2023 Rhode Island General Laws › Title 27 - Insurance › Chapter 27-29 - Unfair Competition and Practices › Section 27-29-4. - Unfair methods of competition and unfair or deceptive acts or practices defined.

§ 27-29-4. Unfair methods of competition and unfair or deceptive acts or practices defined.
The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:
(1) Misrepresentations and false advertising of policies or contracts.
Making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, or statement, sales presentation, omission, or comparison misrepresenting the terms of any policy issued or to be issued or the benefits, conditions, or advantages promised by any policy or the dividends or share of the surplus to be received on any policy, or making any false or misleading statement as to the dividends or share of surplus previously paid on any policy, or making any misleading representation or any misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates, or using any name or title of any policy or class of policies misrepresenting the true nature of that policy or class of policies, or making any misrepresentation to any policyholder insured in any company including any intentional misquote of a premium rate, for the purpose of inducing or tending to induce the policyholder to lapse, forfeit, or surrender his or her insurance, or misrepresenting for the purpose of effecting a pledge or assignment of or effecting a loan against any policy, or misrepresenting any policy as being share or stock;
(2) False information and advertising generally.
Making, publishing, disseminating, circulating, or placing before the public or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance or with respect to any person in the conduct of his or her insurance business that is untrue, deceptive, or misleading;
(3) Defamation.
Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of any oral or written statement or any pamphlet, circular, article of literature that is false or maliciously critical of or derogatory to the financial condition of an insurer, and that is calculated to injure any person engaged in the business of insurance;
(4) Boycott, coercion, and intimidation.
Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance;
(5) False financial statements.
(i)
Knowingly filing with any supervisory or other public official, or knowingly making, publishing, disseminating, circulating, or delivering to any person, or placing before the public or causing directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public any false material statement of financial condition of an insurer; or
(ii)
Knowingly making any false entry of a material fact in any book, report, or statement of any insurer or knowingly omitting to make a true entry of any material fact pertaining to the business of the insurer in any book, report, or statement of the insurer;
(6) Stock operations and advisory board contracts.
Issuing or delivering or permitting agents, officers, or employees to issue or deliver agency company stock or other capital stock, or benefit certificates or shares in any common law corporation, or securities of any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance;
(7) Unfair discrimination.
(i)
Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any policy of life insurance or of life annuity or in the dividends or other benefits payable on any such policy or life annuity, or in any other of the terms and conditions of the policy;
(ii)
Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable under any policy or contract, or in any of the terms or conditions of that policy, or in any other manner;
(iii)
Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, canceling, or limiting the amount of insurance coverage on a property or casualty risk because of the geographic location of the risk, unless:
(A)
The refusal, cancellation, or limitation is for a business purpose that is not a pretext for unfair discrimination; or
(B)
The refusal, cancellation, or limitation is required by law or regulation;
(iv)
Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, canceling, or limiting the amount of insurance coverage on a residential property risk, or the personal property contained in the residential property risk, because of the age of the residential property, unless:
(A)
The refusal, cancellation, or limitation is for a business purpose that is not a pretext for unfair discrimination; or
(B)
The refusal, cancellation, or limitation is required by law or regulation;
(v)
Refusing to insure, refusing to continue to insure, or limiting the amount of coverage available to an individual because of the sex or marital status of the individual; nothing in this subsection shall prohibit an insurer from taking marital status into account for the purpose of defining persons eligible for dependent benefits;
(vi)
To terminate, or to modify coverage, or to refuse to issue or refuse to renew any property or casualty policy solely because the applicant or insured or any employee of either is mentally or physically impaired; provided, that this subsection shall not apply to accident and health insurance sold by a casualty insurer and, provided that this subsection shall not be interpreted to modify any other provision of law relating to the termination, modification, issuance, or renewal of any insurance policy or contract; or
(vii)
Making or permitting any unfair discrimination by treating persons in a domestic partnership as defined in § 27-29-2, differently than persons in a marriage for the purposes of premiums, policy fees, or rates charged for policies of casualty, fire, homeowners, accident and sickness, marine, or automobile insurance;
(8) Rebates.
