Rhode Island Code of Regulations › Title 230 - Department of Business Regulation › Chapter 20 - Insurance › Subchapter 50 - INSURANCE PRODUCERS AND OTHER NON INSURER LICENSEES › Part 1 - Surplus Lines Brokers (formerly Insurance Regulation 11) (230-RICR-20-50-1) › Section 230-RICR-20-50-1.5 - General Rules

Current through June 14, 2024
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.