen. Laws Chapters 5-38, 5-38.3, & 5-38.5, or Chapter 31-5).

C. Multiple Locations. If an Applicant or Licensee desires to do business in more than one location, the Applicant or Licensee shall submit a separate License application for each location and pay a separate fee of three hundred dollars ($300.00) per year for each location authorized by the Department.

D.Change of Location. Any change in the business location requires the Licensee to apply to the Department for transfer of the License to the new location.

E. Evidence of Financial Responsibility. Each Applicant shall furnish to the Director and maintain during the term of the License a certificate of insurance issued by an insurance company authorized to transact business in this state showing that the Applicant has a policy insuring him, her or it against liability for injury to persons and damage to property which may be caused by the operation of the business or the operation of non-owned automobiles. Such policy shall provide for:

1.Bodily injury and property damage liability in the amount of not less than three hundred thousand dollars ($300,000) per occurrence; AND

2.Garage keepers legal liability, including comprehensive and collision for damage to customers’ vehicles, in the amount of not less than fifty thousand dollars ($50,000) per occurrence.

3.Such insurance shall be non-cancelable by either party to the contract, except with five (5) days prior written notice to the Department furnished by the Licensee. Licensee shall also instruct the insurance company that issued the policy to send written notice to the Department at least five (5) days prior to any cancellation of the contract at the following address:

Rhode Island Department of Business Regulation

Division of Commercial Licensing, Attn: Auto Glass

1511 Pontiac Ave, Bldg. 69

Cranston, RI 02920

4.Cancellation shall be effective not sooner than five (5) days after receipt of said notice by the Department from the Licensee or insurance company, whichever is earlier. Any Licensee subject to such insurance cancellation shall obtain a replacement insurance policy and shall furnish to the Director a certificate of insurance evidencing new insurance coverage sufficient to meet the requirements listed above.

F.Display of License and License number - Advertisements.

1.Every Licensee must conspicuously display the License issued by the Department at the location listed on the License.

2.The License number shall appear on all signs and business communications including, estimates, business cards, receipts and any other written documentation, whether delivered by paper or electronically, relating to that business within the state of Rhode Island.

3.All advertisements that originate in Rhode Island or specifically target Rhode Island consumers shall include the License number.

4.The Department encourages Licensees to include the License number on all Mobile Service Vans, but it is not required.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.5 Records Retention and Repair Bills

A.Records Retention. Pursuant to R.I. Gen. Laws § 5-38.5-13, every Licensee shall maintain records for each motor vehicle repaired as outlined in the Act for thirty-six (36) months or for so long as a warranty on the motor vehicle glass repair service performed is in effect, whichever is longer.

B.Notification to Consumer. Upon completion of any motor vehicle glass repair or replacement, the Licensee shall notify each consumer in writing of post-repair practices and the appropriate drive-away time that may be necessary to ensure safe operation of the vehicle.

C.Repair Bills for Each Motor Vehicle. Every Licensee shall record the following information as the Repair Bill for each motor vehicle upon which motor vehicle glass repair or replacement services have been performed. The Repair Bill is for the Licensee’s record keeping and does not have to be provided to the consumer, but shall be provided upon request of a consumer or the Department. The Repair Bill shall include:

1.License Number. The motor vehicle glass repair shop license number, and the license number of any other facility where motor vehicle glass repair services are performed on the motor vehicle.

2.Itemized List of Parts and Adhesives. An itemized listing of all parts used, including all: glass parts; major accessory parts, including moldings and major hardware component parts; and the adhesive system used in the motor vehicle glass repair or replacement.

3.Adhesive Product Identification. Brand, product number or name and lot and batch numbers for the adhesive system product used.

4.Certification. A certification, under the penalties of perjury, that the repairs to a particular vehicle have actually been made and were completed by a licensed shop and certified technician(s) as required by § 3.8 of this Part.

5.Notification to Consumer. A copy of the notice given to consumer in § 3.5(B) of this Part above.

D.Detailed Disclosure of Costs to Consumer – Upon Request. Upon the request of the consumer, irrespective of whether the amount is paid by the consumer or billed to the consumer’s insurance company, a Licensee shall disclose all information relating to the charges for repair or replacement services, including:

1.Amount of the charges;

2.Specific identification of line-item charges for the parts provided; and

3.Verification of the parts used.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.6 Miscellaneous

A.Change of Address. Written notice shall be given to the Department by each Licensee within fourteen (14) days of any change in mailing address, electronic mail address, or any other change in contact information reported on the most recent application. Note that a change in business address, ownership or management would require a Transfer Application or other additional information to be submitted.

B.Licenses are Not Transferable. A License shall be granted only to the Applicant. The License is not subject to transfer, assignment or leasing to another Person without prior application to, and approval from the Department.

C.Licensee Ceases Operations. When a Licensee ceases operating the business of Motor Vehicle Glass Repair, the Licensee must return the original License to the Department within fifteen (15) days of ceasing such operations.

D.Licensee Limitations. No Licensee shall be permitted to perform automobile body repair shop work or to advertise or represent in any form or manner that such Licensee is licensed to perform automobile body repair shop work, other than Motor Vehicle Glass Repair, unless such Licensee also has an automobile body repair shop license issued by the Department pursuant to R.I. Gen. Laws § 5-38-1 et seq.

E.Exception for Licensed Auto Body Repair Shops. Any Person who possesses an automobile body repair shop license from the Department, pursuant to R.I. Gen. Laws § 5-38-1 et seq., shall not be required to hold a License in order to perform Motor Vehicle Glass Repair.

F.Aftermarket Parts on Newer Vehicles. Pursuant to R.I. Gen. Laws § 27-10.2-1 et seq., entitled “Motor Vehicle Body Replacement Parts,” Licensees shall not use aftermarket parts in Motor Vehicle Glass Repair on any Motor Vehicle less than thirty (30) months beyond the date of manufacture without the written consent of the Person who owns the Motor Vehicle as required by this statute.

G.Licensee Responsible for Acts of Agents. Pursuant to R.I. Gen. Laws § 5-38.5-14, each Licensee shall be responsible for the acts of any salesperson or any person acting as an agent of that Licensee, and for the acts of any salesperson, estimator, or other employee acting as the agent for that Licensee.

H.Corporate Licensee. Pursuant to R.I. Gen. Laws § 5-38.5-14, if a Licensee is a firm or corporation, it is sufficient cause for the suspension or revocation of a License that any officer, director, or trustee of the firm or corporation, or any member in the case of a partnership, has been found by the Department guilty of any act or omission that would be cause for refusing, suspending, or revoking a License to that party as an individual.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.7 Complaints/Hearings

A.Complaints. All complaints against Licensees or other Persons for violations of this Regulation or the Act shall be investigated by the Department. In furtherance thereof, the Department shall notify the Licensee or Person in writing of the Department's receipt of the complaint, enclosing a copy thereof. The Licensee or Person shall within ten (10) days from the date of the Department's letter to the Licensee file with the Department a written answer to the complaint. The Department shall review the answer and submit a copy thereof to the complainant for further response, if necessary. Upon receipt of the response, the Department will then evaluate the complaint and response thereto and the matter will be handled in compliance with the Department's applicable procedures and regulations for such matters. The Department may, upon its own motion, with or without a complaint, notice a hearing for the purposes of further investigating whether to sanction a Licensee or other Person.

B.Hearings. The notice for and conduct of any hearings held pursuant to this Regulation or Act shall be governed by the applicable provisions of the Act, the Department's Rules of Procedure for Administrative Hearings (Part 10-00-2 of this Title) and the Rhode Island Administrative Procedures Act (R.I. Gen. Laws § 42-35-1 et seq.).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.8 Technician Certification

A.Requirements. Upon submission of a new or renewal application for a License, each Applicant must certify under the penalty of perjury to the Department that all Technicians, as defined in § 3.3(B)(17) of this Part above, in its employ are certified (by means of the successful completion of trainings, coursework and/or tests) in the following areas:

1.Motor vehicle glass repair and replacement;

2.AGSC Technician Certification or equivalent; and

3.Adhesives.

B.Certification Documentation. All Licensees must maintain evidence of compliance with § 3.8(A) of this Part for each Technician in its employ. Such documentation must include the Technician’s transcript and related documentation, and must be readily available. All Technician certifications must be maintained and current throughout the term of the License. Upon receipt of a written demand from the Department or during an on-site examination, the Licensee must be able to provide such documentation within three (3) business days of the request.

C.Licensees shall ensure that their technicians renew and update certifications every three (3) years or as required by AGSC or equivalent provider to stay current with industry safety standards and changes in technology.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.9 Safety Standards

Licensees shall implement safety standards for motor vehicle glass repair and replacement that are consistent with: the original equipment manufacturer instructions and directions; the current Auto Glass Replacement Safety Standard (“AGRSS”); and the current Repair of Laminated Automotive Glass Standard (“ROLAGS”).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.10 Penalties for Violations

Any Licensee or other Person who fails to comply with the provisions of this Regulation or the provisions of the Act may be subject to any of the penalties, administrative, civil and criminal, as outlined in the Act.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-3 § 3.11 Severability

If this Regulation, or the application thereof to any Person or circumstance, is held to be invalid such invalidity shall not effect other provisions or application of this Regulation which can be given effect without the invalid provision or application, and to this end the provisions are declared to be severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2017-01-25 to 01/04/2022
Technical Revision — effective from 2017-01-25 to 01/25/2017
Technical Revision — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2017-01-25 to 01/25/2017
Amendment — effective from 2015-03-19 to 01/25/2017
Periodic Refile — effective from 2001-12-19 to 03/19/2015

230-RICR-30-05-4 Automobile Body Shop On-Site Inspection Standards

230-RICR-30-05-4 § 4.1 Authority

This regulation (“Regulation”) is promulgated by the Department of Business Regulation (“Department”) pursuant to the authority granted in R.I. Gen. Laws §§ 5-38-2, 5-38-7, 5-38-26, and 42-14-17, and Parts 30-05-1 and 30-05-2 of this Title.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.2 Purpose

A.The purpose of this Regulation is to:

Provide definitions for terms related to automobile body shop conduct during on-site inspections of vehicles;

2.Establish on-site inspection standards relating to automobile body shop conduct during inspection, initial and supplemental motor vehicle damage appraisal, reinspection, and any other reasonable contact by an insurance representative related to the appraisal and/or inspection of the vehicle at issue; and,

3.Provide guidelines and standards to promote efficient and professional on-site inspections of vehicles.

B.This Regulation applies to all automobile body repair shops licensed by the Department and applies to every On-Site Visit by an Insurance Representative.

C. This Regulation also provides a submission process (a non-complaint mechanism) to allow Insurance Representatives to inform the Department of any alleged violations of this Regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.3 Definitions

A."Insurance Representative" means any agent duly authorized by an Insurance Company with potential liability related to a claim, a motor vehicle damage appraiser licensed pursuant to R.I. Gen. Laws § 27-10.1-1 et seq. seeking to appraise or inspect a vehicle, or a claim adjuster licensed pursuant to R.I. Gen. Laws § 27-10-1 et seq.

B."On-Site Visit" means any time in which an Insurance Representative appears at an automobile body repair shop for the purpose of inspecting, appraising, supplementally appraising, or re-inspecting a vehicle in the possession of an automobile body repair shop.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.4 Minimum Space Requirements

Unless the vehicle is damaged such that it cannot be moved in advance, there shall be a minimum of two and one half (2 ½) feet of unobstructed space around each of the four (4) sides of the vehicle to facilitate movement of the Insurance Representative, lien-holder and/or owner and allow sufficient space for the taking of photographs and views of vehicle. This section shall apply to vehicle identification number (“VIN”) checks pursuant to § 4.8(A) and (B) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.5 Lighting Requirements

If the area in which the vehicle is located is equipped with lights, the lighting shall be maintained and available throughout the appraisal process during normal business hours of the shop. The Insurance Representative shall be permitted to bring his or her own portable lighting.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.6 Access to Vehicle

An automobile body repair shop shall allow an Insurance Representative the opportunity to appraise/inspect the damaged vehicle. The vehicle to be appraised/inspected must be unlocked or the keys must be readily available to the appraiser if the automobile body repair shop has custody of the keys. Access to all compartments, including the engine compartment, of the vehicle relative to the damage must be allowed. If an Insurance Representative requests that the automobile body repair shop create access to a compartment of a vehicle, the shop may submit charges for said collision access time to the Insurance Representative.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.7 Non-Interruption of Inspection/Appraisal

Automobile body repair shops shall not terminate an appraisal or inspection from the time it begins until it is completed by the motor vehicle damage appraiser or other Insurance Representative during the normal business hours of the shop. Unless it becomes impractical whether due to unavailability of required information or for other good explained reason.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.8 Appointments

A.Insurance Representatives shall be allowed to inspect any vehicle for photographs and vehicle identification number checks; an automobile body repair shop must permit such access within four (4) hours of such request.

B.Insurance Representatives must be allowed with or without appointment, to make an appraisal inspection of any vehicle as soon as practically possible, but in any event, not more than three (3) days following the insurance representative’s written or oral request to inspect.

C.Given that Insurance Representatives are expected to contact the automobile body repair shop in advance to establish an opportunity for an appraisal inspection visit pursuant to Part 20-50-3 of this Title, automobile body repair shops shall accommodate such requests as soon as practical, with the motor vehicle damage appraisal to occur no later than three (3) business days form the date of the request. The automobile body repair shop shall not unduly delay the Insurance Representative when the Insurance Representative arrives for the appointment. This section shall apply to an inspection by an expert designated by an insurance company and expressly approved by a vehicle owner or their legal representative.

D.Automobile Body Repair Shops are only required to produce invoices and receipts of repair work upon a request for reinspection pursuant to R.I. Gen. Laws § 27-10.1-9 not an inspection request to assess supplemental damage.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.9 Automobile Body Shop Conduct During Motor Vehicle Damage Appraisal Visit

Automobile body repair shop personnel shall conduct themselves in a professional manner by fair and honorable dealings and shall refrain from intimidation, threats, and/or from offering or paying gratuities or inducements to Insurance Representatives.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.10 Supplemental Inspection by Non-Initial Inspection Appraiser

Automobile body repair shops must allow motor vehicle damage appraisals for supplemental appraisals to be performed by a motor vehicle damage appraiser who did not perform the initial appraisal on the claim.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.11 Tracking of Time Related to Inspection/Appraisal

In the event that a vehicle has been disassembled, the insurance company may require the automobile body repair shop to re-assemble the vehicle. The automobile body repair shop shall keep a record of all time related to dismantling, collision access time, and re-assembly of vehicles and shall submit charges for reasonable time. The automobile body repair shop shall provide said records to the Insurance Representative if necessary to support payment for said time.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.12 Enforcement

Any violation of this Regulation by an automobile body repair shop shall be enforced by the Department pursuant to its authority under applicable law.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.13 Submissions Regarding Statutory/Regulatory Violations

A.Submissions by Insurance Representatives regarding violation(s) of this Regulation by an automobile body repair shop licensee, shall be presented in writing to the Department subject to the following:

1.Such submissions will be processed by the Department in its discretion if the Department believes reasonable cause exists to investigate the allegations.

2.Such submissions shall provide documentary evidence of alleged violations which substantiate the allegations with specific reference to both statutory and regulatory sections at issue.

3.If the submissions made by Insurance Representatives provide evidence of statutory and/or regulatory violations, the Department may prosecute said issues pursuant to its authority to initiate Departmental Hearings pursuant to Part 10-00-2 of this Title.

4.Such submissions may, and are encouraged to, combine allegations of multiple violations in one correspondence.

B.Any abuse of the process under this Part by Insurance Representative(s) shall result in a bar of the ability of that Insurance Representative and its affiliated Insurance Company to file any future submissions under this Part. Said bar shall be at the discretion of the Director.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 § 4.14 Severability

If this Regulation or its application to any individual, entity, or circumstance is held to be invalid, such invalidity, shall not effect other provisions or application of this Regulation, which can be given effect without the invalid provision, and application, and to this end the provisions are declared to be severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-4 Automobile Body Shop On-Site Inspection Standards

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2009-02-26 to 01/04/2022
Adoption — effective from 2009-02-26 to 02/26/2009

230-RICR-30-05-5 Auto Wrecking and Salvage Yards (formerly Commercial Licensing Regulation 6)

230-RICR-30-05-5 § 5.1 Authority

This regulation (“Regulation”) is promulgated pursuant to the authority granted in R.I. Gen. Laws §§ 42-14.2-2, 42-14.2-5.1, and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

230-RICR-30-05-5 § 5.2 Purpose

The purpose of this Regulation is to establish standards and procedures for the issuance of Auto Wrecking and Salvage Yard licenses and to generally assist the Department in carrying out the administration and enforcement of the terms and provisions of R.I. Gen. Laws § 42-14.2-1 et seq. so that the public interest may be effectively served.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

230-RICR-30-05-5 § 5.3 Definitions

A.“Act” means R.I. Gen. Laws § 42-14.2-1 et seq.

B.“Applicant” means a Person filing an application or a renewal application for an Auto Wrecking and Salvage Yard license.

C.“Auto Wrecking Yard” or “Auto Salvage Yard” is as defined in R.I. Gen. Laws § 42-14.2-1(b).

D."Department" means the Department of Business Regulation.

E."Director" means the Director of the Department.

F.“License” means that license from the Department issued to a Person engaged in the operation of an Auto Wrecking and Salvage Yard business.

G.“Licensee” means a Person holding a License.

H.“Person” means any individual, partnership, corporation, limited liability company, sole proprietorship, or any other legal entity, however formed.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

230-RICR-30-05-5 § 5.4 License

A.The application and licensing form shall contain sufficient data to fully disclose to the Department the scope of work and the business activities conducted at the location, reflect full ownership by all corporations and persons, indicate the names and addresses of all employees and provide other data on the business as required by the Department as in the public interest.

B.No Person may engage in the business of operating an Auto Wrecking and Salvage Yard without first obtaining a License from the Department.

C.The term of each License shall be for not more than three (3) years before a renewal application is required.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

230-RICR-30-05-5 § 5.5 Application For License

A.Every Person seeking a License shall file a written application with the Director on a form prescribed by the Director which application shall include but is not limited to the following:

1.The completed application form adopted by the Department.

2.All new and renewal applications filed with the Department subsequent to the effective date of the Regulation shall be accompanied by the required fee, proof of a bond in the amount of ten thousand ($10,000), and other documents, if any, as required by the Director. Such bond shall be written by a surety company approved by the Director.

All new and renewal applications shall be accompanied by a document from the city or town where the Auto Wrecking and/or Salvage Yard is to be operated verifying adherence and compliance with the town's or city's zoning requirements.

4.All new and renewal applications shall be accompanied by a document from the city or town where the Auto Wrecking Yard and/or Salvage Yard is located evidencing proof of compliance with R.I. Gen. Laws § 5-21-1 et seq. as set forth in R.I. Gen. Laws § 42-14.2-8(1). If the city or town where the Auto Wrecking and/or Salvage Yard is located does not issue licenses under the provisions of R.I. Gen. Laws § 5-21-1 et seq., the Applicant must conform with the requirements of R.I. Gen. Laws § 42-14.2-8(2).

5.All information as required in R.I. Gen. Laws § 42-14.2-1 et seq.

B.All licensees seeking to renew a License must file a renewal application with the Department every three (3) years. The renewal application shall be made to the Department not less than thirty (30) days before the expiration of the License.

C.Every application to the Department for renewal of an existing License or the issuance of a new License shall be accompanied by a fee of one hundred and eighty dollars ($180.00), payable to the General Treasurer, State of Rhode Island. If the application is denied, the fee shall be returned to the Applicant. The License fees shall be pro-rated for the first License term, consideration being given to the unexpired term of the existing license.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

230-RICR-30-05-5 § 5.6 Denial, Revocation or Suspension of License

A. The Department may deny an application for a License or revoke, suspend, or deny renewal of a License for any of the reasons set forth in R.I. Gen. Laws § 42-14.2-9 and for the following:

1.Failing to respond within ten (10) days to provide information requested by the Department as a result of a formal or an informal complaint to the Department which alleges a violation(s) of either the Act or the Regulation.

2.Engaging in any conduct while engaged in the operation of an Auto Wrecking and Salvage Yard that demonstrates bad faith, dishonesty, untrustworthiness, or incompetency.

3.Violating an order of the Department.

4.If an employee or manager or owner of an Applicant or Licensee has engaged in any the following activities so that the Applicant or Licensee is unfit to do business and/or it impacts the Applicant’s or Licensee’s financial status and/or it impacts the Applicant’s or Licensee’s business integrity:

a.Said individual has been convicted of any criminal felony involving dishonesty, breach of trust, forgery, embezzlement, obtaining money under false pretenses, bribery, larceny, extortion, conspiracy to defraud, fraud, false dealing or any similar offense(s); or

b.Said individual has had a License revoked or suspended or an application for a License denied or any other license issued by this State revoked or suspended or an application for such denied.

5.Jeopardizing public health, safety, or welfare.

6.Failing to supervise employees.

B.The procedure for suspension, revocation, denial of a renewal, denial of an application, or emergency suspension of a License shall be pursuant to the Administrative Procedures Act, R.I. Gen. Laws § 42-35-1 et seq., and the Department's Rules of Procedure for Administrative Hearings, Part 10-00-2 of this Title.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

230-RICR-30-05-5 § 5.7 Bond

The liability of the surety on the bond shall be limited to indemnify the claimant only for his actual damage or loss. Such bond shall not limit or impair any right or recovery otherwise available pursuant to law, nor shall the amount of the bond be relevant to determining the amount of damage, loss or other relief to which any claimant shall be entitled. The bond shall be accessible only after all other remedies have been exhausted.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

230-RICR-30-05-5 § 5.8 Records and Reports

A.Every Licensee shall maintain accurate and up-to-date records with respect to all vehicles and motor vehicle parts purchased and sold. Such records must be maintained and available on the premises for inspection. Such records shall include all items delineated in R.I. Gen. Laws § 42-14.2-14.

1.The Licensee shall maintain and make available for inspection the following information for any vehicles purchased or sold, or any motor vehicle body part(s) or major component(s) purchased or sold, including:

a.Date of acquisition;

b.Name and residence of person from whom acquired;

c.Vehicle identification number;

d.Date of sale;

e.Make, model and year of vehicle;

f.Color;

g.Type of title;

h.Disposition;

i.Date of disposition;

j.Purchaser; and

k.Purchaser's method of identification.

B. Records for all motor vehicle parts purchased and disposed of in any way must be maintained and available on the premises for inspection purposes.

C.The Licensee or his or her or its employee shall verify from the seller of a vehicle or parts from a vehicle his or her or its identity through an operator's license or social security card or other reasonable means of identification deemed by the Department to be reasonable under the circumstances, for example, a passport, military identification, or resident alien permit.

D.Licensees who operate mobile crushers shall not crush any vehicles or motor vehicle parts on any premises which are not licensed. In addition to the records required in § 5.8(A) of this Part, Licensees who crush or allow the crushing of vehicles or motor vehicle parts on Licensed premises must maintain as part of its records the date the vehicle or motor vehicle part was crushed, by whom the crushing was done, and what was done with the crushed material.

E.All records are to be preserved and maintained on the premises for a period of two (2) years, and shall be open to inspection by the Department during reasonable business hours.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

230-RICR-30-05-5 § 5.9 Place of Business

A Licensee’s business shall be housed in a building on the premises containing not less than four hundred (400) square feet of ground level floor space, with an office where at all times business records relating to and pertinent to his or her or its operation of an Auto Wrecking Yard or Auto Salvage Yard shall be maintained.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

230-RICR-30-05-5 § 5.10 Severability

If this Regulation or the application thereof to any Person or circumstance is held to be invalid, such invalidity shall not effect other provisions or application of this Regulation which can be given effect without the invalid provision and application, and to this end the provisions are declared to be severable.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Amendment — effective from 2002-09-04 to 10/08/2017
Periodic Refile — effective from 2001-12-19 to 09/04/2002

Subchapter 15 Mobile and Manufactured Homes

230-RICR-30-15-1 Mobile and Manufactured Homes

230-RICR-30-15-1 § 1.1 Authority

These Rules and Regulations governing mobile and manufactured homes (hereinafter referred to as the “Rules”) are adopted pursuant to the authority vested in the Director of the Department of Business Regulation of the State of Rhode Island under R.I. Gen. Laws § 31-44-1, et seq., (the “Act”).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-15-1 § 1.2 Purpose

The purpose of these Rules is to create standards and procedures for the issuance of licenses to operate mobile and manufactured home parks and to generally assist the Department of Business Regulation in carrying out the administration and enforcement of the terms and provisions of the Act so that the public interest may be effectively served.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-15-1 § 1.3 Incorporated Materials

These regulations hereby adopt and incorporate 24 C.F.R. § 3280 (1993) by reference, not including any further editions or amendments thereof and only to the extent that the provisions therein are not inconsistent with these regulations.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-15-1 § 1.4 Definitions

A.When used in these Rules, the following words, except as otherwise required by the context, shall have the following meanings:

1.“Applicant” means any Person filing an application for a License to operate a mobile and manufactured home park.

2.“Department” means the Department of Business Regulation.

3.“Director” means the Director of the Department of Business Regulation.

4.“Division” means the Division of Commercial Licensing and Regulation.

5.“License” means the Department license issued to an owner of a mobile home and manufactured home park in accordance with these Rules and the Act.

6.“Licensee” shall have the meaning provided in the Act.

7.“Mobile and Manufactured Home(s)” and “Home(s)” shall have the meaning provided in the Act.

8.“Mobile and Manufactured Home Park” shall have the meaning provided in the Act.

9.“Occupied Site” or “Site” means a lot on which a Mobile and Manufactured Home, a recreational vehicle, or any other similar type home or vehicle, by whatever name it may be called, is located, regardless of whether a Person or Persons currently reside therein.

10.“Person” means any individual, partnership, corporation, limited liability company, association, sole proprietorship, public or private organization or any other entity, however formed.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-15-1 § 1.5 Licenses

A.No person shall operate a Mobile and Manufactured Home Park without first obtaining a License from the Department. Any Person wishing to obtain a License shall make written application for such License on the forms prescribed by the Department. Before accepting the application for processing, the application shall be completed in full and shall be accompanied by a non-refundable fee per Occupied Site in the amount specified by the Act.

B.Upon receipt of the License application, the Division shall review the application to determine if it is in compliance with the requirements of the Act and these Rules. The Division may require that the Applicant submit such additional information as the Division may deem necessary to enable it to complete its evaluation of the application.

C.All licenses shall be effective for one (1) year from the date of issuance and may not be transferred without written permission from the Department.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-15-1 § 1.6 Miscellaneous

A.Every Licensee shall file a copy of his/her/its License, including any renewal thereof, with the clerk of the city or town in which the Mobile and Manufactured Home Park is located.

B.Every Licensee shall maintain a definite address, either residential or commercial, which shall be used as an address of record on the application. Post office boxes shall not be used as an address, although they may be used in addition to a definite address, for mailing purposes only.

C.Written notice shall be given to the Director by each Licensee within ten (10) days of any change in mailing, business or residences address, or any change in any information reported on the most recent application.

D.The written fee schedule required by the Act, and all amendments thereto, shall be filed with the Department within three (3) days of publication.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-15-1 § 1.7 Licensee Obligations

A.In addition to the duties and obligations required by the Act, Licensees shall be required to:

1.Provide sufficient electrical service to accommodate all Homes within the Park. Such service shall meet all applicable state and local electrical codes and must be a minimum of 100 amperes for all new Homes. Older Homes must have adequate electrical service sized to the individual Homes;

2.Provide clean and potable water to each and every Home in the Park; adequate water pressure to allow for the ordinary day-to-day needs of all the Homes within the Park; water and sewer lines and connections in good working order; and in the event of an emergency, temporary water or sewer service as necessary;

3.Provide park roads that are graded and maintained in good condition and plowed in winter, and substantially free from all potholes, snow accumulation or other obstructions at all times;

4.Provide each resident of the Park with a list of telephone numbers to be used for normal Park business operations, maintenance and emergencies; and

5.Provide for retention and storage of all leases, disclosure statements and rules and regulations for at least four (4) years after any resident of the Park to whom they relate vacates the Park.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-15-1 § 1.8 Tie Downs

A.All United States Housing and Urban Development ("HUD") approved Homes built since the passage of the HUD Mobile Home Code of 1976 (“HUD Code”), incorporated above at § 1.3 of this Part, are required to be properly “tied down” according to the latest minimum standards established in the Rhode Island State Building Code (or by reference, the specified national building code). The Licensee is solely responsible for the provision of adequate, acceptable anchoring devices to which a resident may attach his or her Home. The resident is solely responsible for providing chains, cables and/or shackles, or other appropriate devices to connect the Home to these anchoring devices.