(i)
Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any policy or agreement as to the policy other than as plainly expressed in the policy issued on it, or paying or allowing or giving or offering to pay, allow, or give, directly or indirectly, as inducement to the policy, any rebate of premiums payable on the policy, or any special favor or advantage in the dividends or other benefits on the policy, or any valuable consideration or inducement not specified in the policy, or giving, selling, or purchasing or offering to give, sell, or purchase as inducement to the policy, or in connection with the policy, any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued on the security, or anything of value not specified in the policy;
(ii)
Nothing in subsection (7) of this section or subsection (8)(i) of this section shall be construed as including within the definition of discrimination or rebates any of the following practices:
(A)
In the case of any contract of life insurance policies or life annuity, annuities paying bonuses to policyholders or abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance; provided, that any bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interests of the company and its policyholders;
(B)
In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount that fairly represents the saving in collection expenses;
(C)
Readjustment of the rate of premium for a group insurance policy based on the loss or expense experience under it, at the end of the first or any subsequent policy year of insurance under the policy, which may be made retroactive only for the policy year;
(D)
Engaging in an arrangement that would not violate section 106 of the Bank Holding Company Act Amendments of 1972 (12 U.S.C. § 1972), as interpreted by the Board of Governors of the Federal Reserve System, or section 5(q) of the Home Owners’ Loan Act, 12 U.S.C. § 1464(q);
(E)
The offer or provision by insurers or producers, by or through employees, affiliates, or third-party representatives, of value-added products or services at no or reduced cost when such products or services are not specified in the policy of insurance if the product or service:
(I)
Relates to the insurance coverage; and
(II)
Is primarily designed to satisfy one or more of the following:
(aa)
Provide loss mitigation or loss control;
(bb)
Reduce claim costs or claim settlement costs;
(cc)
Provide education about liability risks or risk of loss to persons or property;
(dd)
Monitor or assess risk, identify sources of risk, or develop strategies for eliminating or reducing risk;
(ee)
Enhance health;
(ff)
Enhance financial wellness through items such as education or financial planning services;
(gg)
Provide post-loss services;
(hh)
Incent behavioral changes to improve the health or reduce the risk of death or disability of a customer (defined for purposes of this subsection as policyholder, potential policyholder, certificate holder, potential certificate holder, insured, potential insured, or applicant); or
(
ii
)
Assist in the administration of the employee or retiree benefit insurance coverage.
(III)
The cost to the insurer or producer offering the product or service to any given customer must be reasonable in comparison to that customer’s premiums or insurance coverage for the policy class.
(IV)
If the insurer or producer is providing the product or service offered, the insurer or producer must ensure that the customer is provided with contact information to assist the customer with questions regarding the product or service.
(V)
The commissioner may adopt regulations when implementing the permitted practices set forth in this statute to ensure consumer protection. Such regulations, consistent with applicable law, may address, among other issues, consumer data protections and privacy, consumer disclosure, and unfair discrimination.
(VI)
The availability of the value-added product or service must be based on documented objective criteria and offered in a manner that is not unfairly discriminatory. The documented criteria must be maintained by the insurer or producer and produced upon request by the department.
(VII)
If an insurer or producer does not have sufficient evidence, but has a good-faith belief that the product or service meets the criteria in subsection (8)(ii)(E)(II) of this section, the insurer or producer may provide the product or service in a manner that is not unfairly discriminatory as part of a pilot or testing program for no more than one year. An insurer or producer must notify the department of such a pilot or testing program offered to consumers in this state prior to launching and may proceed with the program unless the department objects within twenty-one (21) days of notice;
(F)(I)
Offering or giving non-cash gifts, items, or services, including meals to or charitable donations on behalf of a customer, in connection with the marketing, sale, purchase, or retention of contracts of insurance, as long as the cost does not exceed an amount determined to be reasonable by the commissioner per policy year per term. The offer must be made in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase, or renew a policy in exchange for the gift, item, or service.
(II)
Offering or giving non-cash gifts, items, or services including meals to or charitable donations on behalf of a customer, to commercial or institutional customers in connection with the marketing, sale, purchase, or retention of contracts of insurance, as long as the cost is reasonable in comparison to the premium or proposed premium and the cost of the gift or service is not included in any amounts charged to another person or entity. The offer must be made in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase, or renew a policy in exchange for the gift, item, or service.
(III)
Conducting raffles or drawings to the extent permitted by state law, as long as there is no financial cost to entrants to participate, the drawing or raffle does not obligate participants to purchase insurance, the prizes are not valued in excess of a reasonable amount determined by the commissioner, and the drawing or raffle is open to the public. The raffle or drawing must be offered in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase, or renew a policy in exchange for the gift, item, or service;
(iii)
An insurer, producer or representative of either may not offer or provide insurance as an inducement to the purchase of another policy or otherwise use the words “free”, “no cost”, or words of similar import, in an advertisement.
(9) Free choice of insurance producer or insurer.
