Section 230-RICR-20-50-1.5 - General RulesA. 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.230 R.I. Code R. 230-RICR-20-50-1.5