B.All Existing Homes located in a Park that were built prior to the HUD Code, incorporated above at § 1.3 of this Part, are required to be anchored according to appropriate state building code standards upon resale. The Licensee is solely responsible for the provision of adequate, acceptable anchoring devices to which a resident may attach his or her Home. The resident is solely responsible for providing chains, cables, and/or shackles or other appropriate devices to connect the Home to these anchoring devices.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-15-1 § 1.9 Land Use Changes

Any Licensee who makes or who had knowledge of an application of any type of request to any municipal, state or federal agency or other governmental entity with respect to any matter which may result in a change in the land use of a park shall give written notice of the application or request to all affected residents of the Park. The written notice shall clearly state the reasons for which the application or request was filed and the name, address and telephone number of the governmental agency with which the application or request was filed.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-15-1 § 1.10 Severability

If any provision of these Rules or the application thereof to any person of circumstance is held to be invalid, such invalidity shall not effect other provisions or application of these Rules which can be given effect without the invalid provision or application, and to this end the provisions are declared to be severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

Subchapter 25 Unit Pricing

230-RICR-30-25-1 Unit Pricing

230-RICR-30-25-1 § 1.1 Authority

This Regulation is promulgated in accordance with R.I. Gen. Laws § 6-31-1, et seq., and § 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2006-04-24 to 01/04/2022
Amendment — effective from 2006-04-24 to 04/24/2006
Periodic Refile — effective from 2001-12-19 to 04/24/2006

230-RICR-30-25-1 § 1.2 Purpose

The purpose of this Regulation is to implement the provision of R.I. Gen. Laws § 6-31-1, et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2006-04-24 to 01/04/2022
Amendment — effective from 2006-04-24 to 04/24/2006
Periodic Refile — effective from 2001-12-19 to 04/24/2006

230-RICR-30-25-1 § 1.3 Definitions

A."Consumer commodity" means any food, drug, device, or cosmetic and other article, product, or commodity of any other kind or class, except for drugs sold only by prescription, which:

1.Are customarily produced for sale to retail agencies or instrumentalities for consumption by individuals, for use by individuals for purposes of personal care or in the performance of services ordinarily rendered in or around the household, and

2.Usually are consumed or expended in the course of such consumption or use.

B."Director" means the Director of the Department of Business Regulation, or his/her/its designee.

C.“Retail Price” means the price at which the consumer commodity is sold to the ultimate customer.

D.“Sale at Retail” means sale of a consumer commodity to the ultimate customer.

E.“Total Price” of a consumer commodity means the full purchase price of a consumer commodity without regard to units of weight, measure, or count.

F.“Ultimate Customer” means a person who purchases a product other than for resale.

G."Unit price" of a consumer commodity means the retail price of a consumer commodity expressed in terms of the retail price of such commodity per such unit of weight, measure, or count as the Director designates, computed to the nearest whole cent or fraction thereof as the Director designates.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2006-04-24 to 01/04/2022
Amendment — effective from 2006-04-24 to 04/24/2006
Periodic Refile — effective from 2001-12-19 to 04/24/2006

230-RICR-30-25-1 § 1.4 Exemptions

A.Retail sellers need not comply with the provisions of this Part as to the following packaged consumer commodities:

1.Medicine sold by prescription only;

2.Beverages subject to or complying with packaging or labeling requirements imposed under the Federal Alcohol Administration Act;

3.Those consumer commodities sold in units of whole pounds, pints, quarts, or gallons, and not a fraction thereof which have a retail price plainly marked thereon; but only the particular consumer commodity sold in such units shall be exempt; and

4.Consumer commodities sold by any retail establishment operated by any person, firm, corporation or other business entity with fewer than eight (8) full-time employees and less than two (2) retail outlets.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2006-04-24 to 01/04/2022
Amendment — effective from 2006-04-24 to 04/24/2006
Periodic Refile — effective from 2001-12-19 to 04/24/2006

230-RICR-30-25-1 § 1.5 Means of Disclosure

A.All retail establishments subject to this Part shall disclose to consumers the price per measure of consumer commodities in the following manner:

1.Attachment of an orange stamp, tag, or label on the item itself, or directly under or over the item on the shelf on which the item is displayed, and conspicuously visible to the consumer, such orange stamp, tag or label carrying the following data and no other:

a.The words "Unit Price" as a heading.

b.The designation of the price per measure shall be expressed in terms of dollars or cents, as applicable, carried to three (3) digits. If the price is over $1.00, it may be expressed to the nearest full cent, provided that said price is rounded off from .005 and over to the next higher cent, and if .004 or less down to the next lower cent, but that if it is expressed in cents, it be carried to three (3) digits. Example: "25.3¢ per pound; $1.67 per quart."

c.The description of the consumer commodity by item and size of unit being sold may also be included thereon at the option of the retail establishment.

d.For items such as paper products, which are manufactured in numbers of folds which number is shown in addition to other information as may be required hereunder, the applicable "ply" count or thicknesses, customarily designated as "ply" by such consumer commodities.

e.The retail establishment shall not be required to comply with the provisions of § 1.5(A)(1) of this Part as to color and § 1.5(A)(3) of this Part as to size of type, where the product or commodity carries a pre-printed retail price on its package, provided, that the unit price appears thereon in a size no smaller than that used for the retail price.

2.When the consumer commodity is not conspicuously visible to the consumer, a list of the price per measure conspicuously placed near the point of purchase, or a sign or list of price per measure posted at or near the point of display, or by stamping or affixing the price per measure on the consumer commodity itself, provided that the data, color code and size requirements of § 1.5(A)(1) and (3) of this Part are met.

3.The size of the print of the legend required under the provisions of § 1.5(A)(1) and (2) of this Part and in any other place within the retail establishment, where the price of commodities regulated hereunder is displayed, the price per measure shall be displayed in type no smaller than that used for the price of the item, but in no event shall such price per measure appear in a size less than 6/16" in height; provided, that, if any retail establishment is unable to meet the minimum size requirements, set forth herein, such retail establishment may apply to the Director for permission to use a size and type no less than pica size for such periods of time as the Director may deem to be reasonable.

4.When the retail establishment uses display material and the retail price appears thereon in sizes larger than 6/16", the unit price required hereunder may appear in a size no less than 6/16" or 1/4 the size used for the retail price, whichever is greater.

5.When the display space used for the consumer commodity is inadequate to set forth separate price legends as required hereunder, and/or where price designations are not customarily used for the commodities, the retailer may set forth such legends as are required hereunder on display cards or other material used for the display of prices for such commodities. The display of unit price shall appear on an orange background, be conspicuously visible, and the size of type used for the legend shall be no less than the size of the type used for the price of such packaged commodity.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2006-04-24 to 01/04/2022
Amendment — effective from 2006-04-24 to 04/24/2006
Periodic Refile — effective from 2001-12-19 to 04/24/2006

230-RICR-30-25-1 § 1.6 Price Per Measure

A.The price per measure required to be disclosed under this Part shall be:

1.Price per pound for consumer commodities whose net quantity is customarily expressed in units of pounds or ounces or both.

2.Price per pint, quart or gallon for consumer commodities whose net quantity is customarily expressed in units of pints, quarts, gallons or fluid ounces, or a combination thereof; provided, that the same unit of measure is used for the same commodity in all sizes sold in such retail establishment.

3.Price per 50 feet or per 50 square feet, as appropriate, for consumer commodities and items whose net quantity is customarily expressed in units of feet, inches, square feet or square yards, or whose net quantities are expressed in units of area or length.

4.Price per 100 units of consumer commodities, whose net quantity is expressed by a numerical count, provided, that, where the contents of the consumer commodities are expressed by a measure other than count, either by weight, fluid measure, area, or length, the unit price per measure may be expressed either as a price per measure under the provisions of § 1.5(A)(1), (2) or (3) of this Part, or by count, provided further, that the same unit of measure is used for the same commodity in all sizes in such retail establishment.

5.For those consumer commodities, which are universally sold in sizes less than three (3) ounces, the price per measure may be designated as the price per ounce, provided that the same unit of measure is used for the same commodity in all sizes in such retail establishment.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2006-04-24 to 01/04/2022
Amendment — effective from 2006-04-24 to 04/24/2006
Periodic Refile — effective from 2001-12-19 to 04/24/2006

230-RICR-30-25-1 § 1.7 Packaged Commodities Regulated

A.The following consumer commodities shall be labeled in accordance with this Part. Such consumer commodities may not be sold in retail stores subject to this Part unless the conditions of this Part have been met.

1.Aluminum, plastic wraps, foils, and waxed paper

2.Baby foods

3.Baking mixes and supplies

4.Bottled beverages - carbonated and non-carbonated

5.Bread and pastry products

6.Butter

7.Canned fish and meats

8.Cereals

9.Cocoa

10.Coffee, instant and ground

11.Cookies and crackers

12.Cooking oils

13.Deodorants

14.Detergents

15.Fruits, vegetables, and juices - canned, jarred, boxed

16.Flavored syrups

17.Flour

18.Frozen fruits, vegetables, and juices

19.Grains

20.Honey

21.Household cleansers, waxes, deodorizers

22.Instant breakfast foods

23.Jellies, jams and sandwich spreads

24.Ketchup and mustard

25.Oleomargarine

26.Pet foods

27.Powdered drink mixes

28.Salad Dressings

29.Sanitary paper products, such as napkins, paper towels, tissues, etc.

30.Sauces

31.Shampoos

32.Shaving Cream

33.Shortenings

34.Snack foods, such as potato chips, pretzels, etc., but only when sold in packages of five ounces (5 oz.) or more in weight.

35.Soups - canned and dry mixes

36.Spaghetti, noodles and pasta products

37.Tea

38.Toothpaste

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2006-04-24 to 01/04/2022
Amendment — effective from 2006-04-24 to 04/24/2006
Periodic Refile — effective from 2001-12-19 to 04/24/2006

230-RICR-30-25-1 § 1.8 Severability

If any provision of this Part or the application thereof to any person or circumstance is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Part, which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Part are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2006-04-24 to 01/04/2022
Amendment — effective from 2006-04-24 to 04/24/2006
Periodic Refile — effective from 2001-12-19 to 04/24/2006

Subchapter 30 Gaming and Athletics

230-RICR-30-30-1 Boxing (formerly Racing and Athletics Regulation 1)

230-RICR-30-30-1 § 1.1 Authority

These rules and regulations governing boxing (hereinafter referred to as the "Rules") are adopted pursuant to the authority granted in R.I. Gen. Laws § 41-5-1 et seq. (the "Act"), specifically including rulemaking authority under R.I. Gen. Laws § 41-5-22.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.2 Purpose

A. These Rules are adopted to assist the Department in carrying out the administration and enforcement of the terms and provisions of the Act. In the development of these Rules, the Department’s policy purposes are:

1.To protect the health, safety and well-being of the competitors;

2.To protect and promote the integrity of events for the benefit of the consuming public; and

3.To protect the collection of the tax levied upon events by the State of Rhode Island.

B.These Rules shall be liberally construed and applied to effectuate and promote the stated policy purposes.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.3 Incorporated Materials

A.These regulations hereby adopt and incorporate by reference the federal Professional Boxing Safety Act, Chapter 89 of Title 15 of the U.S. Code, 15 U.S.C. § 6301 (hereinafter the “Federal Act”).

B.R.I. Gen. Laws § 41-5-22 expressly recognizes the standards, rules, regulations, handbooks, or other standards and procedures governing boxing as approved by the Association of Boxing Commissions (“ABC”). The ABC is a non-profit organization comprised of U.S. state and tribal representatives that regulate professional boxing, with an organizational mission to promote the uniformity of health and safety standards and other requirements pertaining to the conduct of sports events. These regulations hereby adopt and incorporate by reference the following publications by the ABC:

1.ABC Regulatory Guidelines. https://www.abcboxing.com/abc-regulatory-guidelines/

2.ABC Unified Boxing Rules. http://www.abcboxing.com/unified-rules-boxing/

3.ABC Referee Rules and Guidelines. http://www.abcboxing.com/ABC_REFEREE_GUIDELINES.pdf

C.§ 1.3 of this Part does not automatically include later amendments to or editions of the incorporated material; however, the Department may periodically update this § 1.3 of this Part to re-incorporate the most recent version of the material incorporated through rulemaking including without limitation direct final rulemaking.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.4 Definitions

“Announcer” means a person who announces information at an Event, including particularly introducing and giving information about athletes competing in an Event and announcing results and scores of an Event. "Boxing" means any form of boxing or other similar sport in which blows are delivered with the hands to another Competitor in a Contest, Match or Exhibition.

"Boxing Commission" means an entity authorized under state law to regulate Professional Boxing Matches.

“Boxing event medical professional” means duly licensed Physicians and persons qualified to assist the Physician (including nurse practitioners, first aid instructors, and/or resuscitators/EMTs) participating in an Event pursuant to R.I. Gen. Laws § 41-5-11.

"Boxing registry" means any entity certified by the Association of Boxing Commissions for the purposes of maintaining records and identification of Professional Boxers.

"Closed circuit television" means any telecast of an Event which is not intended to be available for viewing without the payment of a fee, collected for or based upon each event viewed, for the privilege of viewing the telecast and includes the terms "pay per view".

"Competitor" means an athlete participant in a Contest, Match or Exhibition.

"Contest" and "Match" are synonymous, may be used interchangeably and mean an Event between two (2) Competitors in which the Competitors strive in good faith to win.

"Event" or "Events" means a Contest, Match or Exhibition taking place within the State of Rhode Island where Professional Boxers display or exhibit Boxing, but does not include those events specifically exempted by the provisions of R.I. Gen. Laws § 41-5-1.

"Exhibition" means an Event in which the Competitors show or display their skills without necessarily striving to win.

"Judge" means a Person to be licensed by the Department who attends the Event and who has the responsibility of scoring or judging the performance of the Competitors in the Event.

"Manager" means a person who receives compensation for service as an agent or representative of a boxer.

"Matchmaker" means a person who, on behalf of the Promotor, proposes, selects, and arranges the boxers to participate in a professional boxing match.

"Physician" means an individual currently licensed to practice medicine in the State of Rhode Island and who has been licensed by the Department for the Event.

"Professional boxer" means one who competes for a money prize or purse by engaging in Boxing.

"Promotor" means any entity or person who produces or stages any professional Contest or Exhibition.

"Referee" means a Person to be licensed with the Department who has the general supervision of the Event and is present inside the ring during the Event.

"Second" or "Corner" means a trainer or coach authorized to assist a contestant within the dressing room or alongside the combat area in preparation for, during the course of, or after the conclusion of such contestant's bout.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.5 Licenses

A.Licenses-Event

1.No Event shall take place or be conducted unless the Promotor of the Event has applied for and received a license from the Department (the "Event License"). An Event Application shall be received by the Division at least fourteen (14) days prior to the date of the scheduled Event. The Event Application shall be completed in full, shall be in compliance with and include all of the information required by R.I. Gen. Laws §§ 41-5-3 and 41-5-3.1(a), and shall also include the following:

a.Proof of compliance with R.I. Gen. Laws § 41-5-3.2 with respect to ring equipment;

b.Proof of insurance and bond as required by §§ 1.7 and 1.8 of this Part;

c.A copy of the approval of the city or town authorities where the Event is to be held, pursuant to R.I. Gen. Laws § 41-5-5;

d.An application fee in the amount as specified by the Division; and

e.Bout Sheet listing information about the Competitors and the opponents with which they are matched, as requested by the Division in the course of its review of the Event License Application.

2.Upon receipt of an Event Application, the Division shall review the Event Application to determine if it is in compliance with the requirements of the Act and these Rules. In connection therewith, the Division may require that the Promotor submit such additional information as the Division may deem necessary to enable it to complete its evaluation of the Event Application.

3.In making its determination as to whether to issue or deny the Event License, the Division may in its discretion take into account any factors which it deems appropriate, including, without limitation, whether a substantially similar event has been licensed in this or any other state; whether there exist generally accepted standards and criteria for the conduct and scoring of such events; and whether there exist generally recognized sanctioning bodies for events of such kind. In addition, the Division reserves the right to place such conditions on the grant of an Event License as the Division deems necessary and reasonable pursuant to these Rules, the Act and the Federal Act.

4.If issued, the Event License shall be considered conditional and not deemed valid until the holder of the Event License files with the Division a supplementary application (the "Supplementary Application") updating the original Event Application pursuant to the terms and provision of R.I. Gen. Laws § 41-5-3.1(b). The Supplementary Application shall also contain such additional information as the Division may request.

B.Licenses-Competitors

1.No Person shall be a Competitor in a Boxing Event unless licensed by the Department at least twenty-four (24) hours prior to the starting time for the first Match or Exhibition (the "Competitor License"). The Competitor Application shall be complete in all respects and shall be in compliance with and include all the information required by R.I. Gen. Laws § 41-5-7.1 et seq.

2.Upon receipt of a Competitor Application, the Division shall review it pursuant to the same procedures outlined in § 1.4(A)(2) of this Part. As part of the review conducted pursuant to § 1.4(A)(2) of this Part, and in addition to the prohibitions contained in the Federal Act, no license shall be granted to a Professional Boxer who:

a.Has lost six (6) or more consecutive fights; or

b.Fails, in the sole discretion of the Department to receive a satisfactory physician's certification.

3.If issued, the Competitor License shall be conditional and not deemed valid until the holder of the Competitor License files with the Division a supplementary application (the "Competitor Supplementary Application") updating the original Competitor Application pursuant to the terms and provisions of R.I. Gen. Laws § 41-5-7.1(b). The Competitor Supplementary Application shall also contain such additional information as the Division may request. Notwithstanding the foregoing to the contrary, no Competitor Supplementary Application shall be required when the Competitor Application has been filed within the time frames established by R.I. Gen. Laws § 41-5-7.1(b).

C.Additional Boxing License Types. Pursuant to R.I. Gen. Laws § 41-5-7, the Division also licenses Managers and Seconds; Referees, Judges, Timekeepers; and Boxing Event Medical Professionals. Applicants for such license types shall file applications on forms designated by the Division which forms shall include the following specific requirements:

1.Manager Contract Requirement. Persons applying as Managers must submit a copy of their contractual arrangement with a Competitor demonstrating that the person falls within the definition of Managers delineated in § 1.4 of this Part.

D.Licensed Inspectors. The Division may designate and assign licensed inspector(s) as its authorized representative(s) to evaluate the suitability of the proposed premises or equipment for an Event pursuant to R.I. Gen. Laws § 41-5-3.5 and to monitor the Event, Competitors, and other participants subject to these Regulations for compliance with the Act and these Regulations. Every licensed inspector shall perform his/her duty at the direction of the Division and report actionable violations to the Division in accordance with reporting directions given by the Division. Any prospective inspector is required to file a license application on forms designated by the Division. No licensed inspector shall hold any direct or indirect financial interest in any Event, Competitor, or other participant licensed under these Regulations.

E.Participants Not Requiring Special Licensing

1.Matchmakers and Announcers. Matchmakers and announcers may participate in a Boxing Event without being licensed. It shall be the responsibility of the Event Licensee to ensure that these unlicensed Persons comply with the Act and these Rules.

2.Athlete Competitors Acting as Corners/Seconds. All athlete Competitors must fill out the athlete Competitor application form. An athlete Competitor who also seeks to act as a Corner/Second at an Event in which the athlete Competitor is not personally competing may receive approval from the Division to do so by indicating such intent on his or her athlete application. However, under no circumstances may a person licensed as a Corner/Second become licensed as an athlete Competitor without filling out the requisite forms for the athlete Competitor application.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.6 License Duration; Suspension and Revocation of Licenses

A.All Event Licenses issued pursuant to these Rules shall be valid until the termination of the Event. All other Licenses issued pursuant to these Rules shall be valid until December 31 of the year the License was issued.

B.R.I. Gen. Laws § 41-5-17 authorizes the Division to suspend or revoke a license issued under this Regulation. A licensee subject to such an action may request an opportunity for a hearing under § 1.6(D) of this Part.

C.The Division official in attendance at the Event shall be empowered to immediately suspend or revoke any License on an emergency basis if the Division official determines that any of the Licensees, including the Event Licensee, is in material non-compliance with the conditions of the License, these Rules or the Act.

D.The notice for and conduct of any hearings held pursuant to this Regulation or the state or federal Acts shall be governed by the applicable provisions of the Acts, the Department's Rules of Procedure for Administrative Hearings, Part 10-00-2 of this Title, and the Administrative Procedures Act, R.I. Gen. Laws § 42-35-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.7 Insurance

A.General Liability. All Promoters shall furnish to the Department within twenty-four (24) hours prior to the Event satisfactory proof of commercial general liability insurance providing for at least a one million-dollar ($1,000,000) limit per occurrence, at least a one million-dollar ($1,000,00) limit per personal and advertising injury, and at least a two million-dollar ($2,000,000) general aggregate limit.

B.Health Insurance. All Promotors shall furnish to the Department within twenty-four (24) hours prior to the Event satisfactory proof of health insurance for the protection of Competitors participating in the Event. In accordance with R.I. Gen. Laws § 41-5-11.2, such insurance coverage shall provide for at least twenty thousand dollars ($20,000) to the Competitor for medical, dental, surgical and/or hospital care for all injuries sustained while participating in any sparring match, bout, contest or exhibition conducted under the control of said Promoter.

C.Death Benefit. All Promotors shall furnish within twenty-four (24) hours prior to the Event satisfactory proof of a death benefit payment of at least fifty-thousand dollars ($50,000) to the estate of the deceased Competitor if such death is occasioned by injuries received during the course of sparring or during the course of a bout, contest or exhibition conducted under the control of such Promotor.

D. The terms of the insurance coverage under this Part must not require the Competitor to pay a deductible for the medical, surgical or hospital care for injuries the Competitor sustains while engaged in a contest or exhibition.

E.Failure to produce proof of insurance required under this Part shall be grounds for the denial or revocation of a License.

F.Sunday and Holiday Events. When the scheduled event takes place on a Sunday or a Holiday, proof of insurance in accordance with R.I. Gen. Laws § 41-5-3.3 must be furnished to the Department within one (1) business day prior to said event.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.8 Bonds

A.In accordance with R.I. Gen. Laws § 41-5-6 no event license shall be granted unless the Promoter has executed and filed with the Division a bond in a penal sum of fifty-thousand dollars ($50,000), with such surety or sureties as shall be satisfactory to the Division, running to the Division, conditioned upon the payment to the State of Rhode Island of the sums mentioned in R.I. Gen. Laws § 41-5-15, and upon faithful compliance by the licensee with the provisions of R.I. Gen. Laws § 41-5-1, et seq. and with such other laws of the State as may be applicable to anything done by the licensee in pursuit of the license.

B.The bond shall also provide for the forfeiture to the State, recoverable at the suit of the Attorney General, of such sum, not exceeding ten-thousand ($10,000), as may be stipulated in the bond for each case of non-compliance.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.9 Medical Examinations, Drug Testing and Record Keeping

A.Medical Examinations Required. Pursuant to the provisions of R.I. Gen. Laws § 41-5-7.1, et seq., every application for a license shall include each of the requirements listed in § 1.9(B) of this Part.

B. Each of the following tests shall be conducted by a Physician licensed within the United States, or by a Physician Assistant or a Nurse Practitioner acting under the supervision of a licensed Physician. The results of each test shall be reported on the supervising physician's letterhead bearing the examiner’s name, address, and telephone number, it shall bear the statement "Fighter is cleared to participate" or "Fit to Compete" if so concluded by the supervising physician, and it shall contain the supervising physician’s signature:

1.A comprehensive Physical Exam, performed within one (1) year of the Event.

2.An Ophthalmologic Eye Examination including a dilated retinal exam performed within one (1) year of the Event.

3.An EKG performed within one (1) year of the Event and interpreted and signed by a licensed Cardiologist or Physician.

a.In its discretion, considering an individual fighter's recent competitive activity, the Division may also require any Competitor thirty-five (35) years of age or older to submit to a Stress Test with a clearance letter from a licensed Cardiologist dated within one (1) year of the Event.

4.A MRI or CTScan performed within three (3) years of the Event. A MRI or CTScan remains valid for three (3) years from the date of the test. If the MRI or CTScan is over one (1) year old the Competitor must additionally submit a complete neurological examination, performed by a licensed Neurologist.

5.A negative HIV serology (AIDS blood test) dated within six (6) months of the Event.

6.A negative Hepatitis "B" Surface Antigen (HBV sAG) blood test dated within six (6) months of the Event. Negative Hep "B" cAb, eAg are not acceptable.

a.If a competitor has undergone a vaccination series for Hepatitis "B," he/she may present proof of immunity via a blood test called HBV sAB. If this test is positive, the fighter is considered immune to the virus and does not need to be tested for the HBV sAG.

7.A negative Hepatitis "C" serology (blood test) dated within six (6) months of the Event.

8.A pregnancy test for female athletes dated within seven (7) to fourteen (14) days of the Event.

C.Drug Testing. The administration or use of any substance identified on the "Prohibited List" published by the World Anti-doping Agency (https://www.usada.org/substances/prohibited-list/) either before or during an Event by any Competitor is prohibited.

For the purpose of verifying compliance with this rule, the Director or her Division designee may require that any Competitor submit to a urinalysis or blood test prior to or after the Event, or if recommended by the Physician, any other post-Event examination.
The Division may revoke or suspend the Competitor License of any Competitor whose urinalysis or blood test is positive for any substance on the Prohibited List.

3.Should a winning Competitor's laboratory testing results return as a positive test his/her victory/win will be removed, a "no contest" decision will be entered into his/her Boxing record, and each Competitor will be notified using the contact information provided on his/her License Application.

4.All costs associated with the foregoing tests shall be borne by the Competitor and/or the Promotor.

D.Records. All medical reports and tests required to be performed pursuant to these Rules or the Act shall be considered confidential and shall be open to examination only to the Department or its duly authorized representatives (including a Hearing Officer if applicable), to the Competitor and, upon written authorization of the Competitor to all such designated persons or Boxing Commissions.

E.In addition to any powers of the Referee provided in R.I. Gen. Laws § 41-5-8 and any other sections of these Rules and the Act, the Referee may, in his or her discretion, request the Physician to examine a Competitor during a Match. Should the examination occur during the course of a round, the clock shall be stopped until the examination is completed.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.10 Conflicts of Interest

No employee of the Department may belong to, contract with, or receive any compensation from, any Person who sanctions, arranges or promotes Professional Boxing Matches or who otherwise has a financial interest in an active Professional Boxer currently registered with a Boxer Registry. For purposes of this section, the term "compensation" does not include funds held in escrow for the payment to another Person in connection with a Professional Boxing Match.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.11 Reporting

Not later than forty-eight (48) business hours after the conclusion of a Professional Boxing Match, the Department shall report the results of such Match and any related suspensions to each Boxer Registry.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.12 Miscellaneous

A.No male Competitor may participate in a Boxing Event against a female Competitor or vice-versa.

B.Any Person applying for a Competitor's License without significant professional or amateur experience may be required to show proof of proper training as a Professional Boxer.

C.In addition to the Physician who shall be in attendance at the Event, an ambulance and/or medical personnel with appropriate resuscitation equipment shall be continuously present at ringside.

D.No liquid refreshments of any kind may be sold at the Event except in paper or plastic containers. Chairs must be securely attached so they are not portable.

E. Television. Closed Circuit Television broadcasts of Events are governed by R.I. Gen. Laws § 41-5-3.7.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-1 § 1.13 Variances or Waivers

The Division, upon its own or at the request of any Licensee or of any applicant for a License, may grant variances or waivers of any portion of these Rules in the Department's sole discretion as it deems proper or necessary depending upon the facts and individual circumstances of the request.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2018-08-29 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 08/29/2018

230-RICR-30-30-2 License Applications (formerly Racing & Athletics Regulation 8)

230-RICR-30-30-2 § 2.1 Authority

This Regulation is promulgated in accordance with R.I. Gen. Laws §§ 41-4-1 et seq., 41-7-10 et seq., 42-14-14, 41-1-1, 42-14-17, and 42-35-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-14 to 01/04/2022
Adoption — effective from 2007-05-03 to 10/14/2017

230-RICR-30-30-2 § 2.2 Purpose

The purpose of this Regulation is to establish standards and procedures for the issuance of licenses to all employees, non-employees, concessionaires, vendors, at any Gaming Facility, as well as any other non-employees at any Gaming Facility who have access to any area of the Gaming Facility. Additional purposes of this Regulation include ensuring the safety, security, and integrity of Gaming Facilities, and to generally assist the Department in carrying out the administration and enforcement of the applicable terms and provisions of the statutes listed in § 2.1 of this Part so that the public interest may effectively be served.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-14 to 01/04/2022
Adoption — effective from 2007-05-03 to 10/14/2017

230-RICR-30-30-2 § 2.3 Definitions

A.As used in this Regulation:

1."Applicant" means a Person filing an application or a renewal application for a license.