(i)
When any person, firm, or corporation engaged in the business of lending money on the security of real or personal property, or in the business of negotiating, purchasing, selling, or holding loans on the security of real property, or in the business of building, selling, or financing the sale or purchase of real property, or any trustee, director, officer, agent, or other employee of that person, firm, or corporation, requires that property insurance be procured for the property, the borrower, debtor, or purchaser shall have free choice of insurance producer and insurer through or by which the insurance is to be placed or written, subject only to the right of the builder, creditor, lender, or seller:
(A)
To require evidence, to be produced at a reasonable time prior to commencement or renewal of risk, that the insurance providing reasonable coverage has been obtained in an amount equal to the amount required by the builder, creditor, lender, or seller;
(B)
To require insurance in an insurer authorized to do business and having a licensed resident insurance producer agent in this state; and
(C)
To refuse to accept insurance in a particular insurer on reasonable grounds related to solvency;
(ii)
When any contractor or subcontractor is required to procure a surety bond or policy of insurance with respect to any building or construction contract that is about to be, or that has been bid or entered into, the contractor or subcontractor shall have free choice of insurance producer and insurer through or by which the surety bond or insurance is to be written; provided, that the owner or contractor shall have the right: (A) To require evidence, to be produced at a reasonable time prior to commencement or renewal of risk, that the insurance providing reasonable coverage has been obtained in an amount equal to the amount required by the builder, creditor, lender, or seller; (B) To require insurance in an insurer authorized to do business and having a licensed resident insurance producer in this state; and (C) To refuse to accept insurance in a particular insurer on reasonable grounds related to solvency; provided, that the owner or contractor shall have the right to approve the form, sufficiency, or manner of execution of the surety bond or policy of insurance furnished by the insurance company or insurance producer selected by the contractor or subcontractor;
(iii)
No person who lends money or extends credit may:
(A)
Solicit insurance for the protection of real property after a person indicates interest in securing a first mortgage credit extension until that person has received a commitment in writing from the lender as to a loan or credit extension;
(B)
Unreasonably reject a policy furnished by the borrower for the protection of the property securing the creditor lien. A rejection shall not be deemed unreasonable if it is based on reasonable standards, uniformly applied, relating to the extent of coverage required and the financial soundness and the services of an insurer. The standards shall not discriminate against any particular type of insurer, nor shall the standards call for rejection of a policy because it contains coverage in addition to that required in the credit transaction;
(C)
Require that any borrower, mortgagor, purchaser, insurer, or insurance producer pay a separate charge, in connection with the handling of any policy required as security for a loan on real estate, or pay a separate charge to substitute the policy of one insurer for that of another. This subsection does not include the interest that may be charged on premium loans or premium advancements in accordance with the terms of the loan or credit document;
(D)
Use or disclose, without the prior written consent of the borrower, mortgagor, or purchaser taken at a time other than the making of the loan or extension of credit, information relative to a policy that is required by the credit transaction, for the purpose of replacing the insurance; or
(E)
Require any procedures or conditions of duly licensed insurance producers or insurers not customarily required of those insurance producers or insurers affiliated or in any way connected with the person who lends money or extends credit;
(iv)
Every person who lends money or extends credit and who solicits insurance on real and personal property subject to subsection (9)(iii) of this section shall explain to the borrower in writing that the insurance related to the credit extension may be purchased from an insurer or insurance producer of the borrower’s choice, subject only to the lender’s right to reject a given insurer or insurance producer as provided in subsection (9)(iii)(B) of this section. Compliance with disclosures as to insurance required by truth-in-lending laws or comparable state laws shall be compliance with this subsection;
(v)
This requirement for a commitment shall not apply in cases where the premium for the required insurance is to be financed as part of the loan or extension of credit involving personal property transactions;
(vi)
The commissioner shall have the power to examine and investigate those insurance-related activities of any person or insurer that the commissioner believes may be in violation of this section. Any affected person may submit to the commissioner a complaint or material pertinent to the enforcement of this section;
(vii)
Nothing in this section shall prevent a person who lends money or extends credit from placing insurance on real or personal property in the event the mortgagor, borrower, or purchaser has failed to provide required insurance in accordance with the terms of the loan or credit document;
(viii)
Nothing contained in this section shall apply to credit life or credit accident and health insurance;
(10) Notice of free choice of insurance producer or insurer.
Every debtor, borrower, or purchaser of property with respect to which insurance of any kind on the property is required in connection with a debt or loan secured by the property or in connection with the sale of the property, shall be informed in writing by the builder, creditor, lender, or seller, of his or her right of free choice in the selection of the insurance producer and insurer through or by which the insurance is to be placed. There shall be no interference, either directly or indirectly, with the borrower’s, debtor’s, or purchaser’s free choice of an insurance producer and of an insurer that complies with the requirements of this section, and the builder, creditor, lender, seller, owner, or contractor shall not refuse the policy tendered by the borrower, debtor, purchaser, contractor, or subcontractor. Upon notice of any refusal of the tendered policy, the insurance commissioner shall order the builder, creditor, lender, seller, owner, or contractor to accept the tendered policy, if the commissioner determines that the refusal is not in accordance with the requirements of this section. Failure to comply with an order of the insurance commissioner shall be deemed a violation of this section;
(11) Using insurance information to detriment of another.