2."Application" means any of the applications referred to in this Part and available on the Department’s website.

3."Concessionaire" means any Person operating a concession at any Gaming Facility.

4."Department" means the Department of Business Regulation.

5."Director" means the Director of the Department.

6."Gaming Facility" means any building, enclosure, or premises at which pari-mutuel, simulcast, slot operations, and/or table games are conducted.

7."Key Employee" means any individual employed at a Gaming Facility in a supervisory capacity, any individual empowered to make decisions concerning the operation of a Gaming Facility, and any individual with an ownership interest in a Gaming Facility. This includes all individuals involved in the management of the Gaming Facility.

8."License" means that license issued by the Department to any Person employed at a Gaming Facility, or any Person engaged in Concessionaire or Vendor operations at a Gaming Facility.

9."Licensee" means a Person holding a License.

10."Non-employee" means any individual employed by a Licensed Vendor rather than by the Gaming Facility, or any individual employed by a construction contractor with access to any area of a Gaming Facility.

11."Operations Employee" means any individual, other than management, employed by a Gaming Facility to handle money used in the pari-mutuel, simulcast, slot operations, and/or table games at the facility.

12."Person" means any individual, partnership, corporation, limited liability company, sole proprietorship, or any other legal entity, however formed.

13."Service Employee" means any individual employed by a Gaming Facility, other than management personnel and those involved pari-mutuel, simulcast, slot operations, and/or table games.

14."Vendor" means any Person engaged in a vending operation at any Gaming Facility

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-14 to 01/04/2022
Adoption — effective from 2007-05-03 to 10/14/2017

230-RICR-30-30-2 § 2.4 Licenses

A.License Required - No Person shall engage in any business operation or other activity which requires presence at any Gaming Facility (other than patrons of the Gaming Facility), and no Person shall be employed at any Gaming Facility, without first obtaining a License from the Department.

B.Types of Licenses Issued and Renewal Requirements Pursuant to this Regulation.

1.Operations Employee License — All individuals employed in the simulcast operation of the Gaming Facility are required to hold an Operations Employee License.

2.Service Employee License— All Service Employees, as defined above, employed by a Gaming Facility are required to hold a Service Employee License.

3.Vendor License — All Persons operating a concession or vending operation at a Gaming Facility are required to hold a Vendor License.

4.All Operations, Key, and Service Employee Licensees must use the appropriate Application to renew their respective existing Licenses and after submitting the respective initial Application for each different type of License.

5.Non-Facility/Vendor Employee License— All individuals working on the premises of (but not employed by) a Gaming Facility are required to hold a Non-Facility/Vendor Employee License.

6.Key Personnel License — All individuals employed in a supervisory capacity, or who are empowered to make decisions concerning the operation of the Gaming Facility, are required to hold a Key Personnel License.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-14 to 01/04/2022
Adoption — effective from 2007-05-03 to 10/14/2017

230-RICR-30-30-2 § 2.5 Application for License

Every Person seeking a License shall file a written Application with the Director on the appropriate form available on the Department’s website or by contacting the Department. The term of each License shall be for three (3) years.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-14 to 01/04/2022
Adoption — effective from 2007-05-03 to 10/14/2017

230-RICR-30-30-2 § 2.6 Confidentiality of Application Information

All personal financial information received by the Department from said Applicants shall be deemed not public under the terms and provisions of R.I. Gen. Laws § 38-2-1 et seq. and will not be disclosed unless said Applicant is notified and either agrees to said disclosure or the Rhode Island Superior Court orders said disclosure after consideration of all issues in each context. Said Applications are required to be delivered by Applicants in a sealed envelope to the Department via hand-delivery to the Department's offices at the Gaming Facility or by first class mail to the Department's office.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-14 to 01/04/2022
Adoption — effective from 2007-05-03 to 10/14/2017

230-RICR-30-30-2 § 2.7 Severability

If any provision of this Regulation or the Application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or Applications of this Regulation which can be given effect without the invalid or unconstitutional provision or Application, and to this end the provisions of this Regulation are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-14 to 01/04/2022
Adoption — effective from 2007-05-03 to 10/14/2017

230-RICR-30-30-2 License Applications (formerly Racing & Athletics Regulation 8)

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-14 to 01/04/2022
Adoption — effective from 2007-05-03 to 10/14/2017

230-RICR-30-30-3 Criminal Background Investigation (formerly Racing & Athletics Regulation 9)

230-RICR-30-30-3 § 3.1 Authority

This Regulation ("Regulation") is promulgated pursuant to the authority granted to the Department of Business Regulation ("Department") by R.I. Gen. Laws §§ 41-1-1, 42-14-17, and 42-35-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Adoption — effective from 2011-05-19 to 10/08/2017

230-RICR-30-30-3 § 3.2 Purpose

The purpose of this Regulation is to establish criteria to be used in determining whether an application for a license or permit or an application to renew a license or permit filed with the Gaming and Athletics Division of the Department should be approved based on information obtained pursuant to a criminal records check conducted pursuant to R.I. Gen. Laws § 41-1-1.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Adoption — effective from 2011-05-19 to 10/08/2017

230-RICR-30-30-3 § 3.3 Severability

If any provision of this Regulation or the application thereof to any Person or circumstance is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Regulation which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Regulation are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Adoption — effective from 2011-05-19 to 10/08/2017

230-RICR-30-30-3 § 3.4 Definitions

A.Unless otherwise provided by this Regulation or unless context clearly requires otherwise, capitalized terms used in this Regulation shall have the same meaning as the terms defined in Title 41 of the Rhode Island General Laws.

1."Arrest" means any detaining, holding or taking into custody by any police or other law enforcement authorities based on probable cause that a person has committed a crime,

2."Charge" means any indictment, complaint, information, summons, or other notice of the alleged commission of a crime.

3."Criminal History Record Information" or "CHRI" means information received by the Department, Rhode Island State Police, and/or Rhode Island Department of Attorney General from the Federal Bureau of Investigation ("FBI").

4."Director" means the Director of the Department or his or her designee.

5."Gaming and Athletics Division" means the Division of the Department authorized to issue permits and licenses to gaming facilities, as defined in § 2.3 of this Subchapter, and their employees, vendors and vendors' employees.

6."Offense" means conviction for any felony, misdemeanor, Alford plea, a plea of nolo contendere and/or a civil offense on a CHRI which is relevant to the type of license or permit sought, juvenile offenses will not be considered unless the juvenile has been charged as an adult.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Adoption — effective from 2011-05-19 to 10/08/2017

230-RICR-30-30-3 § 3.5 Criteria To Be Used in Determining Whether Based on CHRI, Application for a License or Permit or Renewal Thereof Will Be Approved

A.Types of CHRI That May Warrant Denial of Application for License or Permit or Renewal of a License or Permit

1.Convictions of Offenses that occurred within the last twenty (20) years; and

2.Arrests and/or Charges that occurred within the last ten (10) years.

B.Aggravating factors related to the CHRI to be considered by the Department in connection with an application for a license or permit or a renewal thereof include, but are not limited to:

1.Relevance and seriousness of the Applicant's CHRI record to the type of license or permit sought;

2.Number of Arrests, Charges, and/or Offenses on the applicant's CHRI that are relevant to the type of license or permit sought;

3.Pattern of similar Arrests, Charges, and/or Offenses on the applicant's CHRI that are relevant to the type of license or permit sought;

4.Evidence of significant harm to a victim{s} or community as reflected in the investigation of the applicant's CHRI;

5.Applicant's refusal, delay, or inadequate explanation of facts and circumstances of information reflected on CHRI or obtained during the investigation of information on the CHRI;

6.Applicant's refusal to acknowledge responsibility for Arrest and/or Charge and/or Offense;

7.Applicant's lack of cooperation with the Department's investigation;

8.Applicant's submission of false or misleading statements or evidence to the Department; and,

9.Applicant's intimidation of or threats to witnesses or others involved with the Department's investigation.

C.Mitigating factors related to the CHRI which may be considered by the Department in connection with an application for a license or permit or a renewal thereof include, but are not limited to:

1.Relevance and seriousness of the applicant's CHRI record to type of license or permit sought;

2.Duration of time since the date of Arrest and/or Charge and/or Offense;

3.Lack of extensive relevant criminal history;

4.Lack of Arrests, Charges, or Offenses currently pending against licensee/applicant;

5.Lack of pattern of similar Offenses relevant to the license or permit sought;

6.Age of the applicant at time of Arrest, Charge, and/or Offense;

7.Documented evidence of the applicant's rehabilitation since Arrest, Charge, and/or Offense;

8.Applicant's cooperation with the Department's investigation;

9.No evidence of significant harm to a victim(s) or public as reflected in the investigation of applicant's CHRI;

10.Documented evidence that the applicant has timely made any required restitution;

11.Documented evidence of the applicant's understanding, acknowledgment, and remorse for Arrest, Charge, and/or Offense; and,

12.Documented explanation by the applicant regarding circumstances related to Arrest, Charge and/or Offense;

D.The Department will also evaluate the CHRI to determine if the Arrest, Charge and/or Offense is relevant to the type of license or permit sought by the applicant,

E.Upon review and evaluation and investigation of the CHRI, the Department may deny the application for license or renewal application, grant the application for license or renewal application without conditions, or grant the application for license or renewal application with conditions.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Adoption — effective from 2011-05-19 to 10/08/2017

230-RICR-30-30-3 Criminal Background Investigation (formerly Racing & Athletics Regulation 9)

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-08 to 01/04/2022
Adoption — effective from 2011-05-19 to 10/08/2017

230-RICR-30-30-4 Simulcast Wagering (formerly Racing & Athletics Regulation 6)

230-RICR-30-30-4 § 4.1 Authority and General Provisions

A.Authority. This Regulation is promulgated pursuant to the Department’s rulemaking authority under R.I. Gen. Laws § 42-14-17 to implement § 41-11-1 et seq. as delegated to the Department in § 41-1-1 and consistent with §§ 41-4-1 et seq. and 41-7-1 et seq.

B.Application. Pursuant to R.I. Gen. Laws § 41-11-1 et seq., the general provisions contained herein shall apply to all associations, as defined herein, conducting Simulcast and interstate/intrastate common pool wagering on any approved event, as defined herein.

C.Licensees subject to rules. All licensees granted a permit by the Division for Simulcast and interstate/intrastate common pool wagering are subject to these rules and regulations.

D.Amendments. These rules and regulations are subject to amendment from time to time and shall be amended in accordance with the Administrative Procedures Act, R.I. Gen. Laws § 42-35-1 et seq. All licensees shall abide by any such amendment.

E.Waiver. The Division in its discretion may waive any rule contained herein when such waiver shall be in the best interest of the State of Rhode Island.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-26 to 01/04/2022
Periodic Refile — effective from 2002-01-02 to 10/26/2017

230-RICR-30-30-4 § 4.2 Definitions, Constructions, Interpretations

A.In applying the rules and regulations as contained herein, including all amendments thereto, the following definitions, constructions and interpretations shall apply:

1.“Betting Interest” means one (1) or more Contestants in a pari-mutuel Contest which are identified by a single program number for wagering purpose.

2.“Breakage” means the Net Pool minus Payoff.

3.“Commission” means a regulatory agency with the authority to regulate racing and or jai alai in another state.

4.“Contest” means a competitive racing or jai alai event on which pari-mutuel wagering is conducted.

5.“Contestant” means each individual race horse, greyhound, or jai alai player or team, that participates in a Contest.

6.“Coupled Entry” means two (2) or more Contestants in a Contest that are treated as a single Betting Interest for pari-mutuel wagering purposes.

7.“Day” means the normal business day of the facility on which the licensee may conduct multiple programs.

8.“Dead Heat” means the finish of a race in which the noses of two (2) or more horses or greyhounds reach the finish line at the same time.

9.“Division” means the Division of Gaming & Athletics, Department of Business Regulation, or the State of Rhode Island.

10.“Game” means a contest between jai alai players or teams on which pari-mutuel wagering is permitted at any licensed fronton.

12.“Guest Association” means an association which offers licensed pari-mutuel wagering on Contests conducted by another association (the host) in either the same state or another jurisdiction.

13.“Handle” means the aggregate of all pari-mutuel pools, excluding wagers.

14.“Host Association” means an association conducting a licensed pari-mutuel Meeting from which authorized Contest or entire Performances are Simulcast.

15.“Inquiry” means an investigation by the Stewards of a foul before they declare the Contest official.

16.“Meeting” means the specified period and dates each year during which an association is authorized to conduct pari-mutuel wagering by approval of the Division.

17.“Minus Pool” means the situation when the amount of money to be distributed on winning wagers is in excess of the amount of money comprising the Net Pool.

18.“Mutuel Field” means two (2) or more Contestants in a Contest that are treated as a single Betting Interest for pari-mutuel wagering purposes because the number of Betting Interests exceeds the number that can be handled individually by the pari-mutuel system.

19.“Net Pool” means the amount of gross ticket sales less refundable wagers and statutory commissions.

20.“Objection” means a verbal claim of foul before the Contest is declared official.

21.“Official Order of Finish” means the order of finish of the Contestants in a Contest as declared official by the Stewards.

22.“Official Starter” means the official responsible for dispatching the horses or greyhounds for a Race.

23.“Official Time” means the Official Time for a Race shall be the period from the first horse or greyhound crosses the starting point until the first horse or greyhound crosses the finish line.

24.“Off Time” means the moment at which, on the signal of the Official Starter, the doors of the starting gate are opened, officially dispatching the horses or greyhounds in each Contest, or the moment of the first serve in a jai alai Game.

25.“Outstanding Ticket” means a winning or refundable pari-mutuel ticket which was not cashed during the Performance for which it was issued.

26.“Pari-Mutuel System” means the electro-mechanical or computerized system and all software (including the Totalisator and off-site betting equipment) that is used to record bets and transmit wagering data.

27.“Patron” means a member of the public present on the grounds of a pari-mutuel association during a Meeting for the purpose of wagering or to observe racing or jai alai.

28.“Payoff” means the amount of money paid to winning wagers.

29.“Performance” means a schedule of Contests conducted on the same Day as authorized by the Division.

30.“Permit” means an authorization by the Division to an association to conduct Simulcast or interstate common and pari-mutuel wagering or a Contest at a specified location.

31.“Post Position” means the pre-assigned position from which a horse or greyhound will leave the starting gate, or the position assigned to a jai alai player or team.

32.“Post Time” means the scheduled starting time for a Contest.

33.“Profit” means the Net Pool after deduction of the amount bet on the winners.

34.“Profit Split” means a division of profit amongst separate winning Betting Interests or winning betting combinations resulting in two (2) or more Payoff prices.

35.“Program” means according to the requirement text:

a.The published listing of all Contests and Contestants for a specific Program.

b.A schedule of Races or Games of either a matinee or evening Performance.

36.“Race” means a Contest between horses or greyhounds at a licensed Meeting on which pari-mutuel wagering is permitted.

37.“Result” means that part of the Official Order of Finish used to determine the pari-mutuel Payoff

38.“Scratch” means the act of withdrawing an entered horse or greyhound from a Contest after the closing of entries.

39.“Simulcast” means the live audio and visual transmission of a Contest to another location for pari-mutuel wagering purposes. The Contest must be sanctioned and/or licensed in the state of origin.

40.“Single Price Pool” means an equal distribution of profit to winning Betting Interests or winning betting combinations through a single Payoff price.

41.“Starter” means a horse or greyhound which becomes an actual Contestant in a Race by virtue of the starting gate opening in front of it upon dispatch by the Official Starter.

42.“Steward” means a duly appointed racing official with powers and duties specified by rules by the state of origin.

43.“Totalisator” means the system used for recording, calculating, and disseminating information on ticket sales, odds and Payoff prices to Patrons of a pari-mutuel wagering facility.

44.“Winner” means the horse or greyhound whose nose reaches the finish line first or a horse which is placed first through disqualification by the Stewards, or a jai alai player or team who first reaches the required number of points in a game.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-26 to 01/04/2022
Periodic Refile — effective from 2002-01-02 to 10/26/2017

230-RICR-30-30-4 § 4.3 General Provisions

A.Pari-Mutuel Tickets. A pari-mutuel ticket is evidence of a contribution to the pari-mutuel pool operated by the association and is evidence of the obligation of the association to pay to the holder thereof such portion of the distributable amount of the pari-mutuel pool as is represented by such valid pari-mutuel tickets. The association shall cash all valid winning tickets when such are presented for cash payment during the course of the meeting where sold, and for a specified period after the last Day of the Meeting.

1.To be deemed a valid pari-mutuel ticket, such tickets shall have been issued by a pari-mutuel ticket machine operated by the association and recorded as a ticket entitled to a share of the pari-mutuel pool, and contain imprinted information as to:

a.The name of the association operating the meeting.

b.The name of the association conducting the Contest for which the pari-mutuel ticket is issued.

c.A unique identifying number or code.

d.Identification of the terminal at which the ticket was issued.

e.A designation of the Performance for which the wagering transaction was issued.

f.The Contest number for which the pool is conducted.

g.The type or types of wagers represented.

h.The number or numbers representing the Betting Interests for which the wager is recorded.

i.The amount or amounts of the contributions to the pari-mutuel pool or pools for which the ticket is evidence.

2.No pari-mutuel ticket recorded or reported as previously paid, canceled, or non-existent shall be deemed a valid pari-mutuel ticket by the association. The association may withhold payment and refuse to cash any pari-mutuel ticket not deemed valid.

B.Pari-Mutuel Ticket Sales. No pari-mutuel ticket may be sold on a Contest for which on a Contest for which wagering has already been closed and no association shall be responsible for ticket sales entered into but not completed by issuance of a ticket before the Totalisator is closed for wagering on such Contest.

1.Payment on winning pari-mutuel wagers shall be made on basis of the order of finish as purposely posted and declared “official.” Any subsequent change in the order may result in the order of finish or award of purse money as may result from a subsequent ruling by the Stewards or Commission shall in no way affect the pari-mutuel Payoff. If an error in the posted order of finish or Payoff figures is discovered, the Official Order of Finish or Payoff prices may be corrected and an announcement concerning the changes shall be made to the public.

2.The association shall have no obligation to enter a wager into a betting pool if unable to do so due to equipment failure.

C.Payment for Errors. If an error occurs in the payment amounts for pari-mutuel wagers, which are cashed or entitled to be cashed; and as a result of such error the pari-mutuel pool involved in the errors is not correctly distributed among winning ticket holders, the following shall apply:

1.Verification is required to show that the amount of the commission, the amount in Breakage, and the and the amount in Payoffs is equal to the total gross pool. If the amount of the pool is more than the amount used to calculate the payoff, the underpayment shall be added to the corresponding pool of the next Contest. If underpayments are discovered after the close of the Meeting, the underpayment shall be held in the interest-bearing account approved by the Division until being added, together with accrued interest, to the corresponding pool of the next meet.

2.Any claim not filed with the association within 30 days, inclusive of the date on which the underpayment was publicly announced, shall be deemed waived; and the association shall have no further liability therefore.

3.In the event the error results in an overpayment to winning wagers, the association shall be responsible for such payment.

D.Display of Betting Information.

1.Approximate odds for win pool betting shall be posted on display devices within view of the wagering public and updated at intervals of not more than 90 seconds.

2.The probable Payoff or amounts wagered, in total and on each Betting Interest, for other pools (excluding exotic wagers involving three or more Betting Interests) shall be displayed to the wagering public at intervals and in a manner approved by the Division.

3.Official prices and Payoffs must be displayed upon each Contest being declared official.

E.Canceled Contests. If a Contest is canceled or declared “no contest,” refunds shall be granted on valid wagers in accordance with these rules.

1.Authorized refunds shall be paid upon presentation and surrender of the affected pari-mutuel ticket.

F.Coupled Entries and Mutuel Fields. Contestants coupled in wagering as a Coupled Entry or Mutuel Field shall be considered part of a single Betting Interest for the purpose of price calculations and distribution of pools. Should any Contestant in a Coupled Entry or Mutuel Field be officially withdrawn or Scratched, the remaining Contestants in that Coupled Entry or Mutuel Field shall remain valid Betting Interests and no refunds will be granted. If all Contestants within a Coupled Entry or Mutuel Fields are Scratched then tickets on such Betting Interests shall be refunded, notwithstanding other provisions of these rules.

1.For the Purpose of price calculations only, Coupled Entries and Mutuel Fields shall be calculated as a single finisher, using the finishing position of the leading Contestant in that Coupled Entry or Mutuel Field to determine order of placing. This rule shall apply to all circumstances, including situations involving a Dead Heat, except as otherwise provided.

G.Closing of Wagering in a Contest. A Division representative shall verify the close of wagering for each Contest after which time no pari-mutuel tickets shall be sold for that Contest.

1.The association shall maintain, in good order, a system approved by the Division for closing wagering.

H.Emergency Situation. In the event of an emergency in connection with the pari-mutuel department not covered in these rules, the pari-mutuel manager representing the association shall report the problem to the Division representative and the association shall render a full report to the Division with 48 hours. The Division, at its discretion, may apply approved rules and regulations of jai alai, greyhound racing, or horse racing, or the Uniform Rules of Racing approved by the association of Racing and Commission International, in an event of an emergency not covered in these rules.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-26 to 01/04/2022
Periodic Refile — effective from 2002-01-02 to 10/26/2017

230-RICR-30-30-4 § 4.4 Simulcast Wagering

A.Duties of Simulcast Host. Every Host Association Simulcasting its Performance, if requested, may contract with an authorized receiver for the purpose of providing authorized users its Simulcast.

1.A Host Association is responsible for content of the Simulcast and shall use all reasonable effort to present a Simulcast which offers the viewers an exemplary depiction of each Performance.

2.Unless otherwise permitted by the Division, every Simulcast will contain in its video content a digital display of actual time of Day, the name of the host facility from where it emanates, the number of the Contest being displayed, and any other relevant information available to Patrons at the host facility.

3.The Host Association shall maintain such security controls including encryption over its uplink and communications systems as directed or approved by the Division.

B.Duties of Authorized Receiver. An authorized receiver conducts and operates a pari-mutuel wagering system on the results of Contest being held or conducted and Simulcast from the enclosures of one (1) or more Host Associations and with the approval of the Division.

1.An authorized receiver shall provide:

a.Adequate transmitting and receivable equipment of acceptable broadcasting quality, which shall not interfere with the closed circuit TV system of the Host Association for providing any host facility Patron information.

b.Pari-Mutuel terminals, pari-mutuel odds displays, modems and switching units enabling pari-mutuel data transmissions, and data communications between the Host and Guest Associations.

c.A voice communication system between each Guest Association and the Host Association providing timely voice contact among the Division designees, placing judges and pari-mutuel departments.

2.The Guest Association and all authorized receivers shall conduct pari-mutuel wagering pursuant to the applicable Division rules.

3.The Division may designate at least one official to supervise all approved Simulcast facilities and may require additional designees as is reasonably necessary for the protection of the public interest.

4.The Guest Association receiving a live audiovisual signal of a Contest shall make available to the Division any necessary audiovisual equipment for monitoring the Simulcast wagering activities at the Host Association.

5.Not less than thirty (30) minutes prior to the commencement of transmission of the Performance of pari-mutuel Contests for each Day or night, the Guest Association shall initiate a test program of its transmitter, encryption and decoding, and data communications to assure proper operation of the system.

6.The Guest Association shall, in conjunction with the Host Association or associations for which it operates pari-mutuel wagering, provide the Division with a certified report of its pari-mutuel operation as directed by the Division.

7.The Guest Association shall establish procedures and maintain backup devices for its transmitter, encryption and decoding, and data communication in the event of a malfunction or equipment breakdown.

C.Minus Pool. In the event that a Minus Pool occurs in any pari-mutuel pool of a Simulcast event, the expense of said Minus Pool shall be borne by the Guest Association and the State shall maintain its percentage of the total pool including half of the Breakage of the remaining pool.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-26 to 01/04/2022
Periodic Refile — effective from 2002-01-02 to 10/26/2017

230-RICR-30-30-4 § 4.5 Interstate/Intrastate Common Pool Wagering

A.General. All contracts governing participation in interstate/intrastate common pools shall be submitted to the Division for approval.

1.Individual wagering transactions are made at the point of sale in the state where placed. Pari-mutuel pools are combined for computing odds and calculating Payoffs and Breakage, but will be held separate for auditing and all other purposes.

2.Any surcharges or withholdings in addition to the takeout shall only be applied in the jurisdiction otherwise imposing such surcharges or withholdings.

3.In determining whether to approve an interstate/intrastate common pool which does not include the host track, the Division will consider and may approve use of a bet type which is not utilized at the host track, application of a takeout rate not in effect at the host track, or other factors which are presented to the Division.

4.The content and format of the visual display of racing and wagering information at facilities in other jurisdictions where wagering is permitted in the interstate/ intrastate common pool need not be identical to the similar information permitted or required to be displayed under these rules.

5.Any licensee applying for a permit to Simulcast a Program from another jurisdiction when there is a corresponding live Contest of the same type occurring in the State of Rhode Island must first obtain approval from that association conducting the live Contest in Rhode Island. The Division shall then determine if such approval is in the best interests of both the licensees and the State.

B.Guest State Participation in Interstate/Intrastate Common Pools.

1.With the prior approval of the Division, pari-mutuel wagering pools may be combined with corresponding wagering pools in the host state, or with corresponding pools established by one or more other jurisdictions.

2.The Division may permit adjustment of the takeout from the pari-mutuel pool so that the take out rate in this jurisdiction is identical to that at the host track, or identical to that of other jurisdictions participating in a merged pool.

3.Where takeout rates in the merged pool are not identical, the net price calculation shall be the method by which the different takeout rates are applied.

4.Rules of racing as established for the Contest in the host state shall apply to the merged pool.

5.The Division shall approve agreements made between the association and other participants in interstate/intrastate common pools governing the distribution of Breakage between the jurisdictions.

6.If, for any reason, it becomes impossible to successfully merge the bets placed into the interstate/intrastate common pool, the association shall make Payoffs in accordance with Payoff prices that would have been in effect if prices for the pool of bets were calculated without regard to wagers placed elsewhere; except that, with permission of the Division, the association may alternatively determine to either pay winning tickets at the Payoff prices at the host track, or declare such accepted bets void and make refunds in accordance with the applicable rules.

C.Host State Participation in Merged Pools.

1.With the prior approval of the Division, an association licensed to conduct pari-mutuel wagering may determine that one (1) or more of its Contests be utilized for pari-mutuel wagering at guest facilities in other states, and may also determine that pari-mutuel pools in the guest states be combined with corresponding wagering pools established by it as the host track or comparable wagering pools established by two (2) or more states.

2.Where takeout rates in the merged pool are not identical, the net price calculation shall be the method by which the different takeout rates are applied.

3.Rules of racing established for Races held in this State shall also apply to interstate common pools unless the Division shall have specifically otherwise determined.

4.The Division shall approve agreements made between the association and other participants in interstate/intrastate common pools governing the distribution of Breakage between the jurisdiction

5.Any contract for interstate/intrastate common pools entered into by the association shall contain a provision to the effect that if, for any reason, it becomes impossible to successfully merge the bets placed in another state into the interstate/intrastate common pool formed by the association, or if, for any reason, the Division’s or the association’s representative determines that attempting to effect transfer of pool data from the guest state may endanger the association’s wagering pool, the association shall have no liability for any measures taken which may result in the guest’s wagers not being accepted into the pool.

D.Takeout Rates in Interstate/Intrastate Common Pools.

1.With the prior approval of the Division, an association wishing to participate in an interstate/intrastate common pool may change its takeout rate (within the limits permitted by the General Laws) so as to achieve a common takeout rate with all other participants in the interstate/intrastate common pool.

2.An association wishing to participate in an interstate/intrastate common pool may request that the Division approve a methodology whereby host and guest states with different takeout rates for corresponding pari-mutuel pools may effectively and equitably combine wagers from the different states into an interstate intrastate common pool.

History

Periodic Refile — effective from 2022-01-04 to current
Amendment — effective from 2017-10-26 to 01/04/2022
Periodic Refile — effective from 2002-01-02 to 10/26/2017

230-RICR-30-30-5 Wrestling

230-RICR-30-30-5 § 5.1 Authority

These rules and regulations governing wrestling (hereinafter referred to as the "Rules") are adopted pursuant to the authority granted in R.I. Gen. Laws § 41-5-1 et seq. (the "Act").

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.2 Purpose

A.These Rules are adopted to assist the Department of Business Regulation (the "Department") in carrying out the administration and enforcement of the terms and provisions of the Act. In the development of these Rules, the Department relied upon the underlying policies and purposes of the Act, including, without limitation, the following:

1.To protect the health, safety and well-being of the competitors;

2.To protect and promote the integrity of events for the benefit of the consuming public; and

3.To protect the collection of the tax levied upon events by the State of Rhode Island.

B.Accordingly, these Rules shall be liberally construed and applied to effectuate and promote the Act's underlying policies and purposes. To the extent that any part of these Rules is inconsistent with the Act or fails to address a matter contained within the Act, or is inconsistent with applicable law or the terms of any other rule or regulation promulgated by the Department, then the Act, applicable law and/or the terms of such other rule or regulation shall be deemed to apply.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.3 Definitions

A.When used in these Rules, the following words, except as otherwise required by the context, shall have the following meaning:

1."Act" means R.I. Gen. Laws § 41-5-1 et seq., as amended.

2."Closed circuit television" means any telecast of an Event which is not intended to be available for viewing without the payment of a fee, collected for or based upon each event viewed, for the privilege of viewing the telecast and includes the terms "pay per view".

3."Competitor" means a participant in a Contest, Match or Exhibition.

4."Contest" and "Match" are synonymous, may be used interchangeably and mean an Event between two (2) or more Competitors in which the Competitors strive in good faith to win.

5."Department" means the Department of Business Regulation.

6."Director" means the Director of the Department of Business Regulation.

7."Division" means the Division of Gaming & Athletics of the Department of Business Regulation.

8."Event" or "Events" means a Contest, Match or Exhibition taking place within the State of Rhode Island where Professional wrestlers display or exhibit Wrestling, but does not include those events specifically exempted by the provisions of R.I. Gen. Laws § 41-5-1.

9."Exhibition" means an Event in which the Competitors show or display their skills without necessarily striving to win.

"Judge" means a Person to be licensed by the Department who attends the Event and who has the responsibility of scoring or judging the performance of the Competitors in the Event.
"License" includes the whole or part of any Department license, permit, certificate, approval, registration or similar form of permission required by law as a condition of conducting a Match as a condition of conducting a Match.
"Licensee" means any holder of a License.
"Person" means any individual, partnership, corporation, limited liability company, association, sole proprietorship, public or private organization or any other entity however formed.
"Physician" means an individual currently licensed to practice medicine in the State of Rhode Island and who has been licensed by the Department for the Event.
"Professional wrestler" means one who competes for a money prize or purse by engaging in Wrestling.
"Promotor" means any Person to be licensed with the Department who arranges, advertises, produces, stages or conducts an Event.
"Referee" means a Person to be licensed with the Department who has the general supervision of the Event and is present inside the ring during the Event.
"Regular business hours" means the regular business hours of the Department of 8:30 a.m. to 4:00 p.m. Monday through Friday.
"Wrestling" means the sport consisting of hand-to-hand combat between two (2) or more unarmed competitors who contend by grappling.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.4 Licenses

A.Licenses-Event

No Event shall take place or be conducted unless the Promotor of the Event has applied for and received a license from the Department (the "Event License"). The application form (the "Event Application") shall be supplied by the Division, upon request, during Regular Business Hours. An Event Application shall be received by the Division at least thirty (30) days prior to the date of the scheduled Event. The Event Application shall be completed in full, shall be in compliance with and include all of the information required by R.I. Gen. Laws §§ 41-5-3 and 41-5-3.1(a) and shall also include the following:

a.Proof of compliance with R.I. Gen. Laws § 41-5-3.2 with respect to ring equipment;

b. Compliance with R.I. Gen. Laws § 41-5-6 with respect to the filing of a surety bond in the amount determined to be satisfactory to the Division;

c. A copy of the approval of the city or town authorities where the Event is to be held, pursuant to R.I. Gen. Laws § 41-5-5; and

d. An application fee in the amount as specified by the Division.

Upon receipt of an Event Application, the Division shall review the Event Application to determine if it is in compliance with the requirements of the Act and these Rules. In connection therewith, the Division may require that the Promotor submit such additional information as the Division may deem necessary to enable it to complete its evaluation of the Event Application. If the Division determines that the Event Application is in compliance with the requirements of the Act and these Rules, the Division shall recommend to the Director that the Event License be issued to the Promotor. If the Director agrees with the recommendation of the Division, the Director shall issue the Event License. If the Director disagrees with the recommendation, the Director shall deny the Event License. If the Division determines that the Event Application is not in compliance with the requirements of the Act and these Rules, the Division shall recommend to the Director that the Event License be denied. If the Director agrees with the Division recommendation, the Event License shall be denied. If the Director disagrees with the recommendation of the Division, the Director shall issue the Event License.

3.In making his/her determination as to whether to issue or deny the Event License, the Director may in his/her sole discretion take into account any factors which he/she deems appropriate, including, without limitation, whether a substantially similar event has been licensed in this or any other state; whether there exist generally accepted standards and criteria for the conduct and scoring of such events; and whether there exist generally recognized sanctioning bodies for events of such kind. In addition, the Director reserves the right to place such conditions on the grant of an Event License as the Director deems necessary and reasonable pursuant to these Rules and the Act. The Promotor may appeal any decision of the Director to the Racing and Athletics Hearing Board in accordance with R.I. Gen. Laws § 41-2-1 et seq.

If issued, the Event License shall be considered conditional and not deemed valid until the holder of the Event License files with the Division a sworn supplementary application (the "Supplementary Application") updating the original Event Application pursuant to the terms and provision of R.I. Gen. Laws § 41-5-3.1(b). The Supplementary Application shall also contain such additional information as the Division may request.

B.Licenses-Competitors

No Person shall be a Competitor in a Wrestling Event unless licensed by the Department at least twenty-four (24) hours prior to the starting time for the first Match or Exhibition (the "Competitor License"). The application form for the Competitor License (the "Competitor Application") shall be supplied by the Division during Regular Business Hours. The Competitor Application shall be complete in all respects and shall be in compliance with and include all the information required by R.I. Gen. Laws § 41-5-7.1(a).
Upon receipt of a Competitor Application, the Division shall review it pursuant to the same procedures outlined in § 5.4(A)(2) of this Part.
If issued, the Competitor License shall be conditional and not deemed valid until the holder of the Competitor License files with the Division a sworn supplementary application (the "Competitor Supplementary Application") updating the original Competitor Application pursuant to the terms and provisions of R.I. Gen. Laws § 41-5-7.1(b). The Competitor Supplementary Application shall also contain such additional information as the Division may request. Notwithstanding the foregoing to the contrary, no Competitor Supplementary Application shall be required when the Competitor Application has been filed within the time frames established by R.I. Gen. Laws § 41-5-7.1(b).

C.Licenses-Physicians, First Aid Instructors, Practical Nurses. No Person shall act as a physician, first aid instructor, practical nurse or in any other medical capacity at an Event unless licensed by the Department (the "Medical License"). The application form for a Medical License (the "Medical Application") shall be supplied by the Division during Regular Business Hours. The Medical Application shall be complete in all respects and shall include and be in compliance with the requirements of R.I. Gen. Laws § 41-5-11.

D.Licenses-Referees. No Person shall act as a referee at an Event unless licensed by the Department (the "Referee License"). The application form for a Referee License (the "Referee Application") shall be supplied by the Division during Regular Business Hours. The Referee Application shall be complete in all respects.

E.Licenses-Judges. No Person shall act as a judge at an Event unless licensed by the Department (the "Judge License"). The application form for a Judge License (the "Judge Application") shall be supplied by the Division during Regular Business Hours. The Judge Application shall be complete in all respects.

F.Licenses-Timekeepers, Managers, Trainers, Seconds. No Person shall act as a timekeeper, manager, trainer or second unless licensed by the Department. The application form for the foregoing positions shall be supplied by the Division during Regular Business Hours.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.5 Termination, Suspension and Revocation of Licenses

B.Any License may be revoked or suspended prior to termination in accordance with the provisions of R.I. Gen. Laws § 41-5-17. Any License suspended or revoked may be appealed to the Racing and Athletics Hearing Board in accordance with R.I. Gen. Laws § 41-2-1 et seq. Any License suspended or revoked may be appealed to the Racing and Athletics Hearing Board in accordance with R.I. Gen. Laws § 41-2-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.6 Insurance

A.Event Licensee.

1.All Event Licensees shall furnish to the Division evidence of insurance at least thirty-six (36) hours prior to the starting time for the first Contest, Match or Exhibition of the Event as follows:

a. Public liability insurance in such form and in such amount as the Division deems satisfactory; and

b. Such other policies of insurance in such form and in such amounts as the Division shall reasonably require.

2.All insurance shall be in force not less than twenty-four (24) hours prior to the starting time for the first Contest, Match or Exhibition. Failure to produce the required insurance shall be grounds for revocation of the Event License.

B.Competitor Licensee. All Competitor Licensees shall furnish within twenty-four (24) hours prior to the Event satisfactory proof of health insurance and life insurance in such form and in such amounts as the Division deems satisfactory in accordance with R.I. Gen. Laws § 41-5-11.2. Failure to produce the required insurance shall be grounds for not granting a Competitor License or for the revocation of a Competitor License.

C.Sunday and Holiday Events. Notwithstanding the provisions of §§ 5.6(A) and (B) of this Part to the contrary, if an Event is permitted to be held on any day on which the evidence of insurance required by §§ 5.6(A) and (B) of this Part would not need to be furnished during Regular Business Hours, then such evidence of insurance shall be furnished to the Division at least six (6) hours before the end of Regular Business Hours on the last business day before the Event.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.7 Closed Circuit Television

No Closed Circuit Television broadcasts of an Event shall be permitted unless the Promotor or Person who intends to broadcast the Event has first obtained a License from the Division. The application form for a Closed Circuit Television License shall be supplied by the Division during Regular Business Hours. The application shall be completed in full, shall be in compliance with the requirements of R.I. Gen. Laws § 41-5-3.7 and shall also include any other information the Division may require.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.8 Miscellaneous

A. No Person under eighteen (18) years of age shall be licensed as a Competitor.

B. No Person may participate in a Wrestling Event against or with an animal.

C. No male Competitor may participate in a Wrestling Event against a female Competitor or vice-versa.

D. No Person over the age of thirty-five (35) shall be licensed as a Competitor without a hearing before the Division concerning his/her physical ability to perform.

E. Any Person applying for a Competitor's License without significant professional or amateur experience may be required to show proof of proper training as a wrestler.

F. The Referee or the Division official at ringside pursuant to R.I. Gen. Laws § 41-5-9.1 may disqualify a Competitor before or during the Event for:

1.the use of profanity, including gestures, by the Competitor, his manager, or his second; or

2.unsportsmanlike behavior including, but not limited to, arguing with a Referee or the Division official or refusing to obey either the Referee or Division official's orders.

G. In addition to the Physician who shall be in attendance at the Event, an ambulance and two (2) paramedics must be on standby, or in the discretion of the Division, at ringside.

H. The administration or use of drugs, stimulants or alcohol, either before or during an Event by any Competitor is prohibited. The Division shall revoke the Competitor License of any Competitor who uses drugs, stimulants or alcohol. For the purpose of verifying compliance with this rule, the Director or his Division designee may require that any Competitor submit to a urinalysis or blood test prior to or after the Event, or if recommended by the Physician, any other post-Event examination. All costs associated with the foregoing tests shall be borne by the Competitor or the Promotor.

I.In addition, the Division may require that any Competitor submit to an H.I.V. test in accordance with R.I. Gen. Laws § 41-5-11.1. The Division may, in its sole discretion, waive the H.I.V. test if the Competitor presents original or certified laboratory test results performed within thirty (30) days of submitting his completed application reflecting that he or she has been tested negative for the presence of the H.I.V. virus.

J.All medical reports and tests required to be performed pursuant to these Rules or the Act shall be open to examination only to the Department or its duly authorized representatives, to the Competitor and, upon written authorization of the Competitor to all such designated persons.

K. No liquid refreshments of any kind may be sold at the Event except in paper containers. Chairs must be securely attached so they are not portable.

L. Matchmakers and announcers may participate in a Wrestling Event without being licensed. It shall be the responsibility of the Event Licensee to ensure that these unlicensed Persons comply with the Act and these Rules. These Persons must register with the Division by supplying their name, address, telephone number and social security number.

M. No Event shall be ticketed in a general admission style of seating. All Events shall be ticketed by reserved seating.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.9 Variances or Waivers

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.10 Time, Number of Matches, Contests or Exhibitions

No Event shall commence later than 8:30 p.m. Each individual Contest, Match or Exhibition shall be a maximum of thirty (30) minutes. The total number of Wrestling Matches, Contests or Exhibitions for an Event shall be submitted to the Division for approval, in advance of the Event.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.11 Protective Equipment

All male Competitors shall be required to wear a foul-proof groin protector. A plastic cup with an athletic supporter is adequate, but an abdominal guard is preferable. Female Competitors must wear foul-proof breast protectors. Plastic breast covers are adequate. All Competitors must wear fitted mouthpieces. In addition to the foregoing, the Division reserves the right to require Competitors to wear such other protective equipment as the Division deems necessary in furtherance of the underlying policies and purposes of these Rules and the Act.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.12 Forbidden Tactics, Blows and Strikes

No Competitor shall be permitted to engage in any tactics, blows or strikes which the Division considers unnecessarily dangerous. In order for the Division to evaluate the tactics, blows or strikes, the Division may require a visual depiction as well as a written explanation of the tactics, blows and strikes the Competitors will be permitted to use at the Event. The Division shall prohibit the Competitors from engaging in any tactics, blows or strikes it considers unnecessarily dangerous in furtherance of the underlying policies and purposes of these Rules and the Act.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.13 Ring and Equipment

A.The ring, platform, covering, posts, ropes and all other equipment and materials to be used, employed or relied upon by the Competitors or any other Person during a Contest, Match or Exhibition shall be inspected and examined by the Division at least four (4) hours prior to the starting time for the first Contest, Match or Exhibition, all in accordance with the requirements and procedures outlined in R.I. Gen. Laws § 41-5-3.5(b).

B.In addition to the foregoing, the Division shall require that the ring shall be not less than eighteen (18) feet nor more than twenty-four (24) feet square within the ropes. The ring floor is to extend beyond the ropes a distance of not less than two (2) feet. The ring floor shall be padded with a soft, nongathering material to a thickness of not less than an inch and one-half extending two (2) feet beyond the ring ropes, with a top covering tightly stretched and secured to the ring platform. The ring shall not be more than four (4) feet above the floor of the building; and shall be provided with suitable steps for the use of the Competitors and other Persons who need access. Ring posts shall be made of metal, extending from the floor of the building to a height of forty-eight (48) inches above the ring floor. The ring must be properly lighted. There shall be three (3) ropes in number, not less than one (1) inch in diameter. Ropes shall be wrapped in soft material. Rope corners shall be padded.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.14 Scoring

A.All Contests, Matches and Exhibitions shall be scored as follows:

In a one-Fall Contest, Match or Exhibition, the Competitor winning the Fall within the time limit shall be declared the winner. If no Fall occurs during the time period prescribed, the Referee or Judge shall render a decision, calling either a draw or awarding a decision to one of the Competitors.
In a two out of three Fall Contest, Match or Exhibition, the Competitor to win the two Falls within the time limit prescribed shall be declared the winner. If only one Fall occurs within the time limit prescribed, the Competitor scoring such Fall shall be declared the winner. In the event neither Competitor scores two Falls within the time limit prescribed but each Competitor has scored one Fall or neither Competitor has scored a Fall, the Referee or Judge shall call a draw or award a decision to one of the Competitors.

3.For the purposes of § 5.14 of this Part, the term "Fall" shall mean a Competitor, who for a Referee's count of three (3), has both his or her shoulders touch the ring mat at the same time.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-30-30-5 § 5.15 Conflicts of Interest

No employee of the Department may belong to, contract with, or receive any compensation from, any Person who sanctions, arranges or promotes Professional Wrestling Matches or who otherwise has a financial interest in an active Professional Wrestler. For purpose of § 5.15 of this Part, the term “compensation” does not include funds held in escrow for payment to another Person in connection with a Professional Wrestling Match.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

Chapter 40 Banking

Subchapter 05 Financial Institutions and Credit Unions

230-RICR-40-05-1 Bonds of Officers and Employees

230-RICR-40-05-1 § 1.1 Authority

This regulation is promulgated pursuant to the authority granted in R.I. Gen. Laws § 19-2-19.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-1 § 1.2 Purpose

The purpose of this regulation is to set forth amounts for fidelity bond coverage for officers and employees of regulated institutions to carry out the provisions of R.I. Gen Laws § 19-2-19 entitled "Bonds of officers and employees - Supervision by director". The actions and information required by this regulation are hereby declared to be necessary and appropriate in the public interest.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-1 § 1.3 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-1 § 1.4 Definitions

Unless otherwise provided by this regulation or unless the context clearly requires otherwise, terms used in this regulation shall have the same meaning as the terms as defined in R.I. Gen. Laws Title 19.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-1 § 1.5 Provisions

A.It is the duty of the board of directors of each regulated institution to require bonds in such form and amount to insure the regulated institution is adequately protected from loss in the case of officers or employees failing to honestly discharge their duties.

B.The aggregate amount and form of coverage shall be determined by the board of directors in a written policy adopted by the board of directors. The policy should be premised upon a consideration of such factors as the adequacy of the current internal control system, the internal auditing safeguards employed, the number of employees, the amount of deposits, the amount of assets under management and the amount of cash and securities normally held by the regulated institution. However, the board of directors shall require coverage in such form and in such amount as to meet any requirements of the regulated institution's federal deposit insurer. The board of directors of financial institutions which are not federally insured because they do not accept deposits shall require coverage in such form as would be required by the financial institution's federal deposit insurer, if such institutions were federally insured. The minimum amount of the bond for financial institutions which are not federally insured shall be set by the board of directors and shall be based upon the greater of total assets or total assets under management as indicated in the following table:

Total Assets

Minimum Bond

$0 to $50,000,000

$100,000 plus $50,000 for each million or fraction over $1,000,000

$50,000,001 to $300,000,000

$2,550,000 plus $10,000 for each million or fraction over $50,000,000

Over $300,000,000

$5,000,000

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-2 Applications of Regulated Institutions

230-RICR-40-05-2 § 2.1 Authority

This regulation is promulgated pursuant to the authority granted in R.I. Gen. Laws § 19-1-3.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-2 § 2.2 Purpose

The purpose of this regulation is to set forth fees for applications filed by regulated institutions, financial institutions and credit unions with the Director of the Department of Business Regulation to carry out the provisions of R.I. Gen. Laws § 19-1-3 entitled "Applications - General." The actions and information required by this regulation are hereby declared to be necessary and appropriate in the public interest.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-2 § 2.3 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-2 § 2.4 Definitions

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-2 § 2.5 Filing Fees

Each regulated institution, financial institution and credit union which files an application with the Director shall pay an application fee, equal in amount to the total cost of the salary and benefits, calculated on an hourly basis, of the person(s) employed by the Division of Banking having actually participated in the review of the application. The Division of Banking shall submit a bill to the applicant with the decision on the application, detailing the application fee. The detailed breakdown of the bill to the applicant shall include but not be limited to the total hours of review time, the name(s) of the person(s) reviewing the application and the charge per hour. The maximum number of hours per type of application which shall be included in the bill to the applicant will be established by the Division of Banking at a public hearing pursuant to R.I. Gen. Laws § 19-1-3.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-2 § 2.6 Applicability

A.Application fees shall only apply in those instances in which an application for approval is required by R.I. Gen. Laws Title 19. For certain types of transactions, approvals may be granted without the need for the filing of an application.

B.Applications and associated fees are required for approvals by the Director, including but not limited to the following:

1.Agreements to Form;

2.Amendments to Agreements to Form;

3.Establishment of branches;

4.Relocations of branches;

5.Mergers of financial institutions;

6.Interstate banking, including but not limited to interstate acquisitions, mergers, and purchase and assumptions;

7.Interstate branching; and

8.Changes in control.

9.Other approvals which, in the discretion of the Director, require the filing of an application

C.Applications, and therefore application fees, are not required to be filed for approvals including but not limited to the following:

1.Mergers of credit unions;

2.Conversions to stock form of financial institution;

3.Amendments to by-laws;

4.Establishment of electronic devices and machines;

5.Conversions to federal charter;

6.Voluntary liquidations;

7.Conservatorships; and

8.Receiverships.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-3 Credit Union Conversions

230-RICR-40-05-3 § 3.1 Authority

A.This regulation (“Regulation”) is promulgated pursuant to the authority granted to the Rhode Island Department of Business Regulation (“Department”) by the Credit Union Conversion Act of 2001, R. I. Gen. Laws §§ 19-5.1-3(g), 42-14-17, and 42-35-1 et seq.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2008-05-01 to 01/04/2022
Adoption — effective from 2008-05-01 to 05/01/2008

230-RICR-40-05-3 § 3.2 Purpose

A.The purpose of this Regulation is to set forth procedures to carry out the provisions of R. I. Gen. Laws § 19-5.1-1 et seq. entitled Credit Union Conversion Act of 2001 (the “Act”) and to protect and preserve the interests and rights of members of a converting Credit Union. This Regulation establishes procedures, requirements, and options for the conversion of Credit Unions into other forms of Financial Institutions under the provisions of the Act or financial services entities chartered under the laws of the United States. The actions and information required by this Regulation are hereby declared to be necessary and appropriate to the public interest. Nothing contained in this Regulation shall limit the ability and authority of the Director to consider other information in determining whether or not to approve an application of a Credit Union to convert into another form of Financial Institution.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2008-05-01 to 01/04/2022
Adoption — effective from 2008-05-01 to 05/01/2008

230-RICR-40-05-3 § 3.3 Definitions

1."Director" means the Director of the Department of Business Regulation or his or her designee

2.“Eligible Member”, for purposes of this Regulation, means a member as defined in the Credit Union’s by-laws and in the plan of conversion, as of a date designated in said plan of conversion which in no event shall be less than three (3) months prior to the date of adoption of said plan of conversion by the board of directors of the Credit Union.

3.“Resulting Financial Institution”, for purposes of this regulation, means the institution into which the converting Credit Union converts as described in the plan of conversion.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2008-05-01 to 01/04/2022
Adoption — effective from 2008-05-01 to 05/01/2008

230-RICR-40-05-3 § 3.4 Provisions

A.Credit Union Conversion into Mutual Form of Financial Institution. A Credit Union chartered under the Rhode Island General Laws may convert into a mutual form of Financial Institution or financial services entity chartered under the laws of the United States upon satisfaction of the following conditions:

1.A plan of conversion is approved and adopted by at least a two-thirds (2/3) vote of the board of directors of the Credit Union;

2.If applicable, demonstration of compliance with R.I. Gen. Laws § 19-2-1 et seq.;

3.The plan of conversion and application for conversion is filed with the Director prior to the membership meeting and vote of the eligible members and the Director has given written approval of the proposed conversion;

4.The plan of conversion is approved by a majority vote of those Eligible Members pursuant to R.I. Gen. Laws § 19-5-7 of the Credit Union present in person or by proxy at a meeting duly called by the board of directors of the converting Credit Union;

5.The converting Credit Union shall file an application for approval of the plan of conversion in the form required by the Director and shall contain:

a.a copy of the minutes of the meeting of the board of directors approving and adopting the plan of conversion with the secretary's attestation;

b.all other application information and materials required to be submitted pursuant to this Regulation including, without limitation:

(1)a three (3) year business plan for the Resulting Financial Institution;

(2)the Credit Union’s most recent financial statements;

(3)all information and materials required by or sent to the National Credit Union Administration;

(4)all information and materials required by or sent to the Federal Deposit Insurance Corporation or other federal banking agency;

(5)all information and materials sent to the members of the converting Credit Union; and,

(6)any other information which the Director may require;

6.All necessary regulatory approvals have been obtained and all conditions imposed by the Director in connection with the granting of the approvals have been satisfied; and,

7.The deposits of any Resulting Financial Institution shall remain federally insured

B.Interests of Members. The Agreement to Form, or bylaws of the Resulting Financial Institution shall confer upon existing members of the converting Credit Union and future depositors of the Resulting Financial Institution, to the extent not inconsistent with the laws applicable to the Resulting Financial Institution, substantially the same rights in the Resulting Financial Institution, including any liquidation rights in the Resulting Financial Institution under R.I. Gen. Laws § 19-5.1-3, as were conferred upon members of the converting Credit Union as in effect immediately prior to the conversion.

C.Contents of the Plan of Conversion. Each plan of conversion shall contain a complete description of all significant terms of the proposed conversion, shall be made available to Eligible Members at least thirty (30) days prior to the vote on the conversion and shall:

1.if necessary, provide for the organization of the Resulting Financial Institution, which shall be in the form of a Financial Institution in mutual form organized pursuant to R.I. Gen. Laws § 19-2-1 et seq. or federal law as the case may be, and shall attach and incorporate the proposed Agreement to Form or charter and bylaws of such Resulting Financial Institution;

2.if necessary, in the case that the converting Credit Union proposes to form one or more holding companies, provide for the organization of one or more holding companies and attach and incorporate the proposed Agreement to Form or corporate charter and bylaws of such holding company or companies;

3.if necessary, provide for amendment of the Agreement to Form or charter and bylaws of the Credit Union to be consistent with an Agreement to Form or charter and bylaws of a state-chartered Financial Institution or financial services entity chartered under the laws of the United States as the case may be, and attach and incorporate such Agreement to Form or charter and bylaws;

4.provide that, upon consummation of the conversion, substantially all of the assets and liabilities, including all of its deposit liabilities, of the converting Credit Union shall be transferred to the Resulting Financial Institution;

5.provide that each member and depositor in the converting Credit Union shall upon consummation of the conversion receive, without payment, an identical account in the resulting financial institution;

6.provide that the plan of conversion as adopted by the board of directors of the converting Credit Union may be substantively amended by the board of directors, including as a result of comments from regulatory authorities, prior to the solicitation of membership approval and at any time thereafter with the concurrence of the Director and that the conversion may be terminated by the board of directors of the converting Credit Union at any time prior to the meeting of members called to consider the plan of conversion and at any time thereafter with the concurrence of the Director;

7.provide that the plan of conversion shall be terminated if not completed within a specified period of time, which shall not be more than 24 months from the date upon which the board of directors or the converting Credit Union approve the plan of conversion, and may not be extended by the converting Credit Union; and,

8.provide that the corporate existence of a Credit Union converting to the Financial Institution or other financial services entity chartered under the laws of the United States shall be deemed to be a continuation of the corporate entity Credit Union so converted.

D.Fairness of Plan of Conversion. The Director shall consider, among other things, the fairness of the plan of conversion to the members of the converting Credit Union. Factors considered by the Director to determine fairness may include, but are not limited to:

1.the adequacy of the disclosure materials;

2.the form of the proxy statement required for the vote of the Eligible Members on the plan of conversion;

3.the extent to which the application materials submitted to the Director conform with laws, rules or regulations of the Federal Deposit Insurance Corporation, the National Credit Union Administration, or other federal banking agency, as the case may be, as in effect at the time of submission of the application to the Director; and,

4.such other factors or information that the Director reasonably determines relevant to the conversion.

E.Disclosure materials.

1.At least thirty (30) days prior to the Credit Union providing any disclosure materials or plan of conversion to the Eligible Members of the converting Credit Union, the Credit Union shall submit such proposed disclosure materials to the Director for review and approval. The Director will either approve or provide comments with respect to the disclosure materials within thirty (30) days of receiving said disclosure materials. If the Director does not approve or provide comments within thirty (30) days from receipt thereof, the Credit Union may provide said disclosure materials to the eligible members. The disclosure materials to be submitted to the Eligible Members shall include at a minimum:

a.A statement of the reasons for the board of directors’ decision to propose the conversion;

b.A statement of the major positive and negative business effects of the proposed conversion;

c.The impact of the conversion on the members’ interest in the Credit Union; and

d.A disclosure of any conversion related benefit a director or senior management official may receive.

2.The disclosure materials and plan of conversion shall be made available to Eligible Members at least thirty (30) days prior to the meeting of the members called by the board of directors to consider the plan of conversion.