Whenever the instrument requires that the purchaser, mortgagor, or borrower furnish insurance of any kind on real property being conveyed or is collateral security to a loan, the mortgagee, vendor, or lender shall refrain from disclosing or using any and all insurance information to his or her or its own advantage and to the detriment of either the borrower, purchaser, mortgagor, insurance company, or agency complying with the requirements relating to insurance;
(12) Prohibited group enrollments.
No insurer shall offer more than one group policy of insurance through any person unless that person is licensed, at a minimum, as an insurance producer. This prohibition shall not apply to employer-employee relationships, or to any of these enrollments;
(13) Failure to maintain complaint handling procedures.
No insurer shall fail to maintain a complete record of all the complaints it received since the date of its last examination pursuant to the general laws providing for examination of insurers. This record shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of each complaint, and the time it took to process each complaint. For the purposes of this subsection, “complaint” means any written communication primarily expressing a grievance;
(14) Misrepresentation in insurance applications.
Making false or fraudulent statements or representations on or relative to an application for a policy, for the purpose of obtaining a fee, commission, money, or other benefit from any insurers, insurance producer, or individual person;
(15) Requiring that repairs be made to an automobile at a specified auto body repair shop or interfering with the insured’s or claimant’s free choice of repair facility.
The insured or claimant shall be promptly informed by the insurer of his or her free choice in the selection of an auto body repair shop. Once the insured or claimant has advised the insurer that an auto body repair shop has been selected, the insurer may not recommend that a different auto body repair shop be selected to repair the automobile. An auto body repair shop may file a complaint with the department of business regulation alleging a violation of this subsection (15). Whenever the department of business regulation has reason to believe that an insurer has violated this subsection (15), the department shall conduct an investigation and may convene a hearing. A complaint filed by an auto body repair shop must be accompanied by a statement written and signed by the insured or claimant setting forth the factual basis of the complaint, and the insured or claimant must voluntarily appear and testify at any administrative proceedings on the complaint; and
(16) Requiring that motor vehicle glass repair be made at a specified motor vehicle glass repair shop or interfering with the insured’s or claimant’s free choice of a licensed repair facility.
The insured or claimant shall be promptly informed by the insurer of his or her free choice in the selection of a licensed motor vehicle glass repair shop. The insurer shall not require a person to use or employ unfair or deceptive acts or practices, threaten, coerce, or intimidate to induce a person to use or select a particular licensed motor vehicle glass repair shop to provide motor vehicle glass repair services. An insurer shall not knowingly contract with, refer motor vehicle glass repair services to, or otherwise negotiate with an unlicensed motor vehicle glass repair shop, as defined in chapter 38.5 of title 5. Once the insured or claimant has advised the insurer that a motor vehicle glass repair shop has been selected, the insurer may not recommend that a different motor vehicle glass repair shop be selected to repair the motor vehicle glass, and an insurer shall not assign or dispatch the repair work or forward a related policy or policyholder’s contact or repair scheduling information to a different licensed motor vehicle glass repair shop without the knowledge and consent of the insured. An insured may at any point in time elect to change the insured’s choice of licensed motor vehicle glass repair shop. However, an insurer authorized to conduct business in the state may provide directly, or through other means, including electronic transmissions, specific, truthful, and nondeceptive information regarding the features and benefits available to the insured under the policy to assist the insured in selecting a licensed motor vehicle glass repair shop or scheduling a licensed motor vehicle glass repair shop to perform motor vehicle glass repair, or enter into any preferred provider agreements and/or participate in direct repair programs or direct repair networks with licensed motor vehicle glass repair shops. A motor vehicle glass repair shop may file a complaint with the department of business regulation alleging a violation of this subsection (16). Whenever the department of business regulation has reason to believe that an insurer has violated this subsection (16), the department shall conduct an investigation and may convene a hearing. A complaint filed by a motor vehicle glass repair shop must be accompanied by a statement written and signed by the insured or claimant setting forth the factual basis of the complaint, and the insured or claimant must voluntarily appear and testify at any administrative proceedings on the complaint.
History of Section.
P.L. 1958, ch. 53, § 4; P.L. 1966, ch. 54, § 1; P.L. 1976, ch. 201, § 1; P.L. 1993, ch. 180, § 24; P.L. 1997, ch. 342, § 1; P.L. 2004, ch. 488, § 1; P.L. 2015, ch. 146, § 2; P.L. 2017, ch. 197, § 1; P.L. 2017, ch. 317, § 1; P.L. 2022, ch. 404, § 4, effective June 30, 2022; P.L. 2022, ch. 405, § 4, effective June 30, 2022.