3.All written communications from a converting credit union to its members regarding the conversion must be written in a manner that is simple and easy to understand. Simple and easy to understand means the communications are written in plain language designed to be understood by ordinary consumers and use clear and concise sentences, paragraphs, and sections. For purposes of this section examples of factors to be considered in determining whether a communication is in plain language and uses clear and concise sentences, paragraphs and sections include the use of short explanatory sentences; use of definite, concrete, everyday words; use of active voice; avoidance of multiple negatives; avoidance of legal and technical business terminology; avoidance of explanations that are imprecise and reasonably subject to different interpretations; and use of language that is not misleading.

F.Credit Union Conversion into Stock Form of Financial Institution. In addition to complying with the provisions of this regulation and specifically the requirements of § 3.4(A) of this Part, any Credit Union converting to or creating a stock form of Resulting Financial Institution or creating a mutual holding company, shall also comply with the provisions of regulations promulgated by the Department with respect to mutual Financial Institutions converting to stock form of ownership and mutual holding companies, respectively. For purposes of said regulations, references to depositors shall mean members of the Credit Union and references to mutual savings banks and mutual financial institutions, shall include Credit Unions.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2008-05-01 to 01/04/2022
Adoption — effective from 2008-05-01 to 05/01/2008

230-RICR-40-05-3 § 3.5 Severability

A.If any provision of this regulation or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this regulation which can be given effect without the invalid or unconstitutional provision or application, an to this end the provisions of this regulation are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2008-05-01 to 01/04/2022
Adoption — effective from 2008-05-01 to 05/01/2008

230-RICR-40-05-4 Credit Union General Provisions

230-RICR-40-05-4 § 4.1 Authority

A.This regulation is promulgated pursuant to the authority granted in Chapter 5 of Title 19 of the General Laws of Rhode Island.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-4 § 4.2 Purpose

A.The purpose of this regulation is to provide for: credit union by-law content and amendment procedures pursuant to R.I. Gen. Laws § 19-5-4; a definition for qualified individuals for credit union supervisory committee membership pursuant to R.I. Gen. Laws § 19-5-9; requirements of loans to credit union officers and directors pursuant to R.I. Gen. Laws § 19-5-17; and, destruction of records programs for credit unions pursuant to R.I. Gen. Laws § 19-5-21. The actions and information required by this regulation are hereby declared to be necessary and appropriate in the public interest.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-4 § 4.3 Severability

A.If any provision of this regulation or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this regulation which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this regulation are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-4 § 4.4 Definitions

A.Unless otherwise provided by this regulation or unless the context clearly requires otherwise, terms used in this regulation shall have the same meaning as the terms as defined in Title 19.

B.“Immediate family member,” for purposes of this regulation, means a spouse, father, mother, brother, sister, father-in-law, mother-in-law or a person who lives in the same household as the member.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-05-4 § 4.5 Provisions

A.By-Laws.

1.Credit union by-laws and any amendment to a credit union by-laws require the approval of the Director. Model by-law provisions permitted pursuant the Federal Credit Union Act are generally allowed and will be approved unless inconsistent with Rhode Island law. This regulation establishes the procedures and policies of the Division of Banking relating to credit union by-law content and form.

2.Each credit union proposing to amend or change its by laws, should review any proposed amendment with the Division of Banking prior to submitting such an amendment to its membership or board of directors for approval. Each proposed amendment submitted to the Director shall be submitted to the membership or the board of directors at a meeting at which the proposed amendment is duly before the membership or the board of directors for consideration. The submission to the Director for approval of amendment(s) to credit union by-laws must include at least:

a.One (1) set of existing by-laws before the proposed amendment(s);

b.One (1) set of the amended section(s), with the proposed amendment(s) clearly identified;

c.A statement of purpose for each proposed amendment along with a summary explanation for each amendment being required;

d.A copy of the dated notice, signed by the Secretary or comparable officer of the credit union, of either:

(1)The meeting of the members, if applicable, which clearly states that an amendment to the by-laws will be considered; or

(2)The meeting of the board of directors, if applicable, which clearly states that an amendment to the by-laws will be considered;

e.A copy of the newspaper publication, if required by the by-laws, including the dates of publication;

f.Evidence of compliance with any applicable notice of meeting provisions in the credit union's by-laws;

g.A copy of the minutes of the membership or board of director meeting, whichever is applicable, evidencing:

(1)the existence of a quorum;

(2)the actual motion(s) made;

(3)the action taken on the proposed amendment(s), demonstrating an affirmative vote by at least three-fourths of the members present at the meeting or an affirmative vote by at least two-thirds of the authorized number of members of the board, whichever is applicable; and

(4)a detailed discussion of the proposed amendment(s) or a certification by the Secretary or comparable officer of the credit union that the proposed amendment(s) were available for distribution to all credit union or board members, whichever is applicable, for their review.

h.Such other information that the Director shall request.

3.Proposals submitted to the Director to amend by-laws will be approved or disapproved within sixty (60) days of a completed submission. The Division of Banking will, upon request by the credit union, notify the credit union proposing by-law amendment(s) as to the date of completion of the submission under consideration.

4.Upon approval, within thirty (30) days, the credit union must submit a revised copy of the by-laws, which incorporates the changes as approved by the Director and the date of such approval.

B.Supervisory Committee.

1.Only actual members of the credit union, as defined by the Agreement to Form or the by-laws of the credit union, are eligible to become members of the supervisory committee of that credit union. The following are guidelines and factors to be used to determine whether an eligible member is qualified to serve on a credit union supervisory committee, whether elected or appointed. It shall be the duty of the board of directors of the credit union to determine whether a member is "qualified" by applying the following factors and/or standards.

a.The member may not be an officer, director or employee of the credit union.

b.The member may not be an immediate family member of an officer, director or employee of the credit union.

c.The member must be in good standing. Good standing shall include being in compliance with all share, deposit and loan terms, as set forth in the credit union's by-laws, policies and regulations, as applicable to the member.

d.The member should have business and/or accounting experience and/or an educational background which would allow the member to discharge the duties and responsibilities of a supervisory committee member, in the opinion of the board of directors. The board of directors of a credit union shall specifically reference such a finding of the member's qualification in the minutes of the meeting at which such member was determined to be qualified, delineating the reasons for such determination of qualification.

e.The member or his or her immediate family member may not be a substantial borrower of the credit union. Substantial borrower shall mean, for purposes of this section only, any member and his or her immediate family member who, in the aggregate, have liabilities to the credit union that exceed 0.5% of the total assets of the credit union or 10% of the net capital of the credit union, whichever is greater, directly or indirectly. Indirectly liable shall include but not be limited to loan guarantees, co-signers on loans or loans to entities in which the member and immediate family member has a majority or controlling interest, whether legal or beneficial

f.Each credit union shall establish a written policy, not inconsistent with this regulation or state law, which defines how members qualify for election or appointment, as the case may be, to the supervisory committee and the factors and standards used to determine such qualification.

C.Loans to Officers, Directors, and Committee Members.

1.No officer, director or member of a committee may borrow under terms more preferable than those terms offered to other credit union members in the usual course of credit union business. Any loan to an officer, director or member of a committee must be granted in compliance with federal deposit insurance rules and regulations governing loans to officers and directors.

2.Loans to officers, directors or committee members will be reviewed by the Division of Banking using the same provisions of Federal Reserve System Regulation O, its successor or replacement regulation, which governs lending to officers or directors of banks or other types of deposit taking institutions as well as the provisions of National Credit Union Administration Rules and Regulations Part 701.21(d)(5). Each credit union shall maintain an updated copy of Regulation O or its successor or replacement regulation as well as National Credit Union Administration Rules and Regulations Part 701.21(d)(5). Each credit union must create and maintain a written policy for loans to officers, directors and committee members not inconsistent herewith.

3.Notwithstanding the above, credit unions are not required to report loans to officers, directors or committee members to the Division of Banking, independent of a request by the Division of Banking for such information.

D.Records Retention.

1.Each credit union shall establish and maintain a written records retention and destruction program which shall be available to the Division of Banking at each examination for review and comment, but not approval. Such a program shall be in conformance with any applicable federal deposit insurance laws, rules, regulations or policies. Notwithstanding anything to the contrary in this regulation, each credit union shall establish its record retention program on or before January 1, 1999.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

Subchapter 10 Lending

230-RICR-40-10-1 Derivative Transactions in Lending Limits

230-RICR-40-10-1 § 1.1 Authority

This Regulation (“Regulation”) is promulgated pursuant to the authority granted to the Department of Business Regulation (“Department”) by R.I. Gen. Laws Title 19, generally, and R.I. Gen. Laws §§ 19-3-3(b) and 19-4-16, specifically.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-01-01 to 01/04/2022
Adoption — effective from 2013-01-01 to 01/01/2013

230-RICR-40-10-1 § 1.2 Purpose

The purpose of this Regulation is to clarify that any Rhode Island state-chartered Financial Institution that engages in Derivative Transactions is required to take into consideration Credit Exposure to Derivative Transactions with respect to the lending limits in R.I. Gen. Laws § 19-3-3 and any other relevant applicable lending limits in R.I. Gen. Laws Title 19 or Federal law.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-01-01 to 01/04/2022
Adoption — effective from 2013-01-01 to 01/01/2013

230-RICR-40-10-1 § 1.3 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-01-01 to 01/04/2022
Adoption — effective from 2013-01-01 to 01/01/2013

230-RICR-40-10-1 § 1.4 Definitions

A.Unless otherwise provided by this Regulation or unless the context clearly requires otherwise, terms used in this Regulation shall have the same meaning as the terms defined in R.I. Gen. Laws § 19-1-1 or in any other relevant provision of R.I. Gen. Laws Title 19. All definitions herein may be superseded by applicable amendments by the Rhode Island Financial Institution’s primary federal regulatory authority and any such amendment shall apply, as relevant and applicable, in that specific context.

1.“Credit exposure” (to a counterparty in connection with a Derivative Transaction) shall be determined based on an amount that the Financial Institution reasonably determines under the terms of the derivative or otherwise would be its loss were the counterparty to default on that date, taking into account any netting and collateral arrangements and any guarantees or other credit enhancements; provided, that the Financial Institution may elect to determine credit exposure on the basis of such other method of determining credit exposure as may be permitted by the Financial Institution's primary federal regulatory authority.

2.“Director” means the Director of the Department or his or her designee

3.“Derivative transaction” shall include any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.

4.“Financial institution” means any entity, other than a credit union, duly organized under the laws of this state which has the statutory authority to accept money on deposit pursuant to title 19, including an entity which is prohibited from accepting deposits by its own by-laws or agreement to form; the term includes, but is not limited to banks, trust companies, savings banks, loan and investment banks and savings and loan associations.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-01-01 to 01/04/2022
Adoption — effective from 2013-01-01 to 01/01/2013

230-RICR-40-10-1 § 1.5 Criteria for Engaging in Derivative Transactions

A.Notice

1.Financial Institutions with no prior Derivative Transaction experience as of December 31, 2012 seeking to engage in Derivative Transactions for the first time after the effective date of this Regulation shall provide the Department written notice of that intention at least thirty (30) calendar days in advance of any binding contractual agreement and provide documentation that said Financial Institution is permitted to engage in Derivative Transactions pursuant to the definition of “Eligible Contract Participant” in 7 U.S.C. § 1(a)(18).

2.Financial Institutions with prior experience in Derivative Transactions shall provide notice of said fact and include the approximate date that the Financial Institution began engaging in Derivative Transactions. Said Financial Institution shall immediately conduct the relevant Credit Exposure impact and analysis for the Department’s review during its next examination.

3.Should any Financial Institution’s lending limit be exceeded by its participation in Derivative Transactions, said Financial Institution shall immediately notify the Department in writing and prepare an analysis and corrective action remedying said issue.

B.A Financial Institution seeking to participate in or currently participating in Derivative Transactions must document in its files that it:

1.is Well Capitalized in accordance with its Federal insurer’s standards and not subject to any written agreement, order, capital directive, or prompt corrective action, directive to meet and maintain a specific capital level for any capital measure and has an ability to absorb and/or mitigate any Credit Exposure indicated by such participation;

2.does not meet the definition of “Troubled condition” in 12 C.F.R. § 371.2(f);

3.has a reasonable basis for engaging in the Derivative Transaction;

4.has an ability to manage and assess Credit Exposure; and,

5.has effective internal controls to manage, monitor, and assess Credit Exposure.

C.Any Financial Institution that does not meet the conditions in § 1.5 (B)(1)(5) of this Part may request written permission from the Department to engage in Derivative Transactions.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-01-01 to 01/04/2022
Adoption — effective from 2013-01-01 to 01/01/2013

230-RICR-40-10-1 § 1.6 Criteria for Evaluating Credit Exposure

A.Rhode Island Financial Institutions shall comply with all requirements set forth in the Office of Comptroller of Currency’s (“OCC”) Final Interim Rule on Lending Limits 12 C.F.R. Parts 32, 159 and 160 (Effective July 21, 2012) with respect to Credit Exposure caused by Derivative Transaction participation on relevant lending limits.

B.Rhode Island Financial Institutions shall act cautiously, responsibly and consistent with safe and sound banking practices in any Derivative Transaction participation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-01-01 to 01/04/2022
Adoption — effective from 2013-01-01 to 01/01/2013

230-RICR-40-10-1 § 1.7 Credit Unions

A.While R.I. Gen. Laws § 19-5-15(2)(i) may be construed to allow Credit Unions to invest in Derivative Transactions, it is the Department’s position that Rhode Island state-chartered Credit Unions are only permitted to participate in Derivative Transactions subject to the conditions in §§ 1.7(B) and (C) of this Part. §§ 1.5 and 1.6 of this Part do not apply to Rhode Island state-chartered Credit Unions.

B.Before engaging in or taking any affirmative step toward participating in Derivative Transactions, Rhode Island state-chartered Credit Unions shall obtain a non-objection letter and/or written approval from the Department and National Credit Union Administration (“NCUA”).

C.If a Rhode Island state-chartered Credit Union obtains approval and/or non-objection to participation in Derivative Transactions from both the Department and the NCUA, the Department may impose appropriate conditions necessary to confirm the Credit Union’s ability to manage, monitor, and assess Credit Exposure related to participation in Derivative Transactions and ensure the safety and soundness of the Credit Union.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2013-01-01 to 01/04/2022
Adoption — effective from 2013-01-01 to 01/01/2013

230-RICR-40-10-5 Interest on Escrow Accounts

230-RICR-40-10-5 § 5.1 Authority

This regulation is promulgated pursuant to the authority granted in R.I. Gen. Laws § 19-9-2.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-10-5 § 5.2 Purpose

The purpose of this regulation is to set forth procedures to carry out the provisions of R.I. Gen. Laws § 19-9-2 entitled "Escrow accounts - Interest". The actions and information required by this regulation are hereby declared to be necessary and appropriate in the public interest.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-10-5 § 5.3 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-10-5 § 5.4 Definitions

A.Unless otherwise provided by this regulation or unless the context clearly requires otherwise, terms used in this regulation shall have the same meaning as the terms as defined in R.I. Gen. Laws Title 19.

1.Escrow account, for purposes of this regulation, is any account in which a mortgagee holds funds of a mortgagor in escrow for the payment of taxes and insurance premiums with respect to mortgaged property located in this state.

2.Annual tax service fee, for purposes of this regulation, is an annual fee imposed upon the mortgagor after the closing of the mortgage transaction to enable the mortgagee to determine whether taxes have been paid in accordance with the loan agreement or mortgage. A one-time charge to pay the cost of a tax reporting service, paid by the mortgagor prior to or at the time of closing of the mortgage transaction, is not an annual tax service fee.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-10-5 § 5.5 Provisions

A.Each mortgagee required to pay interest on escrow accounts shall credit such interest at the rate provided for in R.I. Gen. Laws § 19-9-2. Interest on the escrow account shall be computed based on the aggregate average daily balance in the escrow account as computed by the mortgagee in its usual course of business. Interest on the escrow account shall be credited annually on December 31 of each year. If the mortgage debt is paid in full prior to December 31 in any year, the interest to the date of payment shall be paid to the mortgagor.

B.Each mortgagee shall provide notice to the mortgagor of the amount of such interest credit. Such notice may take the form of notice as required by the Internal Revenue Service (i.e. Form 1099 -INT) or a substantially similar form.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

230-RICR-40-10-5 § 5.6 Applicability

This regulation and the provisions of the R.I. Gen. Laws § 19-9-2 apply to mortgages executed on or after June 20, 1995. With respect to mortgages in existence as of June 20, 1995, which were executed on or after July 1, 1979, compliance with this regulation and the provisions of R.I. Gen. Laws § 19-9-2 is mandatory as of June 20, 1995.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2001-12-19 to 01/04/2022
Periodic Refile — effective from 2001-12-19 to 12/19/2001

Subchapter 15 Mutual Holding Companies

230-RICR-40-15-1 Mutual Holding Companies Converting to Stock Form of Ownership

230-RICR-40-15-1 § 1.1 Authority

A.This Regulation is promulgated pursuant to the authority granted in R.I. Gen. Laws § 19-2-14, 19-2-14.1 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

230-RICR-40-15-1 § 1.2 Purpose

A.The purpose of this Regulation is to set forth procedures to carry out the provisions of R.I. Gen. Laws §§ 19-2-14 and 19-2-14.1 entitled "Conversion to stock form of financial institution" and “Mutual holding companies”, respectively. The actions and information required by this Regulation are hereby declared to be necessary and appropriate and in the public interest.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

230-RICR-40-15-1 § 1.3 Definitions

1.“Board of Trustees” means the governing body of the mutual savings bank, whether it be called the board of trustees or the board of directors. The terms board of trustees or board of directors, for purposes of this Regulation and R.I. Gen. Laws §§ 19-2-14 and 19-2-14.1 are interchangeable.

“Eligible Depositor,” for purposes of this Regulation, means a depositor holding qualifying deposits, as defined in the plan of conversion, as of a date designated in the plan of conversion which is not less than one (1) year prior to the date of adoption of the plan of conversion by the board of trustees. The plan of conversion may provide that any deposit accounts with total deposit balances of less than fifty dollars ($50.00) shall not constitute a qualifying deposit.

‎

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

230-RICR-40-15-1 § 1.4 Provisions

A.General.

Any mutual savings bank or mutual holding company may convert to a stock form of ownership upon complying with the provisions of state law and this Regulation. The deposits of the converting institution must remain federally insured at all times.

B.Application to Convert.

To request approval from the Director to convert to a stock form of ownership, the board of trustees must file an application with the Director in such form and containing such information as the Director requires to meet the requirements of R. I. Gen. Laws §§ 19-2-14 and 19-2-14.1 as the case may be, and this Regulation. Included with such application shall be a certification form, prepared by or caused to be prepared for, the board of trustees detailing the outcome of each vote as required by law. The certification shall contain the date or dates of the voting, the total votes cast, the total votes cast in favor of the conversion, the number of votes present at a meeting called for the purpose of voting on the conversion and the total number of votes cast by proxy.

C.Contents of Application to Convert.

The application to convert shall contain and include the plan of conversion, as adopted by the board of trustees. The application for conversion shall include, but not be limited to:

1.A full appraisal of the value of the converting bank or holding company, prepared by an independent appraiser which includes a complete and detailed description of the methodology employed and sufficient support for the conclusions reached; and

2.A business plan which includes a discussion of how the capital acquired through the conversion will be used.

D.Factors to be Considered.

The Director shall consider, among other things, the fairness of the plan of conversion to the eligible depositors of the converting institution. Factors considered by the Director to determine fairness may include, but are not limited to:

1.the adequacy of the disclosure materials;

2.the form of the proxy statement required for the vote of the depositors on the conversion;

3.the adequacy and independence of the appraisal of the value of the converting institution;

4.the pricing of the stock in relation to the pro forma value market value of the converting institution;

5.the compensation or benefits to be obtained by officers, directors or trustees of the converting institution in connection with the conversion;

6.the extent to which the application materials submitted to the Director conform with laws, rules or regulations of the federal deposit insurer of the converting institution and the various provisions of mutual-to-stock conversion regulations of the Office of Thrift Supervision as in effect at the time of submission of the application to the Director; and

7.such other factors or information that the Director reasonably determines relevant to the conversion.

E.Liquidation Account.

The liquidation account established as part of the plan of conversion shall be maintained and recalculated, if necessary, consistent with the provisions relating to liquidation accounts established pursuant to mutual-to-stock conversion regulations of the Office of Thrift Supervision as in effect at the time of liquidation.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

230-RICR-40-15-1 § 1.5 Severability

A.If any provision of this Regulation or the application thereof to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Regulation which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Regulation are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

230-RICR-40-15-2 Mutual Holding Companies Procedures

230-RICR-40-15-2 § 2.1 Authority

A.This Regulation is promulgated pursuant to the authority granted in R. I. Gen. Laws §§ 19-2-14.1 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

230-RICR-40-15-2 § 2.2 Purpose

A.The purpose of this Regulation is to set forth procedures to carry out the provisions of R.I. Gen. Laws § 19-2-14.1 entitled “Mutual holding companies” and to protect and preserve the interests and rights of depositors of a reorganizing mutual financial institution or an intermediate subsidiary financial institution of a mutual holding company or a subsidiary holding company. This Regulation establishes procedures, requirements and options for the reorganization of mutual financial institutions into mutual holding companies and the issuance of securities by a resulting subsidiary financial institution or subsidiary holding company of a mutual holding company under the provisions of R. I. Gen. Laws § 19-2-14.1. The actions and information required by this Regulation are hereby declared to be necessary and appropriate and in the public interest. Nothing contained in this Regulation shall limit the ability of the Director to consider other information in determining whether or not to approve an application of a mutual financial institution to reorganize into a mutual holding company or to issue securities associated therewith.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

230-RICR-40-15-2 § 2.3 Definitions

A.Unless otherwise provided by this Regulation or unless the context clearly requires otherwise, terms used in this Regulation shall have the same meaning as the terms as defined in Title 19 of the Rhode Island General Laws. Board of Trustees shall mean the governing body of the mutual financial institution, whether it be called the board of trustees or the board of directors. The terms board of trustees or board of directors, for purposes of this Regulation and R.I. Gen. Laws § 19-2-14.1 are interchangeable.

1.“Acquiree subsidiary financial institution” means any mutual financial institution, other than a resulting subsidiary financial institution, that:

a.is acquired by an existing mutual holding company concurrently with or subsequent to, such mutual holding company’s reorganization; and

b.is in the mutual form immediately prior to such acquisition.

2.“Eligible depositor,” for purposes of this Regulation, means a depositor holding qualifying deposits, as defined in the plan of mutual holding company reorganization, as of a date designated in said plan which is not less than one (1) year prior to the date of adoption of said plan by the board of trustees. The plan of mutual holding company reorganization may provide that any deposit accounts with total deposit balances of less than fifty dollars ($50.00) shall not constitute a qualifying deposit.

3.“Mutual financial institution” means a Rhode Island financial institution operating in mutual form.

4.“Mutual holding company” means a mutual financial institution reorganized in accordance with R.I. Gen. Laws § 19-2-14.1 to hold all or part of the shares of capital stock of a subsidiary financial institution, and shall mean, unless otherwise indicated, a subsidiary holding company controlled by a mutual holding company, organized under R.I. Gen. Laws § 19-2-14.1.5.

5.“Mutual holding company reorganization plan or plan of reorganization” means a plan to reorganize into a mutual holding company pursuant to R.I. Gen. Laws § 19-2-14.1, and shall include a plan of reorganization of an acquiree subsidiary financial institution

6.“Resulting subsidiary financial institution” means a financial institution in stock form that is organized as a subsidiary of a reorganizing mutual financial institution to receive the substantial part of the assets and liabilities (including all deposit accounts) of the reorganizing mutual financial institution upon consummation of the reorganization, or that is organized as a successor institution to the reorganizing mutual financial institution.

7.“Securities” means:

a.stock of any kind of a resulting subsidiary financial institution or subsidiary holding company of a mutual holding company including, without limitation, preferred or common stock;

b.securities convertible into or exchangeable for stock of any kind of a resulting subsidiary financial institution or subsidiary holding company of a mutual holding company; and

c.warrants, options or other rights for the issuance of stock of any kind of a resulting subsidiary financial institution or subsidiary holding company of a mutual holding company or of securities convertible into or exchangeable for stock of any kind of a resulting subsidiary financial institution or subsidiary holding company of a mutual holding company.

8.“Stock issuance plan” means a plan providing for the public issuance of securities by a subsidiary financial institution or a subsidiary holding company subject to the requirements of this Regulation.

9.“Subsidiary financial institution” means the financial institution resulting from the reorganization of a mutual financial institution in accordance with R.I. Gen. Laws § 19-2-14.1, all or part of the capital stock of which is held by a mutual holding company or a subsidiary holding company.

10.“Subsidiary holding company” means a stock holding company, organized as a business corporation under the laws of Rhode Island or another state, which is controlled by a mutual holding company, and which owns the stock of a subsidiary financial institution whose depositors have rights in the parent mutual holding company.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

230-RICR-40-15-2 § 2.4 Provisions

A.Mutual Holding Company Reorganizations.

1.A mutual financial institution may reorganize into the mutual holding company structure, or join a mutual holding company as an acquiree subsidiary financial institution, upon satisfaction of the following conditions:

a.A Reorganization Plan is approved by a two-thirds (2/3) vote of the board of trustees of the reorganizing mutual financial institution and, if applicable, any acquiree subsidiary financial institution;

b.The Reorganization Plan and Application is filed with the Director and the Director has given written approval of the proposed reorganization;

c.The Reorganization Plan is approved by a majority vote of the eligible depositors present in person or by proxy at a meeting called by the board of trustees, in accordance with the bylaws;

d.The reorganizing mutual financial institution shall file an Application for approval of the Reorganization Plan in the form required by the Director and shall contain:

(1)a copy of the minutes of the meeting of the board of trustees authorizing the Reorganization Plan and approving the Reorganization Plan with the secretary's attestation;

(2)all other application information and materials required to be submitted pursuant to this Regulation; and

(3)any other information which the Director may require.

e.All necessary regulatory approvals have been obtained and all conditions imposed by the Director in connection with the granting of the approvals have been satisfied; and.

f.The deposits of any deposit taking institutions remain federally insured.

B.Interests of Depositors

1.The Agreement to Form or Bylaws of a mutual holding company shall:

a.confer upon existing and future depositors of the resulting subsidiary financial institution the same rights in the mutual holding company, including any liquidation rights in the mutual holding company under R.I. Gen. Laws § 19-2-14.1, as were conferred upon depositors of the reorganizing mutual financial institution as in effect immediately prior to the reorganization; and

a.confer upon existing and future depositors of any acquiree subsidiary financial institution or any mutual financial institution that is in the mutual form when acquired by the mutual holding company the same rights, including any liquidation rights under R.I. Gen. Laws § 19-2-14.1, in the mutual holding company as were conferred upon depositors of the acquired subsidiary financial institution immediately prior to acquisition.

C.Contents of Reorganization Plans.

1.Each Reorganization Plan shall contain a complete description of all significant terms of the proposed reorganization, shall attach and incorporate any Stock Issuance Plan proposed in connection with the Reorganization Plan, and shall:

a.if necessary, provide for amendment of the Agreement to Form and bylaws of the reorganizing mutual financial institution to be consistent with an Agreement to Form and bylaws of a mutual holding company, and attach and incorporate such Agreement to Form and bylaws;

b.if necessary, provide for the organization of the resulting subsidiary financial institution, which shall be in the form of a financial institution in stock form organized pursuant to R.I. Gen. Laws §§ 19-2-1 et seq., and shall attach and incorporate the proposed Agreement to Form and bylaws of such subsidiary financial institution;

c.if necessary, in the case that the reorganizing mutual financial institution proposes to form a subsidiary holding company, provide for the organization of a subsidiary holding company and attach and incorporate the proposed Agreement to Form or Corporate Charter and bylaws of such subsidiary holding company;

d.if necessary, provide for amendment of the Agreement to Form and bylaws of any acquiree subsidiary financial institution to be consistent with an Agreement to Form and bylaws of a state-chartered financial institution or federal savings association in stock form, and attach and incorporate such Agreement to Form and bylaws;

e.provide that, upon consummation of the reorganization, substantially all of the assets and liabilities, including all of its deposit liabilities, of the reorganizing mutual financial institution shall be transferred to the resulting subsidiary financial institution, which shall thereupon become an operating subsidiary financial institution of the mutual holding company;

f.provide that all assets, rights, obligations, and liabilities of whatever nature of the reorganizing mutual financial institution that are not expressly retained by the mutual holding company shall be deemed transferred to the resulting subsidiary financial institution;

g.provide that each depositor in the reorganizing mutual financial institution or any acquiree subsidiary financial institution immediately prior to the reorganization shall upon consummation of the reorganization receive, without payment, an identical account in the resulting subsidiary financial institution or the acquiree subsidiary financial institution, as the case may be;

h.provide that the Reorganization Plan as adopted by the boards of trustees of the reorganizing mutual financial institutions and any acquiree subsidiary financial institution may be substantively amended by those boards of trustees, including as a result of comments from regulatory authorities, prior to the solicitation of depositor approval and at any time thereafter with the concurrence of the Director; and that the reorganization may be terminated by the board of trustees of the reorganizing mutual financial institution or any acquiree subsidiary financial institution at any time prior to the meeting of depositors called to consider the plan and at any time thereafter with the concurrence of the Director;

i.provide that the Reorganization Plan shall be terminated if not completed within a specified period of time, which shall not be more than twenty four (24) months from the date upon which the trustees of the reorganizing mutual financial institution or the date upon which the trustees of any acquiree subsidiary mutual institution, whichever is earlier, approve the Reorganization Plan and may not be extended by the reorganizing mutual financial institution or acquiree subsidiary financial institution; and

j.provide that the expenses incurred in connection with the reorganization shall be reasonable.

D.Issuance of Stock by Subsidiaries of Mutual Holding Companies.

1.No subsidiary financial institution or subsidiary holding company of a mutual holding company (including any resulting subsidiary financial institution or acquiree subsidiary financial institution) may issue stock to persons other than its mutual holding company parent in connection with a mutual holding company reorganization, or at any time subsequent to the subsidiary financial institution's acquisition by the mutual holding company, unless the subsidiary financial institution obtains approval of each such issuance from the Director.

E.Contents of Stock Issuance Plans.

1.Each Stock Issuance Plan shall contain a complete description of all significant terms of the proposed stock issuance; shall attach and incorporate the proposed stock order form and any agreements or other documents defining the rights of the stockholders; and shall provide that the aggregate amount of outstanding common stock of the subsidiary financial institution, or subsidiary holding company, owned or controlled by persons other than the subsidiary financial institution's mutual holding company parent at the close of the proposed issuance shall be less than fifty percent (50%) of the subsidiary financial institution's total outstanding common stock.

F.Subsidiary Holding Companies

1.Formation. A mutual holding company may establish a subsidiary holding company as a direct subsidiary to hold one hundred percent (100%) of the stock of its subsidiary financial institution. A subsidiary holding company shall be subject to the Director's supervision, regulation, and examination to the same extent as a mutual holding company under R.I. Gen. Laws §§ 19-6-1 et seq. The subsidiary holding company may be established either at the time of the initial mutual holding company reorganization or at a subsequent date, subject to the approval of the Director.

2.Stock issuances. For purposes of this Regulation, the subsidiary holding company shall be treated as a subsidiary financial institution issuing stock. In the case of a stock issuance by a subsidiary holding company, the aggregate amount of outstanding common stock of the subsidiary financial institution owned or controlled by persons other than the subsidiary holding company's mutual holding company parent at the close of the proposed issuance shall be less than fifty percent (50%) of the subsidiary holding company's total outstanding common stock.

G.Other factors.

1.The Director shall consider, among other things, the fairness of the Reorganization Plan to the eligible depositors of the reorganizing mutual financial institution or acquiree subsidiary financial institution. Factors considered by the Director to determine fairness may include, but are not limited to:

a.the adequacy of the disclosure materials;

b.the form of the proxy statement required for the vote of the eligible depositors on the Reorganization Plan;

c.the extent to which the application materials submitted to the Director conform with laws, rules or regulations of the federal deposit insurance corporation and the various provisions of mutual holding company regulations of the Office of Thrift Supervision as in effect at the time of submission of the application to the Director; and

d.such other factors or information that the Director reasonably determines relevant to the reorganization.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

230-RICR-40-15-2 § 2.5 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2003-05-27 to 01/04/2022
Adoption — effective from 2003-05-27 to 05/27/2003

Subchapter 20 Money Servicers

230-RICR-40-20-2 Check Cashers

230-RICR-40-20-2 § 2.1 Authority

This regulation is promulgated pursuant to the authority granted in R.I. Gen. Laws § 19-14.4-3.

History

Periodic Refile — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 06/11/2015
Adoption — effective from 2015-06-11 to 06/11/2015

230-RICR-40-20-2 § 2.2 Scope

This regulation applies to check cashers licensed or required to be licensed pursuant to R.I. Gen. Laws Chapter 19-14.4. Financial institutions, credit unions, and other insured-deposit-taking institutions which are authorized to do business in Rhode Island including one authorized to do business by operation of an interstate banking statute which allowed its original entry, are not considered check cashers for purposes of R.I. Gen. Laws Chapter 19-14.1 but are authorized to cash checks.

History

Periodic Refile — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 06/11/2015
Adoption — effective from 2015-06-11 to 06/11/2015

230-RICR-40-20-2 § 2.3 Purpose

The purpose of this regulation is to set forth procedures to carry out the provisions of R.I. Gen. Laws Chapter 19-14.4 entitled "Check Cashing". The actions and information required by this regulation are hereby declared to be necessary and appropriate in the public interest.

History

Periodic Refile — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 06/11/2015
Adoption — effective from 2015-06-11 to 06/11/2015

230-RICR-40-20-2 § 2.4 Definitions

A.As used in this Regulation:

1."Cash sheet" means a daily record of transactions of cash and cash items at the licensed location which shall include, but not be limited to, opening and closing balances.

2."Liquid assets" means cash on hand, cash in bank, checks on hand not previously dishonored and marketable securities owned by the licensee, less any loans payable on demand or loans payable within one (1) year or less and any accounts payable by the licensee.

History

Periodic Refile — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 06/11/2015
Adoption — effective from 2015-06-11 to 06/11/2015

230-RICR-40-20-2 § 2.5 Applications

A.Application. All licensees shall make application for a license through the National Mortgage Licensing System (NMLS). Any changes to the information provided in the application must be reported to the Department, within thirty (30) days through an NMLS filing.

B.Interpretation of Community. The Director, in reviewing an application for a license to cash checks shall consider the proposed licensee's community, as required by R.I. Gen. Laws § 19-14.4-2, to include the community as proposed by the applicant in its application or business plan, which community in no event shall be less than a one (1) mile geographic radius of the proposed location.

C.Qualified Individual or Branch Manager. All such persons must have at least five (5) years’ experience in check cashing including, without limitation, employment, supervision, or independent work experience. Factors to be considered when assessing the quality of an individual's experience shall include the number, complexity and types of transactions handled in relation to the type of license sought by the application. The Department, will consider experience for a lesser period than five (5) years depending on individual circumstances. Factors which the Department shall consider for such a lesser experience period include but are not limited to the individual's educational experience, the complexity of transactions in relation to the type of license sought by the application and the supervision and oversight over the manager or person designated to operate the licensed business by a person having at least five (5) years of qualified experience.

D.Criminal Background Checks. All officers, directors, owners of 10% or more, Qualified Individuals and Branch Managers must submit the following information to the Division by mail

1.An Original and Completed Authorization for Background Check and Release form in the form provided on NMLS;

2.A copy of the individual’s valid photo Id, such as an unexpired driver’s license or passport;

3.Two (2) completed fingerprint cards (the Division does not provide cards);

4.An Original Certification of Fingerprinting by other agencies form in the form provided on NMLS; and

5.A check in the amount of $35 per individual made payable to “BCI” for the cost of the background check

E.Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the voting stock or equity interests of a licensee requires notification to the Department fifteen (15) days after such a change in ownership. With the notice of a change in ownership to the Department, the licensee shall submit information in substantially the same form as a new application relating to the new owner(s) and new directors, officers and managers, including names, addresses and personal background information. If the new owner(s) and new directors, officers and managers have the financial responsibility, experience, character and general fitness as required of an applicant, the Department shall approve such change in control. The Department shall approve or deny such a change in control within thirty (30) days of receipt of all information the Department requires to be filed to make such a determination.

F.Advertising. Each licensee shall include in all advertisements disseminated primarily in Rhode Island words substantially similar to "Rhode Island Licensed Check Casher.”

History

Periodic Refile — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 06/11/2015
Adoption — effective from 2015-06-11 to 06/11/2015

230-RICR-40-20-2 § 2.6 Check Casher Requirements

A.Security Measures. Every licensee shall provide for the safety and security of its customers and its employees by complying with the following security measures:

1.Install an alarm system that when activated automatically signals either the local police department or a licensed security company, if licensing is required by law, ordinance, rule or regulation. The alarm system must include panic buttons at strategically placed inconspicuous locations within the licensed location.

2.Install a camera surveillance system to monitor the activities of employees and customers at the licensed location.

3.Install bullet proof glass and partitions that meet or exceed Underwriters Laboratories Level II ballistics standards at all check cashing stations, transaction windows, counters and similar areas where the exchange of funds, checks, money orders and other transactions take place. Applicants and licensees are required to provide sufficient documentation such as contractor certification or building inspector certification that such structures and areas meet these requirements. Underwriters Laboratories Level II ballistics standards partitions must extend from floor to ceiling and be constructed in a manner to not allow an individual to breach such partition to gain access to the check cashing area provided, however, that a reasonably lower partition is allowable if the entire transaction area, including the top portion, is enclosed by such materials.

4.Adopt and implement a security program that provides for a schedule of inspecting, testing and servicing of the security devices installed at the licensed location. Each licensee shall maintain records of each inspection, testing and servicing of the security devices.

B.Liquid Assets. Every licensee shall maintain liquid assets of at least ten thousand dollars ($10,000) at all times at the licensed location.

C.Cash Sheets. Every licensee shall prepare daily cash sheets for each day's business reflecting all transactions for that day. The cash sheets must be balanced and settled prior to the opening of the next day's business. Cash sheets must record the beginning and ending numbers of money orders issued each day. A closing cash count must be performed which includes all cash and cash items.

D.Log Sheet and Inventory Items. Every licensee shall maintain a written log indicating each transaction, including the amount, for the following:

1.money orders, travelers checks or checks sold or issued;

2.food stamps issued; and

3.utility payments accepted.

E.Dishonored Checks. Every licensee shall maintain a register of all checks, money orders, or drafts that have been altered, forged, stolen, obtained through fraudulent or illegal means, negotiated without proper legal authority or represent the proceeds of illegal activity, after having been advised of such by the payor financial institution. The register shall contain, to the extent available, the following, if applicable:

1.date the licensee was advised by the payor institution;

2.the amount of the item;

3.the payee;

4.the name of the payor institution;

5.the item number and date; and

6.the reason for dishonor.

7.The licensee shall notify the police department in the city or town in which the office of the licensee where the check was cashed is located of the dishonored check, pursuant to statute.

F.Currency and Foreign Transactions Reporting. Every licensee must maintain and comply with 31 C.F.R. Part 103, as amended, entitled "Financial Recordkeeping and Reporting of Currency and Foreign Transactions." Any records maintained or reports filed pursuant to these federal regulations shall be maintained at the licensed location for at least five (5) years.

GInventory and reconciliation. Inventory and reconciliation records relating to money order, travelers’ checks, other checks, and food stamps issued or sold.

H.Altered Checks. A register of all checks, money orders, or drafts, that have been altered, forged, stolen, obtained through fraudulent or illegal means, negotiated without proper legal authority, or which represent the proceeds of illegal activity, after having been advised as such by the payor financial institution.

I.Money Laundering. A copy of the licensee's written policy and affirmative program to insure compliance with state and federal money laundering statutes

J.Charges. A conspicuously posted notice stating the charges for cashing checks.

K.Financial Statements. A financial statement, prepared at a minimum on a quarterly basis, which evidences compliance to applicable statutory net worth requirements.

History

Periodic Refile — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 06/11/2015
Adoption — effective from 2015-06-11 to 06/11/2015

230-RICR-40-20-2 § 2.7 Severability

If any provision of this regulation or the application thereof to any person or circumstance is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this Regulation which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this Regulation are severable.

History

Periodic Refile — effective from 2022-01-04 to current
Periodic Refile — effective from 2022-01-04 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 01/04/2022
Technical Revision — effective from 2015-06-11 to 06/11/2015
Adoption — effective from 2015-06-11 to 06/11/2015

Chapter 50 Securities, Franchises and Charities

Subchapter 05 Securities

230-RICR-50-05-1 Pre-Licensing Requirements

230-RICR-50-05-1 § 1.1 Authority

This regulation is promulgated by the Director of the Department of Business Regulation pursuant to R.I. Gen. Laws § 7-11-705.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.2 Purpose

The purpose of this regulation is to clarify and set forth practices and procedures consistent with R.I. Gen. Laws Chapter 7-11.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.3 Severability Provisions

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.4 Definitions

A.In addition to the terms defined in R.I. Gen. Laws § 7-11-101, when used in this Part, the following definitions shall have the following meanings:

1.“3(c)(1) fund” means a private fund that is excluded from the definition of an investment company under § 3(c)(1) of the Investment Company Act of 1940, 15 U.S.C. § 80a-3(c)(1).

2.“CRD” means the Central Registration Depository operated by FINRA.

3.“Department” means the Securities Division of the Rhode Island Department of Business Regulation.

“Director” means the Director of the Rhode Island Department of Business Regulation or his or her designee.

5.“FINRA” means the Financial Industry Regulatory Authority, which is a self-regulatory organization as that term is defined in R.I. Gen. Laws § 7-11-101(23).

6.“IARD” means the Investment Adviser Registration Depository, which is operated by FINRA.

7.“Private fund” means an issuer that would be an investment company as defined in § 3 of the Investment Company Act of 1940, 15 U.S.C. § 80a-3, but for 15 U.S.C. §§ 80a-3(c)(1) or 80a-3(c)(7) of that Act.

8."Private fund adviser” means an investment adviser who provides advice solely to one or more private funds.

9.“Representatives” means Broker Dealer Sales Representatives and/or Investment Adviser Representatives.

“RIUSA” means the Rhode Island Uniform Securities Act set forth in R.I. Gen. Laws § 7-11-101 et seq.

11.“SCOR” means Small Corporate Offering Registration.

12.“SEC” means the United States Securities and Exchange Commission.

“Value of primary residence” means the fair market value of a person’s primary residence, subtracted by the amount of debt secured by the property up to its fair market value.

14.“Venture capital fund” means a private fund that meets the definition of a venture capital fund in SEC Rule 203(l)-1, 17 C.F.R. § 275.203(l)-1.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.5 Broker-Dealer Exemptions

A.The following broker-dealers (as that term is defined in R.I. Gen. Laws § 7-11-101(1)) shall be exempt from the licensing requirements of R.I. Gen. Laws § 7-11-201:

1.Any broker-dealer who is a resident of Canada, has no office or other physical presence in this State, and complies with the following conditions:

a.Only affects or attempts to affect transactions exempted by R.I. Gen. Laws § 7-11-402 unless otherwise expressly required by the terms of the exemption:

(1)with or for a person who is a resident of Canada who is temporarily present in Rhode Island and with whom the Canadian broker-dealer had a bona fide business-client relationship before the person entered the State; or

(2)with or for a person who is a resident of Canada who is present in Rhode Island and whose transactions are in a self-directed tax advantages retirement plan in Canada of which the person is the holder or contributor;

b.Files a notice with the Director of the Department in the form of the broker-dealer’s current application for registration required by the jurisdiction in which the broker-dealer’s head office is located, including any amendments thereto;

c.Files a consent to service of process with the Director;

d.Provides the Director, upon request, a copy of the broker-dealer’s books and records relating to the broker-dealer’s business in Rhode Island as a broker-dealer;

e.Informs the Director promptly of any regulatory, disciplinary or criminal action being taken against the broker-dealer, and the Director determines that such action would not be grounds for denial of the exemption contained herein;

f.Is a member in good standing of a self-regulatory organization or stock exchange in good standing and provides evidence thereof to the Director;

g.Maintains provincial or territorial registration and membership in a self-regulatory organization or stock exchange in good standing and provides evidence thereof to the Director;

h.Discloses in writing to its client’s in Rhode Island that the broker-dealer is not subject to the full regulatory requirements of the RIUSA or any regulations promulgated thereunder; and

i.Is not in violation of any of the provisions of the RIUSA or any rules and regulations promulgated thereunder and is not in violation of any federal securities law and any rules and regulations promulgated thereunder.

B.Any person who will be representing a Canadian broker-dealer exempted by this Part shall also be deemed automatically exempt from licensing requirements so long as the person acting as a representative shall comply with all of the conditions of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.6 Exempt Investment Adviser Representatives

A.The following investment adviser representatives are exempt from the licensing requirement of R.I. Gen. Laws § 7-11-203:

1.Individuals who prepare reports or analyses concerning securities who are not identified to advisory clients as having prepared such reports or analyses and who do not provide any investment advice directly to advisory clients (unless required to be licensed due to their roles as investment adviser representatives under R.I. Gen. Laws § 7-11-101(12)(i)(A)(I)-(V).

2.Individuals, who are not on the adviser’s investment committee, who determine any investment advice to be given to advisory clients and who do not provide any investment advice directly to advisory clients. If no investment committee exists, this exemption applies to the individuals who determine any investment advice where there are more than five such individuals who are all supervised by one or more persons who are licensed as investment advisers or investment adviser representatives.

3.Individuals who solicit, offer or negotiate for the sale of or sell investment advisory services provided such solicitation activities are solely incidental to the activities for which such individuals are employed and who would not be an investment adviser representative except for the performance of the activities described in § 1.6(A)(3) of this Part.

4.Any partner, officer, director or person acting in a similar capacity who supervises employees only with respect to activities other than investment advisory activities requiring licensing under R.I. Gen. Laws § 7-11-101(12)(A)(I)-(IV).

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.7 Exemption of Certain Broker-Dealers, Investment Advisers, and Sales Representatives Using the Internet for General Dissemination of Information on Products and Services

A.The following broker-dealers, investment advisers, broker-dealer sales representatives and investment adviser representatives (as those terms are defined in R.I. Gen. Laws § 7-11-101(1) (11),(12) and (20)) who use the Internet to distribute information on available products and services through certain communications made on the Internet directed generally to anyone having access to the Internet, and transmitted through postings on Bulletin Boards, displays on “Home Pages” or similar methods (hereinafter “Internet Communications”) shall not be deemed as “transacting business” in this state for the purposes of R.I. Gen. Laws §§ 7-11-201 and 7-11-203 if the all following conditions are observed:

1.The Internet Communication does not involve either affecting or attempting to affect transactions in securities, or the rendering of personalized investment advice for compensation, but is limited to the dissemination of general information on products and services;

2.The Internet Communication indicates, either directly or indirectly, that the Representatives’ services are not being offered to residents of the State of Rhode Island;

3.The Internet Communication is not otherwise directed to any person in Rhode Island by or on behalf of the Representatives;

4.No services are rendered by Representatives in Rhode Island until they are duly licensed under R.I. Gen. Laws §§ 7-11-201, 7-11-203; or exempt from licensing under R.I. Gen. Laws §§ 7-11-202, 7-11-204;

5.Follow-up, individualized responses to persons in Rhode Island by such Representatives that involve either the affecting or attempting to affect transactions in securities, or the rendering of personalized investment advice for compensation, as may be, will not be made absent compliance with state broker-dealer, investment adviser, or Representatives registration requirements, or an applicable exemption or exclusion;

6.The Internet Communication contains a mechanism, including and without limitation, technical “firewalls” or other implemented policies and procedures, designed reasonably to ensure that prior to any direct communication with prospective customers or clients in this state, said broker-dealer, investment adviser, or Representative is first registered in Rhode Island or qualifies for an exemption or exclusion form such requirement. Nothing in this paragraph shall be construed to relieve a state registered broker-dealer, investment adviser, or Representative from any applicable securities registration requirement in Rhode Island; and

B.In the case of Representatives:

1.The identities of the Representatives are prominently disclosed within the Internet Communication;

2.The broker-dealer or investment adviser with whom the Representatives are associated retains the responsibility for reviewing and approving the content of any Internet Communication by its Representatives;

3.The broker-dealer or investment adviser with whom the Representatives are associated first authorized the distribution of information on the particular products and services through the Internet Communication; and

4.In disseminating information through the Internet Communication, the Representatives act within the scope of the authority granted by the broker-dealer or investment adviser.

C.Reliance on any exemption from registration under this Part does not preclude a Representative from relying on any other exemption provided under the Rhode Island General Laws or this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.8 Registration Exemption for Investment Advisers to Private Funds

A.Exemption for Private Fund Advisers

1.A private fund adviser shall be exempt from the registration requirements of R.I. Gen. Laws § 7-11-203 if the private fund adviser satisfies each of the following conditions:

a.Neither the private fund adviser nor any of its advisory affiliates are subject to a disqualification as described in Rule 262 of SEC Regulation A, 17 C.F.R. § 230.262;

b.The private fund adviser files with the state each report and amendment thereto that an exempt reporting adviser is required to file with the Securities and Exchange Commission pursuant to SEC Rule 204-4, 17 C.F.R. § 275.204-4; and

c.The private fund adviser pays the same fee as that specified for a federal covered adviser in R.I. Gen. Laws § 7-11-206(a)(5).

2.A private fund adviser who advises at least one (3)(c)(1) fund that is not a venture capital fund shall also comply with all of the following requirements:

a.The private fund adviser shall advise only those 3(c)(1) funds (other than venture capital funds) whose outstanding securities (other than short-term paper) are beneficially owned entirely by persons who, after deducting the value of the primary residence from the person’s net worth, would each meet the definition of a qualified client in SEC Rule 205-3, 17 C.F.R. § 275.205-3, at the time the securities are purchased from the issuer.

b.At the time of purchase, the private fund adviser shall disclose the following in writing to each beneficial owner of a 3(c)(1) fund that is not a venture capital fund:

(1)All services, if any, to be provided to individual beneficial owners;

(2)All duties, if any, the investment adviser owes to the beneficial owners; and

(3)Any other material information affecting the rights or responsibilities of the beneficial owners.

c.The private fund adviser shall obtain on an annual basis audited financial statements of each 3(c)(1) fund that is not a venture capital fund, and shall deliver a copy of such audited financial statements to each beneficial owner of the fund.

B.Federal Covered Investment Advisers. If a private fund adviser is registered with the Securities and Exchange Commission, the adviser shall not be eligible for this exemption and shall comply with the state notice filing requirements applicable to federal covered investment advisers in R.I. Gen. Laws § 7-11-203.

C.Investment Adviser Representatives. A person is exempt from the registration requirements of R.I. Gen. Laws § 7-11-203 if he or she is employed by or associated with an investment adviser that is exempt from registration in this state pursuant to this regulation and does not otherwise act as an investment adviser representative.

D.Electronic Filing. The report filings described in § 1.8(A)(1)(b) of this Part above shall be made electronically through the IARD. A report shall be deemed filed when the report and the fee required by R.I. Gen. Laws § 7-11-206(a)(5) are filed and accepted by the IARD on the state's behalf.

E.Transition from Exemption to Registration.

1.An investment adviser who becomes ineligible for the exemption provided by this rule must comply with all applicable laws and rules requiring registration or notice filing within ninety (90) days from the date the investment adviser’s eligibility for this exemption ceases.

F.Grandfathering for Investment Advisers to 3(C)(1) Funds with Non-Qualified Clients

1.An investment adviser for a 3(c)(1) fund (other than a venture capital fund) that is beneficially owned by one or more persons who are not qualified clients as described in § 1.8(A)(2)(a) of this Part may qualify for the exemption contained in § 1.8(A)(1) of this Part if the following conditions are satisfied:

a.The subject fund existed prior to May 17, 2012; and,

b.As of May 17, 2012, the subject fund stopped accepting beneficial owners who were not qualified clients, as described in § 1.8(A)(2)(a) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.9 Licensing Applications

A.The application and consent to service of process requirements of R.I. Gen. Laws § 7-11-205 are met as follows:

1.The application for initial registration as a broker-dealer shall be made by completing Form BD in accordance with the form instructions and by filing the form with CRD. The annual renewal shall be filed with the CRD. The application for initial registration as a sales representative shall be made by filing Form U-4 with the CRD. The annual renewal shall be filed with the CRD. If the broker-dealer is not a FINRA member, the application, amendments, fee and renewal shall be filed with the Department.

2.The application for initial registration as an investment adviser shall be made by completing Form ADV in accordance with the form instructions and by filing the form with the IARD. The application for an investment adviser annual renewal shall be filed with the IARD.

3.The application for initial registration as an investment adviser representative shall be made by filing Form U-4 with the CRD. The annual renewal shall be made with the CRD.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.10 Multiple Licensing of Sales Representatives

A.Pursuant to R.I. Gen. Laws § 7-11-208(d), the Director may authorize multiple licensing if each employer files a written undertaking with the Director containing the following information:

1.A statement by each employer that it consents to the multiple employment of the sales representative and setting forth the effective date of the multiple employment; and

2.A statement by each employer that it agrees to assume joint and several liability with all of the other employers for any act or omission of the sales representative during the stated employment period.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.11 Multiple Licensing of Investment Advisers

A.Pursuant to R.I. Gen. Laws § 7-11-208(g), the Director may authorize multiple licensing if each licensed or registered entity submits a written undertaking with the Department containing the following information:

1.A statement by each licensed or registered entity that it consents to the multiple employment of the investment adviser representative and setting forth the effective date of the multiple employment; and

2.A statement by each licensed or registered entity that it agrees to assume joint and several liability with all other named licensed or registered entities for any act or omission of any investment adviser representative during the employment period.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.12 Multiple Licensing of Sales Representatives and Investment Advisers with Unaffiliated Firms

A. Pursuant to R.I. Gen. Laws § 7-11-208(i), the Director may authorize dual licensing of sales representatives and investment adviser representatives with unaffiliated broker dealer and investment adviser firms if each licensed or registered entity submits a written undertaking with the Director containing the following information:

A statement by each licensed or registered entity that it consents to the multiple employment of the sales representative or investment adviser representative and setting forth the effective date of the multiple employment; and
A statement by each licensed or registered entity that it agrees to assume joint and several liability with all other named licensed or registered entities for any act or omission of any sales representative or investment adviser representative during the employment period.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.13 Examinations

A.Examination Requirements

1.Any person applying to be registered as an investment adviser or investment adviser representative under the Act shall provide the Department with proof of obtaining a passing score on one of the following examinations:

a.The Uniform Investment Adviser Law Examination (Series 65 examination); or

b.The General Securities Representative Examination (Series 7 examination) and the Uniform Combined State Law examination (Series 66 examination). For applicants applying on or after October 1, 2018, the Securities Industry Essentials (“SIE”) Exam will also be required.

2.Grandfathering

a.Any individual who is registered as an investment adviser or investment adviser representative in any jurisdiction in the United States as of December 3, 1999, shall not be required to satisfy the examination requirements for continued registration, except that the Director may require additional examinations for any individual found to have violated any state or federal securities law.

b.An individual who has not been registered in any jurisdiction for a period of two (2) years shall be required to comply with the examinations requirements of this Part.

3.Waivers

a.The examination requirement shall not apply to an individual who currently holds one of the following professional designations:

(1)Certified Financial Planner™/CFP® certification awarded by the International Board of Standards and Practices for Certified Financial Planners, Inc.;

(2)Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;

(3)Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;

(4)Chartered Financial Analyst (CFA) awarded by the Institute of Chartered Financial Analysts;

(5)Chartered Investment Counselor (CIC) awarded by the Investment Counsel Association of America, Inc.; or

(6)Such other professional designation as the Director may by rule or order recognize.

B.Each applicant for an initial license as a sales representative must pass, as above, the Securities Industry Essentials (“SIE”) Exam, the Series 63 or the Series 66, and either the Series 2 or the Series 7 examinations, unless the applicant’s proposed securities activities will be restricted, in which case the applicant is required to pass, as above, each examination administered by the FINRA which relates to the applicant’s proposed activities.

C.Prior to issuance of an initial broker-dealer license, and at all times thereafter, at least one (1) person located in the principal office of the broker-dealer shall be designated in the license application to act in a supervisory capacity and be licensed as a registered representative of the broker-dealer. Each designated supervisor shall meet the examination requirement of § 1.13(B) of this Part and pass, as above, the FINRA General Securities Principal Qualification exam (Series 24), unless the broker-dealer’s proposed securities activities will be restricted, in which case the designated supervisor is required to pass, as above, each examination administered by the FINRA which relates to the broker-dealer’s securities activities.

D.The examination or program/designation requirements in §§ 1.13(A) and (B) of this Part may be waived for any applicant who meets the requirements of either of the following:

1.The applicant has been licensed in the same capacity under the RIUSA at any time within two (2) years prior to the date the application is filed; or

2.The applicant, within two (2) years prior to the date the application is filed, has been:

a.Licensed as a sales representative under the securities law of any other state which required passage of the Series 63 or Series 66 and registered with FINRA; or

b.Licensed as an investment adviser representative under the securities law of any other state which requires passage of the Series 65 or Series 66.

E.A bona fide officer or director of an issuer selling securities registered under SCOR is exempt from the examination requirements for sales representative registration if that person will not be receiving sales related compensation so long as:

1.Any officer or director who offers of sells securities registered under SCOR must provide a copy of the “Consumers Guide to Small Business Investments” to all offerees at or before the time the offering document is required to be delivered.

2.The registration of any person relying on the exemption set forth in this section may be suspended or revoked if that person fails to deliver a copy of the “Consumers Guide to Small Business Investments” to any person to whom securities are offered or sold pursuant to the SCOR offering for which that person is registered.

3.To qualify for the exemption set forth above, a person must submit to the Director an affidavit representing that the person:

a.Is a bona fide officer or director of the SCOR issuer;

b.Will provide all persons to whom securities are offered or sold with a copy of “Consumers Guide to Small Business Investments”;

c.Will not be receiving sales related compensation for the sale of the SCOR securities;

d.Understands that the sales representative registration will only authorize the offer and sale of securities on behalf of the issuer of the SCOR offering to be carried out pursuant to the registration statement that has been filed with the Department; and

e.Understands that failure to provide all offerees with a copy of “Consumers Guide to Small Business” is grounds for revocation or suspension of the sales representatives’ registration.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.14 Minimum Net Capital

A.Every broker-dealer, whether or not subject to Rule 15c3-1 under the Securities Exchange Act of 1934, 17 C.F.R. § 240.15c3-1, shall maintain net capital in such minimum amounts as are designated in that rule for the activities to be engaged in by a broker-dealer in this state.

B.The aggregate indebtedness of each broker-dealer, whether or not subject to Rule 15c3-1 under the Securities Exchange Act of 1934, 17 C.F.R. § 240.15c3-1, to all other persons shall not exceed the levels prescribed in that rule.

C.If a broker-dealer is an individual, the person shall segregate from personal capital an amount sufficient to satisfy the net capital requirement, and the amount so segregated shall be utilized solely for the business for which the broker-dealer is licensed.

D.An investment adviser licensed under RIUSA, but exempt from registration under the Investment Advisers Act of 1940, 15 U.S.C. § 80b-6a, must at all times maintain net worth of not less than $5,000. This applies only to investment advisers that do not take or retain custody of securities or funds of a client. Investment advisers that take or retain custody must comply with the provisions of § 2.12 of this Subchapter.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-1 § 1.15 Broker-Dealer Bond

A.Every broker-dealer who is not registered under the Securities Exchange Act of 1934 shall file with the Department a surety bond in the amount set by order of the Director with a minimum of $100,000 and a maximum of $1,000,000, except:

1.Broker-dealers who are members of the Securities Investor Protection Corporation; or

2.Broker-dealers who do not have custody or possession of any customer’s funds or securities.

B.Every sales representative associated with a broker-dealer who is not registered under the Securities Exchange Act of 1934 shall file with the director a surety bond in the amount set by order of the director with a minimum of $10,000 and a maximum of $100,000, unless the broker-dealer with whom the sales representative is associated is exempt pursuant to §§ 1.15(A)(1) or (2) of this Part.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-2 Post-Licensing Requirements

230-RICR-50-05-2 § 2.1 Authority

A.This regulation is promulgated by the Director of the Department of Business Regulation pursuant to R.I. Gen. Laws § 7-11-705.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.2 Purpose

A.The purpose of this regulation is to clarify and set forth practices and procedures consistent with Chapter 7-11 of the Rhode Island General Laws.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.3 Severability Provisions

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.4 Definitions

A.In addition to the terms defined in R.I. Gen. Laws § 7-11-101, when used in this Part, the following terms shall have the following meanings:

1.“Broker-dealer services” means the investment banking or securities business as defined in paragraph (p) of Article 1 of the By-Laws of FINRA.

2.“Department” means the Securities Division of the Rhode Island Department of Business Regulation.

3.“Director” means the Director of the Rhode Island Department of Business Regulation or his or her designee.

4.“Financial institution” means federal and state chartered banks, savings and loan associations, savings banks, credit unions, and the service corporations of such institutions located in Rhode Island.

5.“FINRA” means the Financial Industry Regulatory Authority, which is a self-regulatory organization as that term is defined in R.I. Gen. Laws § 7-11-101(23).

6.“IARD” means the Investment Adviser Registration Depository, which is operated by FINRA.

7.“Networking arrangements” means a contractual or other agreement between a broker-dealer and a financial institution pursuant to which the broker-dealer conducts broker-dealer services on the premises of such financial institution where retail deposits are taken.

8.“RIUSA” means the Rhode Island Uniform Securities Act set forth in R.I. Gen. Laws § 7-11-101 et seq.

9.“SEC” means the United States Securities and Exchange Commission.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.5 Expiration of Licenses

A.The licenses of a broker-dealer, sales representative, investment adviser or investment adviser representative expire on December 31 of each year.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.6 Post-Licensing Filings

A.In accordance with R.I. Gen. Laws § 7-11-209(c)(1), the following information is required:

1.Each broker-dealer, whether or not subject to SEC Rule 17 C.F.R. § 240.17a-5, shall prepare an annual financial statement as directed by SEC Rule 17 C.F.R. § 240.17a-5. A copy of each annual financial statement shall be retained by the broker-dealer as prescribed in SEC Rule 17 C.F.R. § 240.17a-5 and, upon the written or verbal request of the Department anytime during that period, furnish a copy of said annual financial statement within seventy-two hours of the request.

2.Each broker-dealer shall file with the Department a copy of any complaint related to its business, transactions or operations naming the broker-dealer or any of its partners, officers or agents as defendant in any civil or criminal proceeding, or in any administrative or disciplinary proceeding by any public or private regulatory agency, within twenty (20) days of the date the complaint is served on the broker-dealer; a copy of any answer or reply thereto filed by the broker-dealer within ten (10) days of the date such is filed; and a copy of any decision, order or sanction made with respect to any such proceeding within twenty (20) days of the date the decision order or sanction is rendered

3.Each broker-dealer shall file with the Department a notice of transfer of control or change of name within thirty (30) days after the date on which the transfer of control or change of name occurs.

4.Except as provided in §§ 2.6(A)(2), (3) and (8) of this Part, all material changes in the information included in a broker-dealer’s most recent application for license shall be set forth in an amendment to Form BD filed with the Director within thirty (30) days after the change occurs.

5.Every broker-dealer shall file with the Department the following reports concerning its net capital and aggregate indebtedness:

a.Immediate electronic or written notice whenever the net capital of the broker-dealer is less than is required under § 1.14 of this Subchapter specifying the respective amounts of its net capital and aggregated indebtedness on the date of the notice:

b.A copy of every report of notice required to be filed by the broker-dealer pursuant to SEC Rule 17 C.F.R. § 240.17a-11.

6.Each broker-dealer shall give immediate written notice to the Department of the theft or disappearance of any Rhode Island customers’ securities or funds that are in the custody or control of its offices, whether within or outside this state, stating all material facts known to it concerning the theft or disappearance. However, if a broker-dealer complies with the provisions of SEC Rule 17 C.F.R. § 240.17(f)(1), such broker-dealer need not give the notice required by this paragraph.

7.Each broker-dealer shall file with the Department a copy of any subordination agreement relating to the broker-dealer, within ten (10) days after the agreement has been entered, unless prior thereto the broker-dealer has filed a copy of the agreement with a national securities exchange or association of which it is a member.

8.Each broker-dealer shall notify the Department in writing at least ten (10) days prior to opening and not more than ten (10) days after closing in this state any branch office as defined in R.I. Gen. Laws § 7-11-206(b). The notification shall include such information as the Department may request.

9.Each investment adviser shall within ninety days after its fiscal year end prepare a balance sheet in accordance with generally accepted accounting principles and retain a copy of that balance sheet for a period of not less than five years unless such retention requirement would be in violation of 15 U.S.C. § 80b-18a(b). At any time within that period, such investment adviser shall make available, within seventy-two hours of any verbal or written request of the Director, a copy of said balance sheet. Investment advisers who retain custody of any client’s funds or securities must prepare and retain as above an audited balance sheet and, within seventy-two hours, upon the verbal or written request of the Director, make said audited balance sheet available.

10.Each investment adviser shall file with the Department:

a.A copy of any complaint related to its business, transactions, or operations naming the investment adviser or any of its partners, officers or investment adviser representatives as defendants in any civil or criminal proceeding, or in any administrative or disciplinary proceeding by any public or private regulatory agency, within twenty (20) days of the date the complaint is served on the investment adviser;

b.A copy of any answer or reply to the complaint filed by the investment adviser within ten (10) days of the answer or reply is filed; and

c.A copy of any decision, order or sanction made with respect to any such proceeding within twenty (20) days of the date the decision, order or sanction is rendered.

11.Each investment adviser shall file with the director a notice of transfer of control or change of name within thirty (30) days after the date on which the transfer of control or change of name occurs.

12.Except as provided in §§ 2.6(10) and (11) of this Part, all material changes in the information included in an investment adviser’s most recent application for license shall be set forth in an amendment to form ADV filed with the Department within the time prescribed for filings such amendments with the SEC or for advisers who are not registered under the Investment Advisers Act of 1940, thirty (30) days after the change occurs.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.7 Investment Adviser Representative Continuing Education Requirements

A.Definitions. In addition to the terms defined in R.I. Gen. Laws § 7-11-101 and in this Part, the following terms shall have the following meaning for this Section:

1.“Act” means the Uniform Securities Act (1985) as applicable.

2.“Approved IAR Continuing Education Content” means the materials, written, oral, or otherwise that have been approved by the Department using NASAA criteria which make up the educational program provided to an investment adviser representative under this rule.

3.“Authorized Provider” means an entity the Department using NASAA criteria has authorized to provide continuing education content required by this rule.

4.“Credit” or “Credit Hour” means a unit that has been designated by NASAA or its designee as at least fifty (50) minutes of educational instruction.

5.“Home State” means the state in which the investment adviser representative has their principal office and place of business.

6.“IAR Ethics and Professional Responsibility Content” means Approved IAR Continuing Education Content that addresses an investment adviser representative’s ethical and regulatory obligations.

7.“IAR Products and Practice Content” means Approved IAR Continuing Education Content that addresses an investment adviser representative’s continuing skills and knowledge regarding financial products, investment features, and practices in the investment advisory industry.

8.“NASAA” means the North American Securities Administrators Association, or a committee designated by its Board of Directors.

9.“Reporting Period” means one twelve-month (12) period as determined by NASAA. An investment adviser representative’s initial Reporting Period with this state commences the first day of the first full Reporting Period after the individual is registered or required to be registered with this state.

B.Every investment adviser representative, as set forth in R.I. Gen. Laws § 7-11-203, must complete the following IAR continuing education requirements each Reporting Period:

1.An investment adviser representative must complete six (6) credits of ethics and professional responsibility content offered by an Authorized Provider, with at least three (3) credits specifically covering the topic of ethics; and

2.An investment adviser representative must complete six (6) credits of product and practice content offered by an Authorized Provider.

C.An investment adviser representative who is also registered as an agent of a FINRA member broker-dealer and who complies with FINRA’s continuing education requirements is in compliance with the IAR Products and Practice Requirement in § 2.7(B)(2) of this Part for each applicable Reporting Period if the FINRA continuing education content meets the following baseline criteria as determined by NASAA:

1.The continuing education content focuses on compliance, regulatory, ethical, and sales practices standards;

2.The continuing education content is derived from state and federal investment advisory statutes, rules and regulations, securities industry rules and regulations, and accepted standards and practices in the financial services industry; and

3.The continuing education content requires that its participants demonstrate proficiency in the subject matter of the educational materials.

D.Credits of continuing education completed by an investment adviser representative who was awarded and currently holds a credential that qualifies for an examination waiver under 230-RICR-50-05-1.13(A)(3) may comply with § 2.7(B)(1) and (2) of this Part provided all of the following are true:

1.The investment adviser representative completes the credits of continuing education as a condition of maintaining the license for the relevant Reporting Period;

2.The credits of continuing education completed during the relevant Reporting Period by the investment adviser representative are mandatory to maintain the credential; and

3.The continuing education content provided by the credentialing organization during the relevant Reporting Period is Approved IAR Continuing Education Content.

E.Every investment adviser representative is responsible for ensuring that the Authorized Provider reports the investment adviser representative’s completion of the applicable IAR continuing education requirements to FINRA for continuing education tracking.

F.Continuing education credits in excess of the amount required for the Reporting Period may not be carried forward to a subsequent Reporting Period.

G.An investment adviser representative who fails to comply with this § 2.7 of this Part by the end of a Reporting Period will renew as “CE Inactive” at the close of the calendar year in this state until the investment adviser representative completes and reports all required IAR continuing education Credits for all required Reporting Periods. An investment adviser who is CE inactive at the close of the next calendar year is not eligible for investment adviser representative registration or renewal of an investment adviser representative registration until such time as all required credits for the required reporting periods have been completed.

H.The director may, in their discretion, waive any requirements of this rule.

I.An investment adviser representative registered or required to be registered in this state who is registered as an investment adviser representative in the individual’s Home State is in compliance with § 2.7 of this Part provided that:

1.The investment adviser representative’s Home State has continuing education requirements that are at least as stringent as those set forth in § 2.7 of this Part; and

2.The investment adviser representative is in compliance with the Home State’s investment adviser representative continuing education requirements.

J.An investment adviser representative who was previously registered under the Act and became unregistered must complete IAR continuing education for all reporting periods that occurred between the time that the investment adviser representative became unregistered and when the person became registered again under the Act unless the investment adviser representative takes and passes the examination or receives an examination waiver as required by 230-RICR-50-05-1.13(A)(3) in connection with the subsequent application for registration.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.8 Required Records

A.Every broker-dealer, whether or not subject to the Securities Exchange Act of 1934, shall make and keep current the records required by that Act and rules thereunder.

B.Every investment adviser, whether or not subject to the Investment Advisers Act of 1940, shall make and keep current the records required by that Act and rules thereunder.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.9 Successor Firms

A.An applicant for licensing of a successor under R.I. Gen. Laws § 7-11-210 shall complete the same forms and fees as for initial licensing.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.10 Inspection Fees

A.Licensees shall be charged a fee of one hundred dollars ($100.00) per examiner per day plus actual costs of transportation and lodging where applicable for examinations under R.I. Gen. Laws § 7-11-211.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.11Unethical and Dishonest Practices 2.11Unethical and Dishonest Practices {#sec-230-ricr-50-05-2-2.11unethical-and-dishonest-practices omnilex-key=us-ri-regs-official--title-230--230-RICR-50-05-2#2.11Unethical and Dishonest Practices}

A.Under authority of R.I. Gen. Laws § 7-11-705(a)(3), the Director hereby defines the term “unethical or dishonest practices”, as that term appears in R.I. Gen. Laws § 7-11-212(b)(8) and without limiting the meaning to that set forth below, to mean one or more instances where a person has engaged in the conduct described below:

1.The following are deemed to be unethical or dishonest practices by a broker-dealer:

a.Causing any unreasonable delay in the delivery of securities purchased by any of its customers, or in the payment upon request of free credit balances reflecting completed transactions of any of its customers;

b.Inducing trading in a customer’s account which is excessive in size or frequency in view of the financial resources and character of the account;

c.Recommending to a customer the purchase, sale or exchange of any securities without reasonable grounds to believe that the recommendation is suitable for the customer after reasonable inquiry concerning the customer’s investment objectives, financial situation and needs, and any other information known by the broker-dealer;

d.Executing a transaction on behalf of a customer without authority to do so;

e.Executing a transaction for the account of a customer upon instruction from a third party without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time or price for the execution of orders, or both;

f.Exercising any discretionary power in effecting a transaction of a customer’s account without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time or price for the execution of orders, or both;

g.Extending, arranging for, or participating in arranging for credit to a customer in violation of the Securities Exchange Act of 1934 or the regulations of the Federal Reserve Board;

h.Executing any transaction in a margin account without obtaining from its customer a written margin agreement not later than fifteen (15) calendar days after the initial transaction in the account;

i.Failing to segregate customers’ free securities or securities in safekeeping;

j.Hypothecating a customer’s securities without having a lien thereon unless written consent of the customer is first obtained, except as permitted by rules of the SEC;

k.Charging its customer an unreasonable commission or service charge in any transaction executed as agent for the customer;

l.Entering into a transaction for its own account with a customer with an unreasonable mark-up or mark-down;

m.Entering into a transaction for its own account with a customer in which a commission is charged;

n.Entering into a transaction with or for a customer at a price not reasonable related to the current market price;

o.Executing orders for the purchase by a customer of securities not registered or exempted unless the transaction is exempted under RIUSA;

p.Representing itself as a financial or investment planner, consultant, or adviser, when the representation contains any untrue statement of material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; including but not limited to the nature of the services offered, the qualifications of the person offering the services, or the method of compensation for the services;

q.Violating any material rule of SEC, FINRA, any national or regional securities exchange or national securities association of which it is a member with respect to any customer, transaction or business in this state;

r.Failing to furnish to a customer purchasing securities in an offering, not later than the date of confirmation of the transaction, either a final prospectus or a preliminary prospectus and an additional document, which together include all information set for the in the final prospectus;

s.Introducing customer transactions on “fully disclosed” basis to another broker-dealer that is not licensed under RIUSA; and

t.Recommending to a customer that the customer engage the services of an investment adviser that is not licensed or exempt from licensing under RIUSA.

2.The following are deemed unethical or dishonest practices by a sales representative:

a.Borrowing money or securities from, or lending money or securities to a customer;

b.Acting as a custodian for money, securities or an executed stock power of a customer;

c.Effecting securities transactions with a customer not recorded on the regular books or records of the broker-dealer with which the sales representative is associated, unless the transactions are disclosed to, and authorized in writing by the broker-dealer prior to execution of the transactions;

d.Effecting transactions in securities for an account operating under a fictitious name, unless disclosed to, and permitted in writing by the broker-dealer or issuer with which the sales representative is associated;

e.Sharing directly or indirectly in profits or losses in the account of any customer without first obtaining written authorization of the customer and the broker-dealer with which the sales representative is associated;

f.Dividing or otherwise spitting commissions, profits or other compensation receivable in connection with the purchase or sale of securities in this state with any person not so licensed as a sales representative associated with the same broker-dealer, or with a broker-dealer under direct or indirect common control;

g.Using advertising describing or relating to the sales representative’s securities business unless the advertising clearly identifies the name of the broker-dealer or issuer with which the sales representative is associated;

h.Misrepresenting the services of a licensed investment adviser on whose behalf the sales representative is soliciting business or accounts; and

i.Engaging in any of the practices specified in §§ 2.11(A)(1)(a) through (h), (o) through (r), or (t) of this Part.

3.The following are deemed to be unethical or dishonest practices by an investment adviser or investment adviser representative:

a.Recommending to a client to whom investment supervisory, management or consulting services are provided the purchase, sale or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the client based on information furnished by the client after reasonable inquiry concerning the client’s investment objectives, financial situation and needs, and any other information known by the investment adviser;

b.Exercising any discretionary power in placing an order for the purchase or sale of securities for a client without obtaining written discretionary authority from the client within ten (10) business days after the date of the first transaction placed pursuant to oral discretionary power relates solely to the price at which, or the time when, an order involving a definite amount of a specific security shall be executed, or both;

c.Inducing trading in a client’s account that is excessive in size or frequency in view of the financial resources, investment objectives and character of the account;

d.Placing an order to purchase or sell a security for the account of a client without authority to do so;

e.Placing an order to purchase or sell a security for the account of a client upon instruction of a third party without first having obtained a written third-party trading authorization from the client;

f.Borrowing money or securities from a client unless the client is a broker-dealer, an affiliate of the investment adviser, or a depository institution engaged in the business of loaning funds (for the purpose of this paragraph, the term borrowing does not include the issuance of an obligation that would otherwise be a security under RIUSA);

g.Loaning money to a client unless the investment adviser is a depository institution engaged in the business of loaning funds or the client is an affiliate of the investment adviser;

h.Misrepresenting a material fact to any advisory client, or prospective advisory client with regard to the qualifications of the investment adviser or any person associated with the investment adviser, or the nature of the advisory services being offered or the fees to be charged for such service, or omitting to state a material fact necessary to make the statements made regarding qualifications, services or fees, in light of the circumstances under which they are made, not misleading;

i.Providing a report or recommendation to any advisory client prepared by someone other than the adviser without disclosing that fact. (This prohibition does not apply to a situation where the adviser uses published research reports or statistical analyses to render advice or where an adviser orders such a report in the normal course of providing services;

j.Failing to disclose to clients in writing before entering into or renewing an advisory agreement with the client any material conflict of interest relating to the adviser or any person associated with the adviser which could reasonably be expected to impair the rendering of unbiased and objective advice including:

(1)Compensation arrangements connected with advisory services to clients which are in addition to compensation from such clients for such services; and

(2)Charging a client an advisory fee for rendering advice when a commission for executing securities transactions pursuant to such advice will be received by the adviser or its employees;

k.Guaranteeing a client that a specific result will be achieved (gain or no loss e.g.), with advice which will be rendered;

l.Publishing, circulating or distributing any advertisement which does not comply with SEC Rule 17 C.F.R. § 275.206(4)-1;

m.Disclosing the identity, affairs, or investments of any client unless required by law to do so, or unless consented to by the client;

n.Taking any action, directly or indirectly, with respect to those securities or funds in which any client has any beneficial interest, where the investment adviser has custody or possession of such securities of funds when the adviser’s action is subject to and does not comply with the requirements of SEC Rule 17 C.F.R. § 275.206(4)-2; and

o.Entering into, extending or renewing any investment advisory contract unless such contract is in writing and discloses, in substance, the services to be provided, the term of contract, the advisory fee, the formula for computing the fee, the amount of prepaid fee to be returned in the event of contract termination or non-performance, whether the contract grants discretionary power to the adviser and that no assignment of such contract shall be made by the investment adviser without the consent of the other party to the contract.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.12 Adviser Custody Conditions – Federally Registered

A.An investment adviser registered under the Investment Advisers Act of 1940 may take or retain custody of securities or funds of a client only while the investment adviser is in full compliance with SEC Rule 17 C.F.R. § 275.206(4)-2 and while the investment adviser maintains a net worth of not less than $25,000.00.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.13 Adviser Custody Conditions – Federally Exempt

A.An investment adviser licensed under RIUSA, but exempt from registration under the Investment Advisers Act of 1940, may take or retain custody of securities or funds of a client only while the investment adviser is in full compliance with SEC Rule 17 C.F.R. § 275.206(4)-2, and the provisions of the RIUSA and all relevant rules promulgated thereunder; the investment adviser must maintain a net worth of not less than $25,000.00 and have filed with the Director a surety bond in the amount set by order of the director with a minimum of $100,000 and a maximum or $1,000,000; and the investment adviser must insure that every investment adviser representative associated with the investment adviser has filed with the director a surety bond in the amount set by order of the Director with a minimum of $10,000 and a maximum of $100,000.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.14 Senior-Specific Certification and Professional Designations

A.The use of a senior specific certification or designation by any person in connection with the offer, sale, or purchase of securities, or the offering of advice as to the value of or the advisability of investing in, purchasing, or selling securities, either directly or indirectly or through publications or writings, or by issuing or promulgating analyses or reports relating to securities, that indicates or implies that the user has special certification or training in advising or servicing senior citizens or retirees, in such a way as to mislead any person shall be a dishonest and unethical practice in the sale of securities as defined in this Regulation. The prohibited use of such certifications or professional designation includes, but is not limited to, the following:

1.Use of a certification or professional designation by a person who has not actually earned or is otherwise ineligible to use such certification or designation;

2.Use of a nonexistent or self-conferred certification or professional designation;

3.Use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the person using the certification or professional designation does not have; and

4.Use of a certification or professional designation that was obtained from a designating or certifying organization that:

a.Is primarily engaged in the business of instruction in sales and/or marketing;

b.Does not have reasonable standards or procedures for assuring the competency of its designees or certificants;

c.Does not have reasonable standards or procedures for monitoring and disciplining its designees or certificants for improper or unethical conduct; or

d.Does not have reasonable continuing education requirements for its designees or certificants in order to maintain the designation or certificate.

B.There is a rebuttable presumption that a designating or certifying organization is not disqualified solely for purposes of § 2.14(A)(4) of this Part above when the organization has been accredited by:

1.The American National Standards Institute; or

2.The National Commission for Certifying Agencies; or

3.An organization that is on the United States Department of Education’s list entitled “Accrediting Agencies Recognized for Title IV Purposes” and the designation or credential issued therefrom does not primarily apply to sales and/or marketing.

C.In determining whether a combination of words (or an acronym standing for a combination of words) constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing senior citizens or retirees, factors to be considered shall include:

1.Use of one or more words such as “senior,” “retirement,” “elder,” or like words, combined with one or more words such as “certified,” “registered,” “chartered,” “adviser,” “specialist,” “consultant,” “planner,” or like words, in the name of the certification or professional designation; and

2.The manner in which those words are combined.

D.For purposes of this rule, a certification or professional designation does not include a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency, when that job title:

1.Indicates seniority or standing within the organization; or

2.Specifies an individual’s area of specialization within the organization

E.For purposes of this Subsection, financial services regulatory agency includes, but is not limited to, an agency that regulates broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940.

F.Nothing in this rule shall limit the Director’s authority to enforce existing provisions of law.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-2 § 2.15 Sale of Securities at Financial Institutions

A.Applicability

1.§ 2.15 of this Part applies exclusively to broker-dealer services conducted by broker-dealers on the premises of a financial institution where retail deposits are taken.

2.§ 2.15 of this Part does not alter or abrogate a broker-dealer’s obligation to comply with other applicable laws, rules, or regulations that may govern the operations of broker-dealers and their agents, including but not limited to, supervisory obligations.

B.Standards for Broker-Dealer Conduct. No broker-dealer shall conduct broker-dealer services on the premises of a financial institution where retail deposits are taken unless the broker-dealer complies initially and continually with the following requirements:

1.Setting. Wherever practical, broker-dealer services shall be located in a physical location distinct from the area in which the financial institution’s retail deposits are taken. In those situations where there is sufficient space to allow separate area, the broker-dealer has a heightened responsibility to distinguish its services form those of the financial institution. In all situations, the broker-dealer shall identify its services in a manner that clearly distinguishes those services from the financial institution’s retail deposit–taking activities. The broker-dealer’s name shall be clearly displayed in the areas in which the broker-dealer conducts its services.

2.Networking Arrangements. Networking arrangements shall be governed by a written agreement that sets forth the responsibilities of the parties and the compensation arrangements. Networking arrangements must provide that supervisory personnel of the broker-dealer and representatives of state securities authorities, where authorized by state law will be permitted access to the financial institution’s premises where the broker-dealer conducts broker-dealer services in order to inspect the books and records and other relevant information maintained by the broker-dealer with respect to its broker-dealer services. Management of the broker-dealer shall be responsible for ensuring that the networking responsibilities of all parties, including those of financial institution personnel.

3.Customer Disclosure and Written Acknowledgement.

a.At or prior to the time that a customer’s securities brokerage account is opened by a broker-dealer on the premises of a financial institution where retail deposits are taken, the broker-dealer shall:

(1)Disclose, orally and in writing, that the securities products purchased or sold in a transaction with the broker-dealer:

(AA)Are not insured by the Federal Deposit Insurance Corporation (“FDIC”);

(BB)Obligations of the financial institution and are not guaranteed by the financial institution; and

(CC)Are subject to investment risks, including possible loss of the principal invested.

(2)Make reasonable efforts to obtain from each customer during the account opening process a written acknowledgement of the disclosures required by § 2.15(B)(3)(a)(1) of this Part.

b.If broker-dealer services include any written or oral representations concerning insurance coverage, other than FDIC insurance coverage, then clear and accurate written or oral explanations of the coverage must also be provided to the customers when such representations are first made.

4.Communications with the Public

a.All of the broker-dealer’s confirmations and account statements must indicate clearly that the broker-dealer services are provided by the broker-dealer.

b.Advertisements and sales literature that announce the location of a financial institution where broker-dealer services are provided by the broker-dealer, or that are distributed by the broker-dealer on the premises of a financial institution, must, unless subject to § 2.15(B)(4)(d) of this Part, disclose that securities products:

(1)Are not insured by the FDIC;

(2)Are not deposits or other obligations of the financial institution and are not guaranteed by the financial institution; and

(3)Are subject to investment risks, including possible loss of the principal invested.

c.Recommendations by a broker-dealer concerning non-deposit investment products with a name similar to that of a financial institution must only occur pursuant to policies and procedures reasonable designed to minimize risk of customer confusion.

d.The following shorter logo format disclosure may be used by a broker-dealer in advertisements and sales literature, including but not limited to material published, or designed for use in, radio or television broadcasts, Automatic Teller Machine (“ATM”) screens, billboards, signs, posters and brochures, to comply with the requirements of § 2.15(B)(4)(b) of this Part, provided that the following disclosures are displayed in a conspicuous manner:

(1)Not FDIC Insured;

(2)No Bank Guarantee; and

(3)May Lose Value.

e.As long as the omission of the disclosures required by § 2.15(B)(4)(b) of this Part would not cause the advertisement or sales literature to be misleading in light of the context in which the material is presented, such disclosures are not required with respect to messages contained in:

(1)Radio broadcasts of 30 seconds or less;

(2)Electronic signs, including billboard-type signs that are electronic, time, and temperature signs and ticker tape signs, but excluding messages contained in media such as television, online computer services, or ATMs; and

(3)Signs, such as banners and posters, when only used as location indicators.

5.Notification of Termination. The broker-dealer must promptly notify the financial institution if any agent of the broker-dealer who is employed by the financial institution is terminated for cause by the broker-dealer.

History

Amendment — effective from 2024-11-04 to current
Periodic Refile — effective from 2022-01-04 to 11/04/2024
Technical Revision — effective from 2018-08-22 to 01/04/2022
Adoption — effective from 2018-08-22 to 08/22/2018

230-RICR-50-05-3 Issuance and Registration of Securities

230-RICR-50-05-3 § 3.1 Authority

This regulation is promulgated by the Director of the Department of Business Regulation pursuant to R.I. Gen. Laws § 7-11-705.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.2 Purpose

The purpose of this regulation is to clarify and set forth practices and procedures consistent with R.I. Gen. Laws Chapter 7-11.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.3 Severability Provisions

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.4 Definitions

A.In addition to the terms defined in R.I. Gen. Laws § 7-11-101, when used in this Part, the following terms shall have the following meanings:

1.“Department” means the Securities Division of the Rhode Island Department of Business Regulation.

“Director” means the Director of the Rhode Island Department of Business Regulation or his or her designee.

3.“RIUSA” means the Rhode Island Uniform Securities Act set forth in R.I. Gen. Laws § 7-11-101 et seq.

“SEC” means the United States Securities and Exchange Commission.

5.“ULOR” means a Uniform Limited Offering Registration.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.5 Uniform Limited Offering Registration

A.Authority, Scope, and Purpose

1.In addition to the authority set forth in § 3.1 of this Part, § 3.5 of this Part is also authorized by R.I. Gen. Laws § 7-11-304(c).

2.§ 3.5 of this Part applies to the registration of corporate securities offerings by qualification under R.I. Gen. Laws § 7-11-304(c) which are exempt from registration with the Securities and Exchange Commission under Securities and Exchange Commission Regulation D, Rule 17 C.F.R. § 230.504, or under Regulation A, Rule 17 C.F.R. § 230.251, as promulgated under the Securities Act of 1933.

3.The purpose of § 3.5 of this Part is to implement R.I. Gen. Laws § 7-11-304(c) in order to simplify the registration of small corporate securities offerings and promote uniformity with other states.

B.In accordance with R.I. Gen. Laws § 7-11-705, the Director adopts current Form U-7, the Small Corporate Offering Registration Form.

C.General rules.

1.Qualification. To be eligible for the ULOR under R.I. Gen. Laws § 7-11-304(c), the following conditions apply:

a.The issuer must be a corporation organized under the laws of one of the states or possessions of the United States.

b.The issuer must not be an investment company subject to the Investment Company Act of 1940.

c.The issuer must not be subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1933, 15 U.S.C. §§ 78m or 78o(d).

d.The offering must not be a “blind pool” or other offering for which the specific business to be engaged in or property to be acquired by the issuer cannot be specified.

e.The issuer may not engage in, or propose to engage in, petroleum exploration or production or mining or other extractive industries.

f.The following issuers and programs will not be permitted to utilize ULOR registration unless written approval is obtained from the Director, based upon a showing that adequate disclosure can be made to investors using the Form U-7 format:

(1)Holding companies or companies whose principal purpose is owning stock in, or supervising the management of, other companies;

(2)Portfolio companies, such as a real estate investment trust, which is defined as a corporation, trust, association or other legal entity (other than a real estate syndication) which is engaged primarily in investing in equity interests in real estate (including fee ownership and leasehold interests) or in loans secured by real estate or both;

(3)Issuers with complex capital structures;

(4)Commodity pools;

(5)Equipment leasing programs;

(6)Real estate programs; and

(7)Other issuers that the Director, for good cause, may find inappropriate for ULOR registration.

g.The aggregate offering price of the securities offered (within or outside of this state) shall not exceed the aggregate offering price in Securities and Exchange Commission Regulation D, Rule 17 C.F.R. § 230.504, or Regulation A, Rule 17 C.F.R. § 230.251 as promulgated under the Securities Act of 1933, or successor rules, whichever aggregate offering price is higher, less the aggregate offering price for all securities sold within twelve months before the start of, and during the offering of, the securities in reliance on any exemption under the Securities Act of 1933, 15 U.S.C. § 77e, or in violation of Section 5(a) of that Act, 15 U.S.C. § 77e(a).

h.The offering price for common stock must be equal to or greater than $1.00 per share. This minimum offering price also applies to the exercise price of options, warrants or rights for common stock and to the conversion price of securities convertible into common stock if these types of securities are to be offered.

i.The issuer may not split its common stock or declare a stock dividend for two (2) years after effectiveness of the registration.

j.The issuer may engage selling agents to sell the securities. Commissions, fees or other remuneration for soliciting any prospective purchaser in this state in connection with an offering may only be made to persons who, if required to be registered, the issuer believes and has reason to believe, are appropriately registered in this state.

k.The securities must be offered and sold only on behalf of the issuer and Form U-7 may be used by any selling security-holder to register his or her securities for resale.

2.Disqualification for ULOR registration under R.I. Gen. Laws § 7-11-304(c).

a.ULOR registration shall not be available for the securities of any issuer if such issuer, any of its predecessors or any affiliated issuer:

(1)Has filed a registration statement which is the subject of any pending proceeding or examination under Section 8 of the Securities Act of 1933, 15 U.S.C. § 77h, or is the subject of any refusal order or stop order entered thereunder within five (5) years prior to the filing of the application to register securities;

(2)Is subject to any pending proceeding under Regulation A, Rule 17 C.F.R. § 230.258, of the Securities Act of 1933 or any similar rule adopted under Section 3(b) of the Securities Act of 1933, 15 U.S.C. § 77c(b), or to any order entered thereunder within five (5) years prior to the filing of the application to register securities;

(3)Has been convicted within five (5) years prior to the filing of such application of any felony or misdemeanor in connection with the purchase or sale of any security or involving the making of any false filing with the Securities and Exchange Commission;

(4)Is subject to any order, judgment or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining such person from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the Securities and Exchange Commission; or

(5)Is subject to a United States Postal Service false representation order entered under 39 U.S.C. § 3005 within five (5) years prior to the filing of the application to register securities; or is subject to a temporary restraining order or preliminary injunction entered under 39 U.S.C. § 3007.

b.ULOR registration shall not be available for the securities of any issuer if such issuer, any of its directors, officers, ten percent shareholders of any class of its equity securities, promoters presently connected with it in any capacity or selling agents of the securities to be offered or any officers, directors, or partners of such selling agent:

(1)Has been convicted within ten years prior to the filing of the application to register securities of any felony or misdemeanor in connection with the purchase or sale of any security, involving the making of a false filing with the Securities and Exchange Commission or arising out of the conduct of the business or an underwriter, broker, dealer, municipal securities dealer, or investment adviser;

(2)Is subject to any order, judgment or decree entered by any court of competent jurisdiction temporarily or preliminarily enjoining or restraining, or is subject to any order, judgment or decree of any court of competent jurisdiction entered within five (5) years prior to the filing of the application to register securities, permanently enjoining or restraining such person from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security, involving the making of a false filing with the Securities and Exchange Commission or arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, or investment adviser;

(3)Is subject to an order of the Securities and Exchange Commission entered pursuant to Sections 15(b), 15B(a), or 15B(c) or the Securities Exchange Act of 1934, 15 U.S.C. §§ 78o(b), 78o-4(a) or 78o-4(c); or is subject to an order of the Securities and Exchange Commission entered pursuant to Section 203(e) or (f) of the Investment Adviser Act of 1940, 15 U.S.C. § 80b-3(e & f);

(5)Is subject to a United States Postal Service false representation order entered under 39 U.S.C. § 3007, within five (5) years prior to the filing of the application to register securities; or is subject injunction entered under 39 U.S.C. § 3007, with respect to conduct alleged to have violated 39 U.S.C. § 3005.

c.ULOR registration shall not be available for the securities of any issuer if any promoter presently connected with it in any capacity or any selling agents of the securities to be offered was or named as, an underwriter of any securities:

(1)Covered by any registration statement which is the subject of any pending proceeding or examination by the Securities and Exchange Commission under Section 8 of the Securities Act of 1933, 15 U.S.C. § 77b, or is the subject of any refusal order or stop order entered thereunder within five (5) years prior to the filing of any application to register securities; or

(2)Covered by any filing which is subject to any pending proceeding under Regulation A, Rule 17 C.F.R. § 230.258 of the Securities Act of 1933 or any similar rule adopted under Section 3(b) of the Securities Act of 1933, 15 U.S.C. § 77c(2), or to an order entered thereunder within five (5) years prior to the filing of the application to register securities

d.ULOR registration shall not be available for the securities of any issuer if such issuer, any of its directors, officers, ten percent shareholders of any class of its equity securities, promoters presently connected with it is any capacity or selling agents of the securities to be offered or any officers, directors, or partners of such selling agents:

(1)Is the subject of an adjudication or determination within the last five (5) years by a securities agency or administrator of another state or a court of competent jurisdiction that the person has violated the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Commodity Exchange Act, or the securities law of any other state;

(2)Within the last ten (10) years, pled guilty or nolo contendere to, or been convicted in a domestic or foreign court of an offense that the Director finds:

(AA)Involves the purchase or sale of a security, taking a false oath, making a false report, bribery, perjury, burglary, robbery, or attempt or conspiracy to commit any of those offenses;

(BB)Arises out of the conduct of business as a broker-dealer, investment adviser, depository institution, insurance company, or fiduciary; or

(CC) Involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities or an attempt or conspiracy to commit any of those offenses;

(3)Is permanently or temporarily enjoined buy a court of competent jurisdiction from acting as an investment adviser, investment adviser representative, underwriter, broker-dealer, sales representative, or as an affiliated person or employee of an investment company, depository institution, or insurance company, or from engaging in or continuing conduct or practice in connection with any of the foregoing activities, or in connection with the purchase or sale of a security;

(4)Is the subject of an order of the Director denying, suspending, or revoking the person’s license as a broker-dealer, sales representative, investment adviser, or investment adviser representative; or

(5)Is the subject of any of the following orders that are currently effective and were issued within the last five (5) years:

(AA)An order by the securities agency or administrator of another state or Canadian province or territory, or by the Securities and Exchange Commission, denying, suspending, or revoking the person’s license as a broker-dealer, sales representative, investment adviser, or investment adviser representative, or the substantial equivalent of those terms;

(BB) A suspension or expulsion from membership in or association with a member of a self-regulatory organization;

(CC)A United States Postal Service fraud order;

(DD)A cease and desist order by the Director, the securities agency or administrator of another state, or a Canadian province or territory, the Securities Exchange Commission, or the Commodity Futures Trading Commission; or

(EE)An order by the Commodity Futures Trading Commission denying, suspending, or revoking registration under the Commodity Exchange Act.

3.Disclosure Document. Application for ULOR registration under R.I. Gen. Laws § 7-11-304(c) shall be made by the issuer of the securities by filing with the Department a disclosure document on Form U-7, with Exhibits as required by Part V of the Instructions for Use of Form U-7, and such other documents as are required by Part III(A) of the Instructions for Use of Form U-7.

4.Financial Statements. The financial statements included in the application for ULOR registration shall be in the form provided in Part IV(K) of the Instructions for Use of Form U-7.

5.Debt Service and Preferred Stock. If the offering includes debt securities or preferred stock, the application for registration must include information that demonstrates the ability of the issuer to service its debt or pay the preferred stock dividends.

6.Registration Fee. An application for ULOR registration under this Regulation shall be accompanied by a non-refundable fee as provided in R.I. Gen. Laws § 7-11-305.

7.Other requirements. After registration under R.I. Gen. Laws § 7-11-304(c), the Director may require the issuer to file such reports as the Director may deem appropriate or necessary in such manner and form as may be required by the Director.

8.Waiver. The Director may, for good cause shown, waive or modify any of the requirements of this Regulation.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.6 Federal Covered Securities – Notice Filing Requirements under Section 18(b)(2) of the Securities Act of 1933

A.Pursuant to R.I. Gen. Laws § 7-11-307(a), for a covered security under Section 18(b)(2) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(2), unless the security is exempted by R.I. Gen. Laws § 7-11-401 or is sold in an exempt transaction under R.I. Gen. Laws § 7-11-402, a notice filing shall be filed with the Department prior to the initial offer of such security in this state, which filing shall consist of:

1.A Form NF;

2.A Form U-2 for consent to service of process, unless the version of the Form NF contains a consent to service of process; and

3.The filing fee set forth in R.I. Gen. Laws § 7-11-307(a)(1) or (2), as applicable.

B.A notice filing shall be effective commencing upon the later of its receipt by the Director or the effectiveness of the issuer’s registration statement relating to the offering with the SEC, and continuing until two months after the issuer’s fiscal year end. A notice filing may be renewed prior to its expiration by filing with the Department:

1.A current Form NF; and

2.The renewal fee set forth in R.I. Gen. Laws § 7-11-307(a)(4).

C.A renewed notice filing shall take effect upon the expiration of the previous notice filing.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.7 Federal Covered Securities – Notice Filing Requirements under Section 18(b)(3) of the Securities Act of 1933 (Reg. A+, Tier 2)

A.Federal Covered Securities, specifically securities issued under Section 18(b)(3) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(3), which are offered or sold within this state, are required to file notices with the Securities Division.

B. Pursuant to R.I. Gen. Laws § 7-11-307(c) of the RIUSA, for a covered security under Section 18(b)(3) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(3), unless the security is exempted by R.I. Gen. Laws § 7-11-401 or is sold in an exempt transaction under R.I. Gen. Laws § 7-11-402, a notice filing shall be filed with the director prior to the initial offer of such security in this state, which filing shall consist of:

1.A Form U-1, the Uniform Application to Register Securities or a Uniform Notice Filing of Regulation A – Tier 2 Offering; and

2.The filing fee set forth in R.I. Gen. Laws § 7-11-307(a)(1).

3.If consent to service of process is not included in the version of the form submitted in § 3.7(B)(1) of this Part, then the filing must also include a Form U-2.

C. A renewed notice filing shall take effect upon the expiration of the previous notice filing.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.8 Federal Covered Securities – Notice Filing Requirements under Section 18(b)(4)(F) of the Securities Act of 1933

A.Pursuant to R.I. Gen. Laws § 7-11-307(b), for a covered security under Section 18(b)(4)(F) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(4)(F), unless the security is exempted by R.I. Gen. Laws § 7-11-401 or is sold in an exempt transaction under R.I. Gen. Laws § 7-11-402, a notice filing shall be filed with the Department no later than 15 calendar days after the first sale is made in this state (provided, however, that if the 15th day is a Saturday, Sunday or state holiday, the due date shall be the next business day). The notice filing shall consist of:

1.One copy of the latest Form D filed with the SEC; and

2.The filing fee set forth in R.I. Gen. Laws § 7-11-307(b).

3.If consent to service of process is not included in the version of the form submitted in § 3.8(A)(1) of this Part, then the filing must also include a Form U-2.

B.No renewal filings shall be necessary for notice filings pursuant to R.I. Gen. Laws § 7-11-307(b), but one copy of any amended Form D filed with the SEC shall be filed with the Department promptly after filing such form with the SEC, for so long as the offering continues in this state.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.9 Form of Filing for Exemption

The Director hereby specifies that, for purposes of obtaining the exemption under R.I. Gen. Laws § 7-11-402(2), all information, under cover of a letter stating that the information is being filed to apply for the exemption under R.I. Gen. Laws § 7-11-402(2), must be filed with the Department in the form required under the Securities Exchange Act of 1934 and rules promulgated thereunder.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.10 Securities Manual

Unless otherwise provided by rule or order of the Director, this state recognizes the following as nationally recognized securities manuals for the purpose of qualifying for the exemption under R.I. Gen. Laws § 7-11-402(3): Fitch Investor Services, Inc., Moody Investor Services, Mergent, Inc., and the OTCQB and OTCQX markets maintained by OTC Markets Group Inc., and their successors and/or assigns.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.11 Unsolicited Order

In order to qualify for the exemption provided under R.I. Gen. Laws § 7-11-402(4), the broker-dealer must obtain from each customer a signed written acknowledgement at the time the purchase price of the securities is paid that the purchase was unsolicited and must retain a copy of each such acknowledgement of a period of five (5) years; provided that no acknowledgement from the customer will be required if the confirmation furnished the customer is clearly marked “Unsolicited Order” or the broker-dealer furnishes the customer at any time before or concurrently with the delivery of the confirmation a memorandum stating that the transaction is based upon an unsolicited order and, in either instance, the customer does not object to the designation of the trade as “unsolicited” within fourteen (14) days of the customer’s receipt of the confirmation or memorandum.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.12 Statutory Disqualification

A.No exemption under R.I. Gen. Laws § 7-11-402(18) shall be available for the securities of any issuer if any of the parties described in Securities Act of 1933, Regulation A, Rule 17 C.F.R. § 230.252(c), (d), (e), or (f):

1.Has filed a registration statement which is the subject of a currently effective registration stop order entered pursuant to any state’s securities law within five (5) years prior to the filing of the notice required under this exemption;

2.Has been convicted within five (5) years prior to the filing of the notice required under this exemption of any felony or misdemeanor in connection with the offer, purchase or sale of any security or any felon involving fraud or deceit, including but not limited to forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud;

3.Is currently subject to any administrative enforcement order or judgment entered by the Director within five years prior to the filing of the notice required under this exemption or is subject to any state’s administrative enforcement order or judgment in which fraud or deceit, including but not limited to making any untrue statement of material fact or omitting to state any material fact, was found and the order or judgment was entered within five (5) years prior to the filing of the notice required under this exemption;

4.Is subject to any state’s administrative enforcement order or judgment which prohibits, denies or revokes the use of any exemption from registration in connection with the offer, purchase or sale of securities; or

5.Is currently subject to any order, judgment or decree of any court of competent jurisdiction temporarily or preliminary restraining or enjoining, or is subject to any order, judgment or decree of any court of competent jurisdiction, permanently restraining or enjoining, such party from engaging in or continuing any conduct or practice in connection with the purchase of sale of any security or involving the making of any false filing with the state entered within five (5) years prior to the filing of the notice required under the exemption.

B.Disqualification pursuant to §§ 3.12(A)(1) through (5) of this Part may be waived by the Director upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.13 Exemption of Certain Securities from Registration

A.The following shall be exempt from the registration and filing requirements of R.I. Gen. Laws §§ 7-11-301 and 7-11-404:

1.All securities which are offered for sale on or through the Internet when all of the following conditions are observed:

a.The Internet offer of the securities indicate, directly or indirectly, that the securities are not being offered to residents of the State of Rhode Island; and

b.The Internet offer of the securities is not specifically directed to any person or persons in the State of Rhode Island by, or on behalf of, the issuer of the securities; and

c.No sales of the insurer’s securities are made in the State of Rhode Island as a result of the Internet offering until such time as the securities being offered have been properly registered under the terms and provisions of RIUSA and the rules and regulations promulgated thereunder.

B.This Part shall not relieve an issuer of securities on the Internet or a person acting behalf of such an issuer from liability under the RIUSA and the rules and regulations promulgated pursuant thereto.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.14 Exemption for Offers and Sales to Accredited Investors

A.Any offer or sale of a security by an issuer in a transaction that meets the requirements of § 3.14 of this Part is exempted from R.I. Gen. Laws §§ 7-11-301 and 7-11-404.

B.Sales of securities shall be made only to persons who are, or the issuer reasonably believes are, Accredited Investors. “Accredited investor” is defined as any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:

1.Any bank as defined in Section 3(a)(5)(A) of the Securities Act of 1933, 15 U.S.C. § 77c(a)(5)(A), whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Securities Act of 1933, 15 U.S.C. § 77b(a)(13); any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of the Act, 15 U.S.C. § 81a-2(a)(48); any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958, 15 U.S.C. § 681(c) or (d); any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of the Act, 29 U.S.C. § 1002(21), such association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decision made solely by persons that are accredited investors;

2.Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-2(a)(22);

3.Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

4.Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

5.Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000;

6.Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

7.Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in 17 C.F.R. § 230.506(b)(2)(ii); and

8.Any entity in which all of the equity owners are accredited investors.

C.The exemption is not available to an issuer that is in the development stage that either has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person.

D.The issuer reasonably believes that all purchasers are purchasing for investment and not with the view to or for sale in connection with a distribution of the security. Any resale of a security sold in reliance on this exemption within 12 months of sales shall be presumed to be with a view to distribution and not for investment, except a resale pursuant to a registration statement effective under R.I. Gen. Laws §§ 7-11-301 through 7-11-305, and 7-11-307 or to an accredited investor pursuant to an exemption available under the RIUSA.

E.The exemption is not available to an issuer if the issuer, any of the issuer’s predecessors, any affiliated issuer, any of the issuer’s directors, officers, general partners, beneficial owners of 10% or more of any class of its equity securities, any of the issuer’s promoters presently connected with the issuer in any capacity, any underwriter of the securities to be offered, are any partner, director or officer of such underwriter:

1.Within the last five (5) years, has filed a registration statement which is the subject of a currently effective registration stop order entered by any state securities administrator of the United States Securities and Exchange Commission;

2.Within the last five (5) years, has been convicted of any criminal offense in connection with the offer, purchase or sale of any security or involving fraud or deceit;

3.Is currently subject to any state or federal administrative enforcement order or judgment, entered within the last five (5) years, finding fraud or deceit in connection with the purchase or sale of any security; or

4.Is currently subject to any order, judgment or decree of any court of competent jurisdiction, entered within the last five (5) years, temporarily, preliminarily or permanently restraining or enjoining such party from engaging in or continuing to engage in deceit in connection with the purchase or sale of any security.

F. § 3.14(E) of this Part shall not apply if:

The party subject to the disqualification is licensed or registered to conduct securities related business in the state in which the order, judgment or decree creating the disqualification was entered against such party;
Before the first offer under this exemption, the state securities administrator, or the court or regulatory authority that entered the order, judgment or decree, waives the disqualification; or
The issuer establishes that it did not know and in the exercise of reasonable care, based on a factual inquiry, could not have known that a disqualification existed under this § 3.14(E) of this Part.

G.A general announcement of the proposed offering may be made by any means.

H. The general announcement shall include only the information, unless additional information is specifically permitted by the Director:

1.The name, address and telephone number of the issuer of the securities;

2.The name, a brief description and price (if known) of any security to be issued;

3.A brief description of the business of the issuer in 25 words or less;

4.The type, number and aggregate amount of securities being offered;

5.The name, address and telephone number of the person to contact for additional information; and

6.The name, address and telephone number of the person to contact for additional information; and

7.A statement that:

a.Sales will only be made to accredited investors;

b. No money or other consideration is being solicited or will be accepted by way of this general announcement; and

c. The securities have not been registered with or approved by any state securities agency or the U.S. Securities and Exchange Commission and are being offered and sold pursuant to an exemption from registration.

I.The issuer, in connection with an offer, any provide information in addition to the general announcement under § 3.14(G) of this Part, if such information:

1.Is delivered through an electronic database that is restricted to persons who have been prequalified as accredited investors; or

2.Is delivered after the issuer reasonably believes that the prospective purchaser is an accredited investor.

J.No telephone solicitation shall be permitted unless prior to placing the call, the issuer reasonably believes that the prospective purchaser to be solicited is an accredited investor.

K.Dissemination of the general announcement of the proposed offering to persons who are not accredited investors shall not disqualify the issuer from claiming the exemption under § 3.14 of this Part.

L.The issuer shall file with the Securities Division a notice of transaction, a consent to service of process, a copy of the general announcement, and a $300 fee within fifteen (15) days of the first sale in this state.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.15 Canadian Securities Exempt from Registration

Offers and sales of any security effected by a broker-dealer who is exempt from licensing under § 1.5 of this Subchapter are exempt from the registration requirements of R.I. Gen. Laws. § 7-11-301 and the filing requirements of R.I. Gen. Laws § 7-11-404.

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

230-RICR-50-05-3 § 3.16 Consent to Service of Process

Unless otherwise provided by rule or order of the Director, the Uniform Consent to Service of Process (Form U-2) satisfies the requirements of R.I. Gen. Laws § 7-11-708, as does the post September 1, 2016 Uniform Application to Register Securities (Form U-1).

History

Periodic Refile — effective from 2022-01-04 to current
Adoption — effective from 2018-08-22 to 01/04/2022

Subchapter 10 Franchises

230-RICR-50-10-1 Franchise Regulation

230-RICR-50-10-1 § 1.1 Authority

This Part is promulgated pursuant to R.I. Gen. Laws §§ 19-28.1-6, 19-28.1-9, 19-28.1-27, 42-35-3 and 42-14-17.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-12-23 to 01/04/2022
Adoption — effective from 2011-12-23 to 12/23/2011

230-RICR-50-10-1 § 1.2 Scope

This Part applies to franchises offered or sold in Rhode Island pursuant to R.I. Gen. Laws § 19-28.1-4.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-12-23 to 01/04/2022
Adoption — effective from 2011-12-23 to 12/23/2011

230-RICR-50-10-1 § 1.3 Purpose

The purpose of this Part is to regulate franchise sales in Rhode Island.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-12-23 to 01/04/2022
Adoption — effective from 2011-12-23 to 12/23/2011

230-RICR-50-10-1 § 1.4 Expiration and Renewal

A.Exemption of a franchise under the Franchise Investment Act shall expire three hundred and sixty-five (365) calendar days after the notice is received by the Department and the notice of exemption may be renewed annually thereafter.

B.Registration of a franchise under the Franchise Investment Act shall expire three hundred and sixty-five (365) calendar days from the initial effective date and may be renewed annually thereafter.

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-12-23 to 01/04/2022
Adoption — effective from 2011-12-23 to 12/23/2011

230-RICR-50-10-1 § 1.5 Fractional Franchise

A.Any franchise that meets all of the following criteria shall be referred to as a fractional franchise and shall be exempt from registration requirements of R.I. Gen. Laws § 19-28.1-5 and the delivery requirements of R.I. Gen. Laws § 19-28.1-8 pursuant to the authority granted in R.I. Gen. Laws § 19-28.1-6(10).

B.A fractional franchise is a business or other commercial entity purchased by a franchisee that has executed a licensing agreement with a franchisor to conduct the business of the franchisor on the premises of the franchisee subject to the following conditions:

1.The franchisee has two or more years' experience in an established business of which the franchisee will become a component;

2.The franchised business will be operated from the same business location as the franchisee's established existing business;

3.The products or services offered by the franchised business will be substantially similar to the existing products or services offered by the franchise;

4.The parties anticipate that the revenue from the franchise will not exceed twenty percent (20%) of the franchisee's primary business operation in the first year; and

5.The franchisee is not controlled by the franchisor.

C.A fractional franchisor that registers under this rule shall register with the Department and pay the same registration fee as paid by an exempt franchise pursuant to R.I. Gen. Laws § 19-28.1-29(c).

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-12-23 to 01/04/2022
Adoption — effective from 2011-12-23 to 12/23/2011

230-RICR-50-10-1 § 1.6 Severability

History

Periodic Refile — effective from 2022-01-04 to current
Technical Revision — effective from 2011-12-23 to 01/04/2022
Adoption — effective from 2011-12-23 to 12/23/2011